But then that person should not give priority to their credit score more than the basics of keeping the family fed, a roof over your head or electricity bill paid, there is a danger of people put their rating of risk of accident.
Given the credit ratings to determine what interest rate you are offered on loans to know if you are accepted for some jobs, it is something that people need to keep on top of.
Therefore, to ensure that you do not accidentally block yourself from a mortgage of five years because of something that you do now, Mirror Money has teamed up with the digital service of financial advice OpenMoney to make sure that you have all the information you need to make the best choices you can.
Mortgage, credit and insurance vacation
Banks, building societies, providers of cards and more have been said to offer a difficult British payment of public holidays during the outbreak of coronavirus.
This means that you will not be required to make payments for a set period of time, and they can’t put a black mark on your credit report if you take advantage of them.
But extreme caution should be applied.
There are two reasons for this, first of all, a interest yet to be built, while the suspension of payments, so that you are effectively adding to your bill, and on the other hand, there’s a chance, a mistake will be made.
If you do not apply correctly, the missed payment will be recorded as a black mark on your credit score – something that will take 6 years to clear – and there is a chance that your lender can be wrong also.
Tesco Bank has already recognized misadventures where the holidays have been wrongly perceived as a missed payment if the application process has been delayed. It is up to them to get it removed, but things could be tricky if, later, you did not notice, at the time, and need it fixed in a hurry to qualift for a product.
“In order to avoid negative consequences, make sure that you have explored all the other sensible options before making the commitment. Take it seriously and make sure that you are timely in completing the application form, ” Open Money said.
“Make sure you get a written confirmation of the arrangement, the monitor of your credit report and report any errors, such as a default, as soon as possible. “
The overuse of credit cards
The numbers of radical change debt charity show that during the lock-British built £6billion additional borrowing through 4.6 million households.
It is understandable with income reduced, sometimes to nothing, and the bills continue to arrive on the mat and in the mailbox.
Many banks have also said they will extend the credit limits of borrowers in distress to help them to cope.
But just because your credit card has a limit, it does not mean that the expenditure until it is the consequence-free.
Everything you need to know about credit reports
Quite apart from the real prospect of having to repay the money – plus interest-how much of your available credit that you use is a factor in your credit score.
To get a perfect score, you should not use more than 30% of the available credit on a single account. The closer you get to the limit, the less likely it is that someone else will offer you a good deal.
And even getting an extension of your credit limit “just in case” could prove to be a problem.
Lenders also look at “total available credit” when you take into account the degree of risk that you are with people with more credit, in total, considered the worst to offer new deals for those with less.
The under-use of your credit card
People who have never been in debt or a credit card have worse credit scores than those who have them and use them in a responsible manner.
This is because, without evidence, to act responsibly when on the check, the lenders are reluctant to offer a line of credit.
That means the use of the pandemic is a sufficient reason to stop all of the loans and cut up your cards could in fact harm your credit score in the long term.
“If you have a regular income, it is a good idea to keep spending small amounts on credit, such as your weekly shopping, and paying it off immediately with the money in your current account,” Open Money said.
“By continuing to use your credit card shows an ability to navigate finances during this financially uncertain time, and it could also be you have the money to pay off immediately.
“But only ever pass on the credit you cash, and make sure that you know your limits before you spend. “
Missing bill payments
Banks, energy companies, mortgagees, insurers and others have been working to help people in financial difficulty as a result of the Covid-19 epidemic.
Except that we are not only in financial difficulties.
Combining homeschooling with working from home at the top of the general, the stress of an unprecedented situation means that things are getting on top of people.
But if you have an error and miss a bill payment, the consequences are long-lasting.
“If you miss a payment, it is important to act as soon as possible, as this can put a bad dent in your credit score,” Open Money said.
“If you are unable to pay the full amount, make sure that you cover at least the minimum payment, and don’t forget that the longer you leave it, the more you need to increases.
“If you are able to pay the full amount and just missed the payment, pay the amount and call your supplier to query the cost of delay. You could have them removed, but they are well within their rights to say no. “