Jargon buster: What is a credit score and why does it matter?

What is a credit score?

Your credit score is a three-digit number. It’s calculated from the information a credit reference agency (CRA) holds about you. Your credit score usually comes with your credit report, which gives you more details about your credit history.

Lenders use your credit score, plus other information, to decide whether they will lend you money.

The better your score, the more doors open for you in the world of credit. Think mortgages, credit cards, or loans – the cream of the financial crop. And that’s not all – having a stellar credit score means you get the best deals in town. Higher limits, lower interest rates, great cashback etc.

Here’s a quick rundown on what those digits really mean:

0 – 550 = Very Poor
551 – 565 = Poor
566 – 603 = Fair
604 – 627 = Good
628 – 710 = Excellent

However, don’t let past slip-ups haunt you forever. We’re all human, and mistakes happen. Now, let’s talk about how you can give that credit score a makeover.

First up, keep tabs on your credit report. It’s like a real-time reflection of your financial health. Check it regularly, and if you spot any errors, don’t fret. You have the power to dispute them. And trust me, fixing these hiccups can do wonders for your credit score.

Being on the electoral register is another game-changer. It’s not just about voting; it shows lenders that you’re settled and stable. Whether you’re a student or a seasoned professional, make sure your address is consistent on credit applications.

Lastly, financial ties – they matter. Joint mortgages, shared bills, or acting as a guarantor can impact your credit score. Even if things change – relationships end or you move – it’s wise to keep an eye on your credit report to ensure it’s all up-to-date.

Loan sharks have many faces – make sure you know who’s behind the mask

What does a loan shark look like to you?

The chances are the image that springs to mind is the TV soap gangster. But in reality they are not always that easy to spot.

They could just as easily be that neighbour who always stops to chat, a parent who you know from the school gate, a popular work colleague, even a long-standing family friend.

The one thing they have in common is that they are expert manipulators and masters of deception, often befriending victims and offering a quick-fix loan.

And with Christmas fast approaching they may be more active than usual, aware that with the cost-of-living crisis, people may be under increasing financial pressure.

Victims often aren’t aware that they have borrowed from a loan shark until it’s too late. Things can quickly turn nasty as they demand extortionate repayments and issue threats of violence when you can’t pay.

Figures from the England Illegal Money Lending Team, an organisation that works in partnership with trading standards authorities to investigate and prosecute illegal lenders and support victims, show that in the first half of 2023, 56 per cent of the people it worked with said they thought they were borrowing from a friend.

But there are warning signs to look out for, and alternatives available for those who need access to affordable credit but who might have been turned down by the mainstream banks.

What is a loan shark?

A loan shark is another term for an illegal money lender – someone who lends money and asks for repayments, but who does not have the necessary authorisation from the Financial Conduct Authority (FCA).

Why do people turn to loan sharks?

Often someone may be looking for a small amount over a short period to cover unexpected expenses. They may have been refused credit elsewhere and need cash at short notice. In the cost-of-living crisis, more people are being forced to borrow to cover basic living costs such as bills and food.

What are the warning signs that someone is a loan shark?

There are a number of giveaways that indicate the person you are borrowing from is not a legitimate lender.

They can include:

• You are given no paperwork or details about the loan
• The lender demands repayments that add up to much more than you initially borrowed
• They intimidate or threaten you if you struggle to pay
• They demand you hand over items like bank cards or a passport until you can pay

Where can I go to borrow money if I have been turned down by the banks?

Credit unions offer an alternative, ethical and safe way of borrowing for people who may have been refused credit elsewhere. They can offer small loans at affordable rates. Visit www.findyourcreditunion.co.uk to find one nearest to you.

What should I do if I think I have been targeted by a loan shark?

Contact the England Illegal Money Lending Team. There is a host of information on its website www.stoploansharks.co.uk.

You can:
Call the 24/7 confidential hotline 0300 555 2222
Text a report to 078600 22116
Join a live chat on the website www.stoploansharks.co.uk
E-mail reportaloanshark@stoploansharks.gov.uk
Private message on www.facebook.com/stoploansharksproject

Remember you have done nothing wrong if you have borrowed from a loan shark. It is the lender who has committed a crime.

ENDS

Article written by the England Illegal Money Lending Team

Budget-friendly-winter-tips

Winter not only brings the joy of festivities but also a chill that often leads to increased energy bills. As we embark on this season, it’s the perfect time to explore budget-friendly ways to stay warm and cosy without breaking the bank:

  1. Layer up:
    Start with good base layers. Thermal shirts and leggings can work wonders, trapping heat close to your body. Layering allows you to adjust your clothing to stay comfortable as the temperature fluctuates.
  2. Seal the leaks:
    Check for drafts around windows and doors. Draft stoppers or weather-stripping can help seal gaps, keeping cold air out and warm air in. It’s a simple and cost-effective way to improve insulation.
  3. Warm drinks and foods:
    Embrace the power of warmth from the inside. Sip on hot drinks like tea, coffee, or cocoa. Opt for hearty, warm meals that not only satisfy your taste buds but also raise your body temperature.
  4. DIY insulation:
    For those on a tight budget, consider DIY insulation solutions. Heavy curtains can act as an extra barrier against the cold. You can even use bubble wrap on windows for a temporary insulating fix.
  5. Utilise sunlight:
    Open your curtains during the day to let sunlight in. Sunlight not only brightens your space but also adds natural warmth. Close them at night to trap the heat inside.
  6. Blanket comfort:
    Keep cosy blankets within reach. Whether you’re lounging on the sofa or working at your desk, having a warm blanket handy allows you to stay warm without cranking up the heat.
  7. Energy-efficient heating:
    If you use a space heater, make sure it’s energy-efficient. Place it strategically to maximise its effectiveness. Set it to a reasonable temperature and layer up, allowing you to keep warm without a hefty energy bill.

As the winter season unfolds, we hope these tips empower you to navigate the colder months with confidence, warmth, and financial savvy. Small changes in your daily habits and home environment can lead to significant savings, ensuring that you not only enjoy the beauty of winter but also have some extra funds for those holiday treats.