Are Credit Scores real or nonsense? How to make yourself more attractive to lenders

24:28It's just joint products. And you'd be better to stay separate rather than going together if one of you has a poor credit history. Equally, in Lynn's case, as she's got divorced, cost once you are no longer financially linked from somebody and you have to be truly not financially linked. You know, even if you're not in a relationship anymore, if you've got a joint account and you're paying some joint bills, you're financially linked. Then the right thing to do is write to the three credit reference agencies, Equifax, Experian and TransUnion, and request a notice of disassociation, which is where you apply to be separated from the person that you are financially linked with because you're no longer financially linked with them.

25:08And I know Lynne was writing about something entirely different, but in Lynne's case, she absolutely certainly would want to make sure that she's not financially linked. And if she is financially linked, then she should be writing a notice of disassociation onto all the credit reference agencies to make sure that she's no longer financially linked as she is no longer financially connected to her ex. OK. Rob, going back to your question about, is your credit score real? Is it a real thing? Rob says a lot of hard... They better be real because a lot of hard work went into cultivating this score.

25:431 ,250 out of 1 ,250. So that is an Experian credit score, which is important to understand because Experian scores out of 1 ,250, Equifax out of 1 ,000... But why 1 ,250? It seems random. OK, well, if you want to get into... I do. Experian has just changed its credit scoring. It was out of 999. and in the last month or so, it's now doing it out of 12.50. And within that, 44 % of people will see their score band drop. So you might move from excellent to very good. And 42 % will see a higher score in the same or higher band. Now, the most important thing I can say about this, and Equifax and Experian says the same thing.

26:26If you have dropped from excellent to very good, it doesn't actually mean anything. Literally, it means nothing. Remember, your credit score is just that particular credit reference agency's loose indication of how it thinks a typical lender would view you. Your underlying data has not changed. So the fact that you have dropped, say, from excellent to very good will not in any way change whether you're accepted or not if you apply for a product. because they are deciding based on the underlying data, not based on the credit score. Now, Experian says the new score will include the likes of phone contract repayments, use of overdraft facilities, withdrawing cash on credit cards and mortgage overpayments.

27:13And when I said to them, why are you increasing it from 999 to 1250? They said, we think 1250 is a better way for us to be able to include all these new things that we're putting into it to be able to give the granular detail that we want. I personally find that quite difficult to buy I have a sneaking suspicion and there's no confirmation this is supposition and scurrilous and rumour and I am sure it's not true what I'm about to say but I just think that they want a bigger number so they've got a bigger number than the other credit reference agencies so that you can have look, you can be a 1200 with us you can't be a 1200 with Equifax you can only be a 999 with them I just think it's a psychological piece because I don't think that I can't understand why you couldn't explain a credit score out of 999.

28:01I mean, 999 different data points is pretty granular to me. I don't think there is that much of a difference between that and 12 ,000, 12 ,250. Is it a bit like Spinal Tap going up to 11 on the amplifier? That's exactly what it is. They have turned the dial up to 1250 in my view. And their view is so they could have a bigger range. But come on, 1 ,000 is a pretty big range. I just don't see that it makes any difference. So I haven't bought that argument. But the most important thing is if your credit score has moved with Experian to understand that does not affect in any way your acceptance at lenders because it's just their assessment of you has changed.

28:37But the underlying data which lenders use hasn't changed unless your actual data has changed, obviously, personal thing. Adrian Harris says, according to Credit Karma and ClearScore, I have excellent scores, but I still got turned down on a credit card application as my only regular pension income is quite low. All right. OK, Adrian. I sometimes do a different man-in-the-pub game to explain credit scores, but we'll do the man of the pub, Adrian Charles, here. OK. So someone comes up to you, they want a£10 ,000 loan, they earn£100 ,000 a year and they have a perfect credit history and you're a lender do you think you'd lend to them?

29:18£10 ,000 loan probably probably probably okay someone comes up to you they want a£10 ,000 loan they've got a perfect credit history they no longer are working and they earn£50 a month and they don't have any savings would you give them a£10 ,000 loan? well I would because I'm foolish but you're a lender you're commercial But no, I wouldn't. OK. And so this is the big point, and it's sort of why I go back to don't buy too much into your credit score. There are at least three different types of scoring being done when you apply. And this is a form of explanation because it's all done via an algorithm.

29:53You've got your credit score. You've also got fraud scoring, whether they score you out because it looks like you're fraudulent, and there are some things you need to do to protect yourself from that. And then you've got affordability scoring. And affordability scoring, the biggest and most important part of that, is all about what you earn. Because ultimately, you can have the best credit score in the world, but if you don't earn enough, you will be rejected. And we focus far too much on the credit score element and nowhere near enough on the affordability score element. And the affordability score element affects different products in different ways.

30:28So let's just contrast a credit card and a loan. With a credit card, you're applying for a borrowing facility. And whether or not you get that borrowing facility will tend to rely more on your credit score. Have you got a good credit history? Are you the type of person who repays? Your affordability score when you're applying for a credit card will be more important in dictating the size of the credit limit, how much you are able to borrow if you're accepted for the credit card, than the actual acceptance of the credit card. But now if we look at applying for a personal loan, when you apply for a personal loan, you're applying for a fixed amount of borrowing.

31:06You're applying to borrow a set amount of money. So in a personal loan, you could be applying, just as we've just discussed, for a£3 ,000 personal loan from one company. And it could accept you because you've got a good credit score and your income is suitable so you make the affordability test. But you could apply for a £10 ,000 loan from the same company. And if you did that, even though your credit score is the same, it would be your affordability score that meant you were rejected because they don't think you can afford to pay the£10 ,000. And similar happens on mortgages as well. So we often don't talk about it.

31:41And I'm going to go into now, I'm going to get a bit complex now. So, Adrian, let me know if this doesn't make sense. There's a good way to think about credit scoring and affordability scoring is three metrics. Now, not every lender does it in exactly the same way, but I think this is a really good illustrative format of how they are deciding whether they'll lend to you. And the metrics are your debt ratio, your credit utilisation and your disposable income. The debt ratio is your unsecured debt, so not counting mortgages, not counting student loans, as a percentage of your annual income. So if you have less than 20 % of unsecured debt than your annual income, that's seen as pretty good.

32:2420 to 40 is good. 40 to 60 is okay. Over 60 is bad. So for example, if you earn£20 ,000 a year and you've got£5 ,000 on your credit cards, you're at 25%. It's not the best, but it's not the worst either. The next metric, credit utilisation. This is the percentage of the available credit to you that you are using. So, for example, if you have a credit card with a£1 ,000 credit limit and you had£100 debt on it, that is a 10 % credit utilisation. You're utilising 10 % of your available credit. Now, and that's done on all of your debts, not just on one. Now, the interesting thing about both debt ratio and credit utilisation is a way to improve it is to reduce the total amount of your debt or to improve your income.

33:17But ironically, with credit utilisation, you could also technically improve your credit utilisation by getting more credit. So if you had£100 debt on one credit card with a£1 ,000 credit limit, if you got a second credit card with another£1 ,000 credit limit, you'd now have£100 debt with a£2 ,000 credit limit. So your credit utilisation would be lower. And some people think that that's useful. What I now need to explain to complicate it a bit more, credit utilisation only tends to be important if you have a bad debt ratio. So if you have a lot of debt as a proportion of your annual income and you are using a lot of your credit, it's a bad thing.

33:55If you have very little debt and you're losing a lot of your credit, because the only thing you've got is one credit card and it's got a£500 credit limit and you earn 50 grand a year and you're using all that credit limit, then your credit utilisation isn't going to affect you very much. The final thing they look at is your disposable income, which is the spare cash you have each month after bills and essentials. But interestingly, that does not tend to be done by an exact calculation of your own personal income. It tends to be done by a statistical calculation of what someone in your situation would likely have as disposable income.

34:27So hopefully that makes sense. Your debt ratio, unsecured debt as a percentage of your annual income. And if that's high, your credit utilisation, how much of your available credit you're using. And then your disposable income. With the first two, higher is worse. With disposable income, the more disposable income you have is better. Did you get that? Was it too complicated? No, I've got that. Mick Olly said he's 997 with Experian, which was always classed as excellent. Now they've changed their system. He's still 997. Is this the one that's gone up to 12.50? Yes. OK, but now he's just classed as good.

35:01I mean, that doesn't seem like cricket. I mean, he stays at 9.97 and they've just moved the top mark up. That's exactly it, and 44 % of people will have seen their score band drop. Mick is in that 44 % of people. But I go back again, it's completely meaningless! Do not worry, nothing has actually changed. Just how this one credit reference agency that's selling you its score or giving you a score three via some third-party agency views you is now not as good as it used to view you. But if you go and apply for something, it does not change a jot whether you will be accepted or not. And that's the most important message.

35:37I mean, the big thing, if we just go on, the most important thing everybody should be doing on their credit files, the one that really counts and we don't talk about enough because we fixate on the credit score, is checking your credit reports. You should check your credit ports for errors at least annually and before any big application. Now, these are your credit reference agency reports. They've got much of the data lenders use to assess you on. So I said it before, electoral role information, credit products, whether you pay them on time, county court judgments. What I would like you to do is I would like you to check yours line by line.

36:15And wait, how do you do that? They are all available by one way or another for free. Now, You have a statutory act to get them from their own websites. You've got TransUnion that you can just go to its website. Lots of banks also give you the TransUnion credit file. You can get a free Equifax file and score via Equifax Basic Site or ClearScore. You can get a free Experian file and score via the free Experian app, or you can apply for its statutory credit report. But how many do you need to go for? OK, if I were doing an annual check-up and didn't have a big application due, like a mortgage, I'd just do one.

36:51And because they tend to be very similar. I would just do one. If I was applying for a mortgage and I were going out to do that or had a big application like a balance transfer that was very important for me done, I would check all three. And when I say go through line by line, what I mean is literally, is there anything in that file that is not correct? It's an old example of this, but I was so shocked by it at the time. There was a woman who came to me on a roadshow who kept being rejected for credit, couldn't understand why. I couldn't understand why either. And eventually I did, you know, some due diligence through the credit reference agencies.

37:30and what it turned out to be is she had an old mobile phone account that was active, but the address on her credit file for that account was her old address. And while it was technically active, she wasn't using the mobile phone, but it wasn't an old account. Do you see what I mean? It was still live technically. Because it had the wrong address, that had been triggering fraud scoring and that's why she was being rejected. Right. And so when I say check line by line, I mean line by line for errors, for anything that is wrong in your credit file. And you should do that once a year. It's quite interesting and voyeuristic.

38:10But what if there's something that should be on there which would not act in your favour in terms of your credit rating? What do you do? Keep quiet about that or confess? The question is normally the other way around. There's nothing for you to confess. I mean, there is not necessarily a legal obligation on lenders to report things on your credit file. Credit file is a data collection agency, so there is nothing to confess. If information isn't on there, information isn't on there. And what you will find in different credit reference agencies, different companies do report to them, so they're not always exactly the same.

38:44There can be slight differences between them. So I wouldn't say it's a keep your mouth shut. It isn't on the credit file, so there is nothing to correct. But what we have to be careful of here is, you know, you can always... One of the things I always say is that student loans aren't on your credit file, because they're not. They don't go on your credit file with the very minor exception of pre-1998 student loans that have had a default. Let's not worry about that for a moment. But if you are applying to a lender and it's asking about your outgoings and it asks, do you have a student loan and which plan are you on, then you have to answer them.

39:15So the idea it's not on your credit file doesn't mean they don't know about it. It's somewhat different. they will be asking you the questions depending on the detail that they're going into. And student loans, just as a note, while it's not on your credit file, they count effectively as if you're paying increased tax. It reduces your disposable income. We talked about disposable income being one of the tests that go on earlier in that. Lots more to come on credit scoring, including how to get paying rent on time to count. What you can do as a young person to start building your credit score for the first time and my top tips to make you more financially attractive to lenders.

39:51I don't know about my credit score, my mastermind score definitely needs attention. I mean, that is real, my mastermind score. Play the theme tune and then we'll start to discuss it.

40:05Welcome to My Money Mastermind. Now, Adrian, in our three-option multiple choice, got it right last week, which means he has scored 14 correct and 26 wrong, which means, Adrian, I'm delighted to tell you, You are BRC. BRC. There you are. So, last week you were NBRC, no better than random chance. This week you are one ahead of random chance. 13 right, 26 wrong would have been random chance. You've got 14 right and 26 wrong. All this means is that you'll give me an extra hard one to just knock me off my perch. What I think you should be excited by is, of the 40 questions we've asked, one of the 40 is your added value.

40:52Thank you so much for that. Very good. Adrian, you're at home on a Monday afternoon doing your favourite things, alphabetising your coffee bean collection and complaining about modern life. A bit of self-examination means you decide enough is enough, you need to get out of there, get fit, get healthy, get well and join a gym. On the spur of the moment, you call up your local fitness centre, negotiate a great deal. Well done, mate. And it asks you for your debit card details, the longer number to set up the payment. What I would like to know is which of these is the correct legal position you are now in.

41:30Is it A, as it's a card you use to do it, it's a recurring payment with little protection? I used a credit card, did I? No, you used your debit card. Debit card, right. B, as it's your bank debit card you used, you're covered by the powerful direct debit guarantee. C, as it's your bank debit card you used, you're covered by the powerful direct debit guarantee, but only if you sign the direct debit guarantee document they send to you afterwards. So is it A, it's just a recurring payment with little protection. B, you're covered as a direct debit because you used your debit card. or C, you're covered as a direct debit because you used your debit card but only if you sign the direct debit guarantee form they send you.

42:18What's your thinking? I think... Well, I don't think you're covered. I think... Well, it's a recurring payment on a debit card. It's not the same as a direct debit agreement. I think... So are you saying, A, as it's the card you use to do it, it's a recurring payment with little protection? Well, yes, except I think that's true. Although if then you, by some rule, have to sign a direct debit agreement, that might elevate it to being a de facto direct debit. So you're thinking it's C, as it's your bank debit card you use, you're covered by the powerful direct debit guarantee, but only if you sign the direct debit guarantee document they send you afterwards.

43:08It's a hell of a red herring you've put in if... I mean, it's a hell of a direct debit you've put in if that's not true. I mean, do they... I can't answer your questions because that would give the answer away. Well, you might be able to. I mean, do they have to send you the direct debit agreement? Is your answer A, it's a recurring payment, B, it's a direct debit, or C, it's a direct debit only if they send you the direct debit agreement and you sign it? I think it's C. Final answer. Final answer. So Adrian, first of all, let's say the fact that you are using your debit card does not automatically mean you are covered as a direct debit guarantee.

43:53No. Adrian, if you so used your debit card and you're covered by the powerful direct debit guarantee and they send you the direct debit guarantee document, then it would be completely weird because I made that option up. Play this. Uh-uh, please. Well, that's the reddest of red hair. I don't think that's cricket. I don't think that's cricket. I'm sending that up to the third umpire. I made that. I did look at it and I think what I've done is I've put two options that are very similar, that are both wrong, and that will make you think that one of those two must be right. And it worked. Because the correct answer is it's a recurring payment with little protection.

44:33And this is actually really important for people to understand. Adrian, you've now got 14 right and 27 wrong. You're still BRC, though, just. Yeah, but our relationship has taken a hit there. So sorry about that. Now, let's just talk about the direct debit guarantee. This is covered by the direct debit scheme rules. These are powerful protections, legally enforceable backed by the banking industry. That applies when you set up a direct debit. The way you set up a direct debit is from your bank account. So you would give your bank account number and the sort code. The crucial bit in this question is that you gave your long card number, and in which case it doesn't matter whether it's a debit card or a credit card.

45:14If it's a payment from the card as opposed to a payment with the bank account number, then it is a recurring payment and you have far fewer rights on a recurring payment. This is commonly used for subscriptions, you know, Netflix, Disney Plus, but people don't realise. In fact, what a recurring payment really is, is if you think about it, when you go into a shop, you give them your card, you say, take one payment. What you're actually saying to the firm is, I'm giving you my card details so you can take a payment when you want to take a payment. And each one of those payments is an individual payment.

45:44It just recurs. With the direct debit guarantee, it's actually far stronger. It's a specific thing. So if you want to cancel your direct debit guarantee, you just need to contact your bank and they must stop all future payments. if you dispute it because you say it's taken in error, it was taken on the wrong date, it's the wrong amount, it's taken without authority. With the direct debit, you must get an immediate refund from your bank, even before they go into the dispute process. So it's very powerful. With a recurring payment, while you should be able to stop it by going to your bank, I get lots of reports that sometimes that does not happen and they say you have to go to the payment provider.

46:24Disputing it is far more difficult. It's not instant. It can be declined. It depends on the card scheme rules, not a statutory guarantee. With a direct debit, you switch bank. It's moved automatically for you. With a recurring payment, you will have to move it yourself. So it is always worth being aware. If you are making a payment and they're asking you for the card details, not your bank account details, you have far, far fewer protections than you do if you're paying with an actual direct debit. Got it. And I thank you very much, and I'll call you later to discuss the ethics of what you've just done to me.

47:00People, please feel free to get in touch and say, if a three-option multiple-choice mastermind, one of the options is correct, what is ethically wrong by having two false options in it, which is all I did. That's the definition. Only one can be correct, Adrian. That is true. But you threw a red herring in because, you know, it wouldn't make any difference whether or not you signed a direct debit agreement which you're not going to get sent anyway. Well you're not going to be sent one because it wasn't a direct debit it was a recurring payment so you'd never be sent one of course. Alright, I've got it.

47:31Love you really. May your cold last. May your luggie last 48 hours longer.

47:41I'm here with podcast producer Matt. I know we've had a lot of questions in on credit scores Matt so I want to try and get through as many as I can. Why don't you bash them out to me and let's see what we do. OK, let's go straight into it then, shall we? Jonathan, if you have no form of or need for credit, do you really need a score? Well, it's important to establish what credit is. I mean, obviously, there's the obvious things, credit cards, loans, mortgages, the overdrafts that people will think of. Those are all forms of credit, but equally a contract mobile phone and in some cases a monthly direct debit, gas and electricity bill would count as credit.

48:12Therefore, having decent credit worthiness is important. If you're saying, do I need a credit score, as in, do you need to go to a credit reference agencies to get a credit score? No, you don't. But is it worth managing the way that you operate your credit so that you have, when you apply to a lender, they look at you and think you are decently credit worthy? Well, yes, it is because you don't know what you'll want in the future. But it sounds like it's not too important for you, but it's still not something to mess up for the sake of carelessness. Lots of parents have been asking this for their kids, Martin.

48:39How do they build their credit score? Well, your credit worthiness, if you like. You're absolutely right. The two big reasons people get rejected based on their credit worthiness are that they've got a history that makes them look a bad credit citizen because, you know, they've missed payments or they've been late on payments in the past. or quite simply there isn't enough data on them. Credit scoring, what a company is trying to do is to predict your future behaviour based on your past behaviour. And if there is no data of your past behaviour, because they can't predict your future behaviour, they will often reject you.

49:14Not because they think that you'll behave badly, but because they can't work out how you are going to behave. So in both cases, both of having a bad credit history and of having no credit history, perversely the best thing to do is to get some borrowing and use it carefully and deliberately to start to build or rebuild a picture of yourself as a good credit citizen the problem of course the catch-22 is you need credit to get credit but how do you get credit when you don't have credit and the answer to that for most is specialist credit build or rebuild cards which are designed to do this. Now, these cards have hideous interest rates, 30, 40, 50 % annual interest.

49:57But provided you pay the card off in full every month, you don't breach your credit limit, you don't withdraw cash on it, you just use it for spending, then you can use them to improve your credit score. So you're going to be looking for, you could go onto an eligibility calculator. By the way, anytime you're doing any application for credit, use an eligibility calculator. That's tool, lots of comparison sites have them, where you put your details in, it does a soft search. A soft search is a search that goes on your credit file but doesn't impact lender's assessment of you, unlike an application, which is a hard search, and lots of hard searches in the short space of time can be negative for you.

50:36An eligibility calculator does a soft search, and then will tell you which, if you're doing it on a comparison site, which of the top cards are most likely to accept you. Now, in this case, I would suggest you go through a credit rebuild eligibility calculator, and there are quite a few out there to see what will accept you most. I'm just going to give you a couple of credit rebuild cards because these are the ones that also give you points on spending, so it's a little bit lucrative. But if you don't get these, just go for any and just make sure you're paying off in full each month. There's the Tesco Foundation card, which gives club card points.

51:08There's the Asda Money card, which gives Asda when you spend on it. So my recipe for what you do in this case is do 50 to 100 quid of normal spending on the card, repay in full each month, preferably by direct debit. That way there is no interest and by direct debit means you're not going to miss a repayment. And worth remembering, I've said this before, the reason I say repay in full, a thousand pound debt on a credit card, repay£1 ,000, no interest. A£1 ,000 debt on a credit card, repay£999.99, so you've only got one P remaining, you pay interest on the entire£1 ,000. You don't just pay interest on the penny, you pay interest on the entire£1 ,000.

51:48Then make sure you never miss a repayment, you never withdraw cash, you never bust your limit. After a year or so, if you've followed these rules and not messed up elsewhere, your credit worthiness should improve. Now, if you wanted to boost that, Once you've got your first card, after a couple of months, you could apply for a second rebuild card and again, put 50 to 100 quid a month of your normal spending. Not an excuse to spend any more on the card. The one caveat I'd give when I'm talking about young people, and it's often parents, I presume, who've been asking this for their youngsters. Look, credit cards are a bit like fire.

52:22Used well, it's a very useful tool. Used badly, it burns. So a lot of this is about understanding what you're doing. This is about a tool to follow a recipe to give you a specific outcome of building your credit worthiness. It should not be seen as free money. It should not be seen as an excuse to spend. If you have a young person who is not financially mature enough yet to be able to handle a credit card, then it's best just not to do it. This is only for those people who get that they're doing this for a specific purpose. It must be paid off in full. You're just putting a little bit of your spending.

52:57It is money that you will have to pay back. But that is the way to build or rebuild your score. But if you get it wrong, it will make things worse. So it has to be done very tightly to the recipe. OK, LC, why aren't rent payments reported to your credit file? It's a very big question and it's one many people ask me and I totally get it. Logically, if you're paying£1 ,500 a month in rent, that should help prove you could do the same with a£1 ,500 a month mortgage. But logic is only half the issue on this. The real issue is, is the data being collated and are lenders looking at that data when you apply?

53:33Now, the reason it isn't, and rent hasn't historically been on credit files, is rent is not a credit product. Therefore, and credit files are about credit products. It's only more recently that we've started to see these as a sort of a financial fairness type issue of am I being fairly treated? Because previously credit files were pretty much treated as something for lenders to decide whether they wanted to lend to you or not. Not for us to say, well, I have a right to be treated fairly within this world. But the way that consumer protections and regulations are changing with the consumer duty, I think, is giving a bit of force towards the idea that, hold on, If you're excluding my good payment of my rent when I'm applying for a mortgage, I don't believe you're fulfilling your consumer duty towards me.

54:15And I think that's why we're in an interesting time that these things are changing a little bit. Now, the first way you can get rent included on your credit file, and again, that doesn't guarantee that a lender will look at it, but it means they have access to the information, is if you have a big landlord. So it would normally be social housing or a big private landlord who owns over 500 properties. and they're a member of Experian's Rental Exchange Initiative, in which case paying your rent on time would be reported to Experian. It is worth noting, of course, that if you fail to pay your rent on time, that could have a big negative effect, just as paying it on time could have a big positive effect.

54:53If not, and you're with a smaller landlord, then there are things you can do for yourself. You can join Canopy, which reports rental payments to Experian for free, and Credit Ladder, which lets you choose one of the big three credit reference agencies to report to for free. So you could choose Credit Ladder to report to Equifax or TransUnion and that way totally for free you would have Experian and one of the other two of the three credit reference agencies having your rental data for free. Alternatively, you could pay Credit Ladder, it totals up at£6 a year,£5 a month and then it will automatically report your rental payments to all three credit reference agencies.

55:35Again, though, just to be really clear, if you're going to miss a rent payment or be late on a rent payment, be very careful if you're doing that because that could affect your credit file. OK, do you want one from Brian? Of course. He said he suffered, he was a victim of an online scam last year. He got all his money back, so that's good. But he noticed he had a CIFAS marker. I don't know what that means. Could you explain that? A CIFAS marker is basically a marker that there was a scam and there was something went wrong on his credit file. Ah, OK, so that's on his credit file. He said it makes money transfers very tricky because the banks are very cautious.

56:09It's been removed now. His score's gone up. But he'd like to know if being scammed and having this CFAS marker has a detrimental effect on his credit report. Yes and no. I mean, hopefully there's an explanation on there that you were scammed but you aren't. What it tends to do is it doesn't negatively affect applications but it slows the whole process up. That's the honest answer. But what it's doing is it's flagging to lenders to be extra careful to check that this is a real, not a fraudulent application. And that's why it slows everything up. So, I mean, you sort of do want it there because a scammer has hold of your details and something could happen again.

56:46But yes, it's frustrating. Final one from Lava. Too many credit cards wants to cancel two of them that they no longer use. They've replaced them with better rewards cards. I know cancelling cards affects one's credit score. Should I cancel one and then wait a certain period of time before cancelling the other? Or does it make a difference on my score if I do them at the same time? This is one of those aren't not science questions, because the truth is when you're cancelling credit cards or bank accounts, there are two different factors at play. Some lenders like to see evidence of longevity and score evidence of longevity as being good.

57:20But the fact that you have available credit that you're not using means you've got a lot of potential credit and some lenders see that as being bad. So the overall effect depends on an individual lender's wish list. And this goes back to my very initial point of don't get too wound up about small moves on your credit file because that's what that particular reference agency views it. But not all lenders view these type of small moves, these minutiae themselves. I'm going to answer a different way. What you don't want to do is do that cancelling a credit card just before you're about to make an important application.

57:54let's say a mortgage or a balance transfer. So if you are in a period now where you don't have any applications imminent for the next six months, I would just cancel both because spreading them out just means you've got a longer time period where either one could affect them. So while it might mean a slightly, on your indicative credit file, it might mean a slightly bigger hit in the short term, the fact is once it's done and dusted and then it all carries away, it'll be gone and it won't make a problem anyway. So my view would be do it at a good time and do them both at the same time to get rid of them when you know that you're not going to be applying for anything coming imminently.

58:30But that is I need to be really honest. That's an intuitive answer because there is no hard fact here. Now, earlier I talked about financial attractiveness. And as I say, there's no way to make you attractive to every lender out there, but there are some general tips that can rouge you up, buff you out and get everybody maybe to turn their eye to you just a little bit more. So let me run through them now. First, use consistent answers on every application. For example, your job title. Evidence of stability is good. So don't unnecessarily put a different variant of your job title or different bank details or mobile phone numbers down.

59:12Try and always use the same one. Obviously, if you change mobile number, then put the right new number. But it's about consistency, both for your credit score, but also so you don't fall foul of fraud scoring. Next, overpaying your mortgage may start to boost your credit worthiness. We're hearing this is something more lenders are going to factor in and it's inexperienced new credit scoring. So there is a push here that if someone's overpaying their mortgage, that could help to improve the way that different lenders look at them. Get on the electoral roll. If not, getting credit is tough as not being on the electoral roll can cause ID and tracing issues.

59:49So sign up to it. If you're worried about the junk mail, you can still opt out of the open register. that's the one that allows anyone to see your details and send junk mail to you, and be on the electoral roll. If you're a foreign national who can't get on the electoral roll, then you can write a note of that on your credit reference file, which will often help. Never miss or be late with repayments. It's an obvious one, but if you're the type of person who does that, then use a direct debit to be sure. You could just set up a direct debit to make the minimum repayment, say on a credit card, even if you plan to pay more off, and then you can call up and manually pay more off each month.

1:00:24But by setting up a direct debit to pay the minimum repayment, you know you're at least covered that you won't miss one. Buy Now Pay Later is increasingly appearing on credit reports. Klarna and Zilch now do report to credit reference agencies as part of responsible lending criteria. And from July 2026, when regulation starts, all Buy Now Pay Later firms will likely have to. It isn't yet being fed into the credit scores you get from credit reference agencies. but some lenders are looking at it. And while Buy Now Pay Later does not feel like a debt, it is. So the same rules apply. Pay it off on time and it can help you get other credit.

1:01:02Miss payments and it can hurt. Though overly regular use of BNPL, if you're just doing it time and time again, will be scored as a danger signal, so beware. And it's scored as a danger signal because it is dangerous. Be very careful doing it. Do not withdraw cash on credit cards. It's expensive and evidence of poor money management. especially if you do it regularly. It's something that lenders are really hot on. Though if you're only doing it when you go abroad because you've got a specialist overseas card I wouldn't worry too much. Time it right. Major problems like county court judgments, defaults and bankruptcies stay on your file for six years though the impact diminishes after time.

1:01:37Applications for products stay on for one year. So if something is soon about to lapse you might want to wait a day or two before you apply because that thing will poof have disappeared. And finally don't do little applications just before a big one. Too many applications too quickly can be negative, so space them out and prioritise. For example, if you're soon applying for a mortgage, don't apply for a cashback credit card or a new bank account in the days running up to it. Apply for the mortgage once you've got that, then apply for the cashback credit card or the new bank account. So those are all my little tips to help you appear more attractive when a lender looks at you.

1:02:13How you doing? And that is it for this week. If you've enjoyed it, please tell your friends you've been listening to the Martin Lewis podcast and why not suggest they do too and then you can subscribe, they can subscribe and you can be subscription buddies all together. And if you're worried about it, don't worry. There are no recurring payments involved nor direct debits. Adrian doesn't have to get his knickers in a twist. But your pockets may well just be pleased with you. We tend to put out a new episode every Thursday and now on Mondays too in the form of our new Question Time podcast where you can ask me absolutely anything and everything within reason.

1:02:49Just send an email to martinlewispodcast at bbc.co.uk. Look forward to hearing from you. I got meals. I got to pay. So I'm going to work for a while and never let. I got a mouth. I got a fee. So I'm going to make sure everybody eats. Martin Lewis is the founder of MoneySavingExpert.com. But of course, other consumer and price comparison websites are available. You can get in touch with Martin's podcast production team by emailing martinlewispodcast at bbc.co.uk. The offers and rates mentioned in the podcast are correct at the time of recording. However, if you are listening on demand, it's worth double-checking as details can date.

1:03:32Remember to subscribe on BBC Sounds and leave us a review however you listen.

1:03:40you