Hey Everyone, welcome back to the blog, and welcome to the first of many of these kind of posts over the next 12 – 18 months
Today we’re gonna be talking about something that I imagine not a lot of people speak about, in fact I imagine not a lot of people even check theirs, but today we are talking about credit scores, and mine in particular
To start off we need to understand what a credit score is, this definition from HSBC explains it simply
“Your credit score is a three-digit number that indicates how reliable you are at borrowing and repaying money. A good score can help you get approved for credit cards, loans and mortgages, while a bad score can stop you getting approved.”
Plain and simply, the higher your score, the more likely you are to receive credit, or a credit based product for instance a credit card, loan or even a mortgage
One thing to remember with credit scores is that each company that shows yours are scoring them slightly different, so on ClearScore your credit score is out of 700, but on Experian it’s out of 999
For the purpose of keeping the blog consistant over the coming months, we’ll be using clear score, although I do usually check a few different sources to compare and get a bigger picture
Now I’ve done a little post or 2 before with my credit score, but this is where it gets serious, of course the plan and expectation is that over the next 12-18 months my score will improve, though I imagine at times it will dip!
But mainly we’ll be looking for it to rise consistently, and as our debt reduces our score should improve!
So what’s the starting point?
This months report is a score of 209, with 15 days before my next report, though you’ll see that next month
The above image is taken from the clear score site, and is an indication of that each score means!
So at present we are sat in the “Very Poor” section with a rather low score of 209, this is 211 away from a minimal good, and 257 from excellent
For me I am looking to get to the stage where my score is of the average person in the Uk which according to clear score is 414, that’s an increase needed of 215 points!
Why is my score “Very Poor”?
It’s good to understand why my score is so poor, although for me that is glaringly obvious, for you guys maybe not so much
My credit score has never been that of a great level, and throughout my life I have borrowed money via multiple sources including payday loans, credit cards, and family
But the journey is to now get debt free and have something to show for my money, which will be the end goal of a house
Above all r can see that over the past 6 1/2 years the amount of Red (missed payments) on a monthly basis is very high
This is something that going forward we will look to put right, we’ll be looking to set up direct debits, move payment & make sure the payment are made on time and without any delay or issue
As we can see towards the back end of 2019 / early part of 2020 I have been looking to do this, however the whole of 2018 & part of 2019 was all red!
It’s now about bringing this back to black, and creating good money habits going forward
Let’s have a look at the current situation of some of the debt that I’m looking to clear over the coming months of the journey
1st up we have credit card debt, this I will be looking to pay off ASAP, it’s around £350, but I have seen on many occasion you should only be using I think around 50% of your credit, I’m currently at 99%
I’ll be hoping to have my cards paid off first, then will look to switch up my usage by only paying for petrol on them before paying off at end of the month
We then have then have the loans, this is mainly made up of my car finance, In fact to illustrate my credit
The whole of this loan, £14,521 is for my car! A 13 plate, which I bought at the time for around £7900! That’s £6,621 i will have paid over the lifetime of my loan in interest! Which when looking at it is shocking
I can give the advise that I would never get something so expensive again on finance if it was on such a bad deal / bad credit!
This has been a 5 year loan at around £250 a month! And is still going to be running for the next 18 months whilst on this journey to being debt free
There we have it! Some crazy figures, and a new goal set for the journey
Achieve a credit score of 414 over the next 18 months before December 31st 2021
Hopefully next month we will have improved, but certainly if not, the following months will be better and we will be on the right track
For now, I appreciate everyone making it this far, have a great day, stay safe, stay positive and I’ll catch you all on the next blog