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00:00The UK's biggest credit reference agency, Experian, is about to tell millions of its customers their credit scores will drop.
00:23If that's you, what does it mean in practice? Credit scoring is shrouded by grey mist.
00:29Tonight, I want to blow them away.
00:32I want to show you the truth of how it really works, what you need to do, and I will finish with my crucial key tips to boost your acceptance odds.
00:42Now, this isn't just about the obvious mortgages and credit cards and loans, where credit scoring can even impact the rate you get.
00:50Credit checks may affect things you pay ahead for too, like mobile phone contracts and sometimes energy direct debit tariffs.
01:00Then, in my news you can use, new figures out show 1.1 million graduates have paid more student loan back than they should have done in just the last tax year.
01:11I will show you how to reclaim hundreds or thousands of pounds of it.
01:16And British savings bonds are about to get better, half-priced Christmas trees, a Ryanair warning and cheap theatre tickets.
01:22Now, to our own showstopper, Jeanette Kwachi, everybody.
01:26Thank you very much.
01:29I am your leading lady.
01:30I am happy to be back, but we want to hear from you, so please do send us your questions on X or on threads.
01:36Use the hashtag MartinLewis.
01:38Or you can email the team, MartinLewis at ITV.com.
01:41If we don't use your question tonight, we may use it in a future show.
01:45And a huge welcome, as always, to our studio audience.
01:47Wave your wallet, everybody!
01:49We love that.
01:50You're amazing.
01:51That's right.
01:52So, Martin, we had an enormous response to your call-out last week, saying that people could leave O2 because it's hiking its price hike, if you like.
02:00Just wanted to show you a few messages.
02:02This is coming from Nicola.
02:03She's ditched and she's switched.
02:04She says,
02:05I saw your O2 increase information this week, requested my PAC code and switched to a new provider.
02:10I got a great offer for three months, pocketed a saving with £38, £25 a month, £459 a year.
02:17Wow.
02:18New sim, up and running, O2 boycott.
02:20So, if you watched last week, you'll know I got on my soapbox about this.
02:24O2 put up the price hike it had previously said when people signed up it would give them, so it was a price hike on the price hike mid-contract.
02:31Crucially, if you get that notification, you've got 30 days in which you can leave.
02:36And then you might be able to go and save a lot of money.
02:38And I'm encouraging people to do so because we want it to cost O2 in the pockets so that it never behaves like this again.
02:45And other companies think we don't want to do that either.
02:48Yeah.
02:49Sean, he's taking your advice here.
02:50And Sean has haggled.
02:51He said,
02:52Now, this is the interesting one because when I told people their rights last week, normally when you're at the end of the contract you can use that as an opportunity to haggle, benchmark the best deal elsewhere, take it to your firm.
03:15But because this is a unique experience, this 30-day notification that you can leave, I wasn't 100% sure it would work with O2 like it would at the end of the contract.
03:24So I asked people to try.
03:25Sean is a success.
03:26And frankly, I've had hundreds of other people who've taken this opportunity to go to O2 and say, I will leave you unless you give me a better deal.
03:32And they've got better deals.
03:33So that's working.
03:34Fabulous.
03:35Right.
03:36Now, there is a question though.
03:37It's coming from Shirley.
03:38It's a follow-up question.
03:39She said,
03:40I've seen your item on O2.
03:41I just asked for a PAC code and they've come back saying I need to pay the device off in full.
03:45Is that correct?
03:46It's very interesting.
03:48So PAC code is a porting authorization code that you get when you're changing mobile phone number.
03:52Listen.
03:53I've seen some of those messages.
03:55And what actually says it, it does say you need to pay this off in full.
03:58But I think that is a terrible piece of phrasing by O2.
04:02I'm going to hope it's accidental and not deliberate.
04:05Certainly something the regulator should look at.
04:07What that means is you're still going to have to pay your handset.
04:11It doesn't mean you have to pay all of your handset now.
04:14You were paying it by the month and you can continue to pay it by the month,
04:17but you'll have to pay everything that they owe them on the same plan.
04:20But when they say pay it off in full, it sounds like you have to give them the money now, doesn't it?
04:23It's poor communication, bad phrasing.
04:26I hope it hasn't deliberately been done to put people off switching.
04:29If it has, that's something the regulator should look at.
04:31You can leave O2's airtime plan and keep paying your handset costs by the month,
04:36just as you were doing before.
04:37You're free to leave, Shirley.
04:38OK, hopefully that helps, Shirley.
04:40Now, I know we're going to get into credit scoring in the show later.
04:42We are.
04:43The meat of the show.
04:44Something I wanted to ask you first, though, is a question that's coming from Amy O.
04:48Oh, there it is.
04:49There it is.
04:50I've heard there's a way you can claim back a student loan which you may have overpaid on.
04:54How do I do this and how do I know if this applies to me?
04:57Absolutely.
04:58We've just got brand new figures out on this from the student loans company,
05:01so I'm going to do the first part of my news you can use now.
05:04OK, so the new figures say 1.1 million university leavers and graduates have overpaid their student loans in the 24-25 tax year.
05:15And that adds to at least 4 million people from figures and requests that we've given them for information in the past.
05:20So there could be 5 million of you out there who are owed money.
05:24There are four reasons, but the first reason is the big reason.
05:29It's when you repaid your loan but you didn't earn enough to need to repay it.
05:34Over a million people in the last tax year did this.
05:36Now, the rules state absolutely plainly you only need to repay the student loan if you earn over the annual threshold in a tax year.
05:44What your annual threshold is depends which plan you're on.
05:48So we'll hold on this graphic so you can read your graphic as I go through.
05:52I'm going to focus on Plan 2 loans because that's the one with by far the most people on.
05:57England starters, it's when you started university and where you were resident, 2012 to 2022, and wealth starters from 2012 onwards.
06:04Your repayment threshold is £28,470 a year.
06:08You repay 9% of everything you earn over that in a year.
06:11That's how it works.
06:13But PAYE, payroll, it takes the money based on your monthly earnings.
06:20So, £28,470 a year is equivalent to £2,372 a month.
06:25You repay 9% of everything you earn above that a month.
06:27Let me give you an example and you'll see why so many have overpaid this.
06:31Here we go.
06:32So, there's the monthly repayment threshold.
06:35Let's imagine maybe you've just started after university and it's the next year or two.
06:39You've had a few months off.
06:40You didn't work in April.
06:41You didn't work in May.
06:42You didn't work in June.
06:44Then you've got yourself a job paying £36,000 a year.
06:47£3,000 a month.
06:48Done, because it's easy maths.
06:50In each of those months, you have to repay 9% of everything above the monthly threshold.
06:57Which is about a repayment of £56 a month each month for the remaining nine months.
07:03You understand why?
07:04OK.
07:05But, now look at this.
07:07Your total tax year earnings were £27,000.
07:12The annual threshold is £28,470.
07:17You earned less than the threshold.
07:20You don't have to repay your student loan.
07:22Here are the payments that you made.
07:24£508.
07:25You can reclaim the £508.
07:28So, this is big for many people.
07:31Who does it tend to most commonly affect?
07:33Well, it's those who only worked for part of the year.
07:36Those who are on commission, or those who are on variable incomes.
07:39If your income is going up and down, and you didn't turn over that amount in the tax work,
07:43you are able to reclaim.
07:45You use SLC Refund Request Form at gov.uk,
07:48or you can do it in your student loan company repayment app.
07:51You can do it for every year, except the current tax year,
07:54because the current tax year, you'll have to wait till it finishes.
07:57So, for every year before that, you can go and reclaim your money.
08:00Yes, Jeanette?
08:01Just before you move on, we've got a success story on this one,
08:03and it's a big one.
08:04Have a look at this.
08:05Danielle lives in Loughborough with her husband and two kids.
08:10Being a maths teacher was the career that I always wanted.
08:14I needed to take a student loan to pay for it.
08:16After my initial £16,000, I borrowed.
08:19I also had to borrow another £9,000 to pay for my teacher training.
08:23I've watched the Martin Lewis show for almost seven years now.
08:27There was one show back in November.
08:29Martin mentioned there's over a million students that have overpaid their student loan.
08:33Is that me? Have I overpaid?
08:35He gave numerous reasons.
08:36The one that stood out to me was gaps in employment.
08:39In the last few years, I have had to give up my job when I had my eldest child.
08:43He was born with a brain condition and requires a lot of care.
08:46Once Martin shared that you could possibly have overpaid your student loan, I acted instantly.
08:52It was as simple as log on to your student finance, click manage your statements and click request refund.
08:59Within 48 hours of my application, I was told I got a refund of £2,213.
09:05It was a pinch-free moment.
09:07I was seven months pregnant.
09:08I'm not working.
09:09I don't get an income.
09:10Having that money was really helpful.
09:12I'm so glad I went through the process.
09:14Yes!
09:17Thank you so much for doing that film.
09:19So look, she said a million people have overpaid.
09:22That was the previous tax year.
09:23This is an annual figure and it's still a million people overpaying each year,
09:26which is why it's a clarion call for me that if you are a graduate or university leaver
09:31who's paying your student loan to cheque, you haven't overpaid.
09:33OK.
09:34Now, just before I move on, because we came in, there is one thing.
09:37This is a technicality and people ask me about this.
09:39It's a bit complex.
09:41If you overpaid in some months but earned over the annual threshold, you cannot reclaim.
09:46So this is a negative.
09:47Let me explain that to you.
09:49So here's a scenario.
09:50Someone who earns £24,000 a year, normally standard salary, so £2,000 a month below the threshold.
09:56We'll stick with Plan 2 again as an example here, but obviously from different plans, the numbers are different.
10:00But then got a £5,000 bonus in December.
10:03So they've got a £5,000 bonus.
10:05Let's have a look.
10:06First of all, their total tax year earnings are £29,000 above the threshold, therefore.
10:13So they repaid 9% in this month of everything above £2,372.
10:20They repaid 400, just over £400.
10:23Now, what you might think is, hold on, they're only £500 above the annual threshold.
10:28They should be paying 9% of that, about £45.
10:31But no, it's done by the month.
10:33They've repaid £400 of their student loan, even though they're only just above the threshold.
10:38And this is complicated, but effectively the rule is this.
10:41You repay your student loan by the month through PAYE, and that is correct, unless your total annual earnings are below the threshold, and then you don't have to repay.
10:53If you think it seems unfair, that's because it's unfair, but that's the way the system works.
10:57Jeanette?
10:58Absolutely.
10:59I mean, I understood it, but you can move on.
11:02They're small.
11:03OK, good.
11:04You got it.
11:05Right, I've got more for you.
11:06Yes, you're right.
11:07Other reasons.
11:08Let's scroll up.
11:09There we go.
11:10I'll do these ones quickly.
11:11Reason to all much smaller, all in the tens of thousands, not over a million here.
11:13Wrong student loan repayment plan.
11:14If your employer doesn't know which plan you're on, it has to default to Plan 1, which is repayments above £26,000.
11:19But the biggest plan, Plan 2, and all the Scottish plans, Plan 4, the repayment threshold is higher.
11:24So you shouldn't be repaying as much.
11:25You should only be repaying above this amount, but you're repaying above that amount.
11:28If that's you, call the student loan company here for a refund.
11:31You can't do it online.
11:32Also, go and talk to your employer's payroll department and say, actually, this is my plan.
11:36Please change my setup so I'm paying on the right plan.
11:39Reason three.
11:40You started repaying the loan too early.
11:42Nearly £40,000 here.
11:44This is the rule.
11:45You only, regardless of what you earn, you only have to start qualifying to repay the student loan in the April after you leave university.
11:52For most graduates, that's nine months after they graduate, so you'd leave in the July the following April.
11:57But if your employer has the wrong details, it can take the money too soon.
12:00If that happens, you can get the money back by calling SLC for a refund.
12:04Good to have your pay slips if you're doing that one.
12:06And the final reason, often get asked about this, is money is deducted after you've fully cleared the loan.
12:12So once you've paid off everything that you owe.
12:15Nearly 60,000 people last year.
12:17The loan's normally wiped after 30 years.
12:19It depends on the plan.
12:20Every plan is different, so you can look that up online.
12:23But the student loan company takes time to notify PAYE, so they don't always stop it on time.
12:28If that happens, you don't need to reclaim, you will be paid back automatically.
12:31My top tip, though, within the last two years of repaying your student loan, you can go online at student loan company and ask to set up a direct debit.
12:41So you pay it by direct debit, not through the payroll, and then you only pay the exact amount that you owed.
12:46And that is where we're finishing, I think, on student loans.
12:49One more.
12:50I know.
12:51I'm so sorry.
12:52There's one more question.
12:53Oh, go on.
12:54It's coming from...
12:55I'm sorry.
12:56It's coming from Amy.
12:57Amy says, I recently received a student loan refund of £1,601 overpaid.
13:01A proportion of that will have paid off interest.
13:04When I claim the refund, won't the amount just be added to my student loan?
13:07Absolutely.
13:08Very important question.
13:09Yes, 100%.
13:11If you've overpaid and you get the money back, then your student loan account, you will owe more.
13:16Now, what you may be thinking is, hold on.
13:18Doesn't he normally say it's best to overpay loans because then you pay less interest?
13:22The quicker you pay a loan, the better.
13:23You are right on normal loans.
13:25Student loans are not normal loans.
13:29For example, those on those Plan 2 loans, the biggest one being repaid off at the moment,
13:34the stats show only around one in three people will clear what they borrowed plus interest in the 30 years before it wipes.
13:42Most people will just pay 9% of what they earn above the threshold for 30 years.
13:47So, if you've overpaid and you take the money and you're one of those two thirds of people lower to middle earners,
13:54well, you're still going to repay 9% of everything you earn over the threshold for the next 30 years.
13:59So, taking that money back is not going to cost you any more in future.
14:01The money in your pocket is better in your pocket.
14:03Now, with other plans, you are more likely to clear earlier because the loan amount is lower and the interest rate is lower.
14:10But what I would still say then is if you need the money, say, to clear expensive debts or to reduce your mortgage borrowing,
14:16on the other plans, the interest rate is only 3.2% and student loans have better terms than any other form of borrowing.
14:23You only repair it if you're earning enough and it's going to wipe at some point.
14:26So, in that case, you may still be better to take the money, have it in your pocket so you can use it so you don't have other more expensive debts.
14:33But especially those on the Plan 2 loans, the majority of people are better to take the money rather than just to reduce a loan
14:39that won't necessarily mean they pay any less in the future anyway.
14:42OK, now...
14:43Do you understand that? Because it's really complex.
14:45OK, I promise you're done now with that, I promise.
14:48Well, you can get in touch. Let us know about your student loan situation.
14:51Does this affect you? Always use that hashtag, Martin Lewis.
14:54But coming next, credit scoring. How does it work?
14:57And what is Experian about to do? We'll see you in four.
15:00Welcome back. We're live. We're going to be talking about credit scoring in a moment.
15:14But just before that, we're getting lots of reports that the student loan company website and app is struggling a bit,
15:19likely because of lots of demand. It's always what we do on this show.
15:22So, be a bit patient, maybe check it in half an hour or an hour or so and it should be easier.
15:26It should be. There's lots coming in over the break.
15:28I'm going to sort it all out and come back to it.
15:30But let's go to Jo in the studio. Jo, you've got a question for Martin.
15:33Hi, Martin. Hi. Hi.
15:35Yeah, I've heard that the credit agencies are changing the rules,
15:39but I don't understand how they actually work in the first place.
15:42Could you explain? I can.
15:44And they're not changing the rules, they're changing the score.
15:47Ah. And the first thing you all need to understand is the difference between your credit score
15:51and the credit scoring process. Don't worry, I'm going to explain in my big briefing.
15:58OK. The truth about credit scoring. The most important thing you all need to understand.
16:04You do not have a credit rating. You do not have a credit score in the UK.
16:10There is no single number that dictates acceptability.
16:15Each lender, when you apply, scores you differently based on its own individual profitability wishlist.
16:24Profitability, not risk. Why do I say profitability?
16:27Well, in many cases it is. Are you a good or bad risk?
16:30But it may be a company that is trying to target people who are at poor risk
16:33so it can charge them more, and for them, poor risk are profitable customers.
16:37So it's a profitability wishlist, not a risk wishlist.
16:41That's the point.
16:42Nope.
16:43Yeah.
16:44I was expecting that, because this is what everyone says to me.
16:47But that's nonsense, Martin, because I have paid for my credit score,
16:50I know what my credit score is, I monitor my credit score very carefully,
16:53and I do have a credit score.
16:55Is that what you were thinking?
16:57Yes.
16:58OK.
16:59Let me explain.
17:00Here you go.
17:01The big credit reference agencies, there are three of them,
17:04they will show you a credit score, capitalised, because that is your credit score,
17:08not the credit scoring process.
17:10But they are just their illustration of how a typical lender may view you.
17:17They are not used by lenders.
17:20Now, just to prove my point, TransUnion is out of 710.
17:24Equifax is out of 1,000.
17:27Experian is out of 999, but that's about to change, so it's out of 1,250.
17:32The fact they're all different tells you something.
17:34Just before I go on, let's explore that Experian change for a moment.
17:38Here's what's happening.
17:39It's rolling out new scores from mid-November till the end of the year.
17:42Some of you will have had notifications today on this particular one.
17:4544% of you will see your band drop.
17:48It might drop from excellent to very good.
17:5042% will get a higher score.
17:51Some may be in a higher band.
17:54But crucially, this shouldn't change anything.
17:57Why?
17:58Because this is just their illustration of how a typical lender views you.
18:03The underlying data is what the lenders use.
18:07Your underlying data hasn't changed.
18:10Therefore, your acceptance by lenders won't change.
18:14We are too hung up on this.
18:16Now, we have a man from Experian here, John Webb.
18:19Thank you for joining us.
18:20John, why are you doing this?
18:21So, what we've done is, as you've explained there, lenders are looking at the data on credit reports.
18:26We've added in more data into our credit score.
18:29Things like overpaying a mortgage, reducing your overdraft, taking cash from a credit card.
18:36These are the things that lenders are now looking at.
18:39We've included them into credit scores so we can give people the most accurate view
18:43of how a lender will view their credit report information when they apply.
18:47How a typical lender, but every lender, does it differently.
18:49Why 1250, though? Why have you increased the number?
18:52I don't get that. I've heard your explanations. I still don't get it.
18:55So, we did consider staying at the same score, but actually, the number one thing people tell us
19:00is that they want more information about how their credit score is calculated.
19:04By moving to the new range of up to 1250, it allows us to give people more detail
19:10than they've ever seen before about how their score is calculated
19:13and, more importantly, how to improve it, because, typically,
19:15higher credit scores mean access to more affordable credit, better rates, better limits.
19:19You're obviously a cleverer man than me, because I can't see how doing it out of 999,
19:22creating it to an arbitrary figure of 1250, when you could just proportion it,
19:25makes any difference. But, hey, we'll move on.
19:27So, let me move on a little bit. Here we go.
19:30The biggest single thing you need to understand about credit scoring is the biggest piece of information they missed.
19:35The biggest thing that lenders look at is on your application form. It's your income.
19:40Lenders also do affordability scoring. That isn't in your credit score.
19:44Think about it. You've got the best credit score in the world. It's been brilliant.
19:47You've just lost your job. You've got no income. You can't afford to repay what you want to borrow.
19:52They are not going to lend to you. Credit scoring is not the end of the story at all.
19:57So, my big message to you... Now, people get in touch with me and say,
20:00my credit score's just moved by seven points. What should I do?
20:03Don't sweat small moves in your credit score. It's just their illustration.
20:07But do sweat big ones that last longer, because that's likely an indication
20:13there's something more systemic going wrong in your file.
20:16Kevin has emailed you just on this. Have a look at this.
20:19My energy supply did a hard search on my credit report,
20:22but I decided to switch instead of after getting a better deal within the cooling-off period.
20:27Does this affect my credit score? Seems to have dropped a little. And what can I do?
20:31Well, yeah, it does affect your credit score, but who cares?
20:34Would be my honest answer. I've got more detail on that, though,
20:37because this is what you need to consider. So, we'll just break it down.
20:40What you've got there is a new credit account or an application
20:44or maybe a cash withdrawal on a credit card. What happens then?
20:48You'll get a small score dip, but it'll only last for up to about three months.
20:51And then it'll go back to normal. It'll bounce back. Don't worry.
20:54I mean, listen, it always depends on circumstance, but this is sort of guidance. Scale of magnitude.
20:59If you've been applying for lots of accounts in a short space of time,
21:02that is a more significant problem. You'll see a bigger drop in your score.
21:06It'll probably start reducing after three months,
21:08and then it should be gone after six months as long as you don't do any more.
21:12If you've missed a payment, we're starting to get onto this side now is the real problem side.
21:17You'll have a much bigger drop. It'll often go on for six months after it has been fixed.
21:22So, you have to make sure you make the payment, and it's only improved if you're paying on time afterwards,
21:26or it could be even worse. Now, if you have an arrea where you are owing money to a lender,
21:32that is significantly damaging. It can take two years to recover from,
21:35and only if you manage to make it up to then. And then the really bad stuff,
21:39the stuff that is going to cause you problems with all lenders,
21:42if you have a default, a county court judgment and insolvency.
21:47Bankruptcy. IVA equivalent. It is very significantly damaging.
21:51It can impact your score for up to six years or possibly longer.
21:54Now, I'm talking here about the credit score that the credit reference agencies give you,
21:58but that is roughly symbolic of the way that most lenders would think too.
22:02So, it's both the impact and the time span of the impact that matters.
22:06In the case of that question, they've gone in a few months.
22:08OK. How about this one from Sandra? She's asking,
22:11My son has a phone contract in my name. He recently had a late payment on the account,
22:16which is showing on my credit report. Do you have any advice?
22:19Well, just being... I need to make this blunt, and I don't mean to be rude, Sandra.
22:24You have a phone contract you're letting your son use.
22:27Therefore, the debt is yours. It's on your credit file of yours.
22:31Whatever your relationship between the son.
22:33When you give somebody else money in your name, it's you that owe it.
22:36The first thing you need to do is make sure you're paid and pay on time in future.
22:42There's very little you're going to be able to do about it.
22:44The truth is, it's representing a real thing that's happened.
22:47It hasn't been paid. That's gone onto your credit file.
22:50It will have a negative effect. That's what credit scoring is all about.
22:53So you need to just protect yourself in future.
22:55We can't tidy up things that are real.
22:57We can learn how to correct errors that shouldn't be on your file.
23:00Let's just ask John, anything else you can think of that I've not said?
23:02No, it's exactly right. It's her account, her contract.
23:06So actually, she's responsible for paying it or showing up on her file.
23:09Bring it up to date as soon as possible and keep paying on time.
23:12And like you said, it will improve.
23:13It will improve. Within six months, it will start to get better.
23:15In two years, it should mostly be gone.
23:17But let me get on to the most important thing you need to do when it comes to credit.
23:23It's not your credit score. It's your credit file, also called your credit report.
23:27You should check your file at least annually and definitely before any major application you're going to make.
23:33Because if there's an error that stops you getting one, you've got too many applications on your file and you can start to go into a vicious circle.
23:38So your credit file will list key information, the products you have, whether you've paid on time,
23:43or any county court judgements against you, the electoral roll information.
23:46I want you to go through this line by line. Be a pedant. Be pedantic and I will give you a tick.
23:53Because even a small address error on an open account could block you in fraud scoring. Line by line.
24:03Now, for a general check, I would just do one agency.
24:06But if you're about to do a big application by that, I really mean a mortgage.
24:09I would check all three agencies because you don't know which one they're using.
24:12And one, if there is an error, they will pass it on to the others. It's safer to do it that way.
24:15You can see your files for free. You can use the statutory credit reports, which tend to be a bit slower, or these ways are a bit quicker.
24:21For Equifax, Equifax Basic or ClearScore will give you a free report.
24:25For Experian, go to the free Experian app, relatively new that.
24:28For TransUnion, loads of bank websites and many credit help apps will also give you a TransUnion report.
24:35Big warning, though. Loads of them will try and sign you up to this.
24:38£15 a month credit monitoring service. Everything you need.
24:41You don't need that to see your credit report, and it's your credit report that really matters.
24:44So don't accidentally sign up for that if you don't need to.
24:47Final thought. We've been talking about student loans already.
24:49Student loan company loans do not go on your credit file.
24:54That isn't to say they can't affect your applications, but they don't affect it as debt.
25:00What they effectively do is they reduce your disposable income if you're paying off, if you're above that threshold and you're paying off the 9%.
25:06So it's a bit like you earn less, and that can still lead to rejections or getting worse products.
25:11But it's not because it's a debt on your credit file. It's just because you have lower disposable income, if that makes sense.
25:16Absolutely. We've got a virtual wall this evening. Jane is here. Jane, you've got a question for Martin. Good evening, Jane.
25:23Hi, Martin. My question is, he used to have a good credit rating of about 750.
25:32After we manually underpaid by 55p, one bank loan instalment, the bank then incorrectly reported to the credit reference agency that we had missed six hold payments.
25:47Didn't find this out until earlier on this year when I had to check his credit file for something.
25:53We contacted the bank. The bank admitted they've made an error. They've corrected the file now, but it's not really improved his credit score.
26:01It's gone from 277, which is what it dropped to now, to 377.
26:06And you are absolutely sure that they have corrected it on the credit file, that that information is right, and it's the same credit file that is of the report that you're looking at?
26:15Yeah. Well, that's a tough one. Luckily, I've got John here. John.
26:19Thank you. That is a tough one.
26:21So, yeah, my first instinct would be to say, check all credit reports with the three credit reference agencies, make sure it's correct.
26:28It sounds a bit like they maybe haven't updated the credit reference agencies with the right information.
26:34But if that's the case, if it is correct, there might be other factors that are influencing the credit score.
26:41So, go through your credit report, have a look, see if there's something else that's impacting.
26:45How recently was this? How recent was it?
26:47Right. So, we found out in September, contacted the bank. The bank admitted their mistake.
26:53It met... I think... I think this could literally... Sorry, they're telling me to go to break.
26:56I think this could literally be that they've just not updated it in time. Keep monitoring over the next month to six weeks.
27:02If it hasn't worked, you apply to have a notification on your file, a notice of correction put on your file,
27:08where you write that this was a mistake and hasn't really happened.
27:11You write back to the bank and you put in a dispute with the credit reference agency that something is going wrong and you want it fixed.
27:17And you absolutely have a right to do that.
27:19But I suspect some just don't update that quickly and it's probably just an updating issue and it will fix itself.
27:24It should fix itself, shouldn't it? Yeah, they update every month.
27:26Go to break, go to break, go to break. Thank you very much.
27:30OK. Well, coming up, we're going to be talking about what actually happens when you apply for Credit Plus.
27:36Martin, you're taking us to your credit pub. Credit pub?
27:39My credit pub indeed. You will find out more. I'll have some water.
27:41OK, we'll see you after this.
27:55Welcome back to our credit scoring special.
27:57We've got this question that's coming from Lainey just for you, Martin.
28:00I have a clear score, credit score of 1,000, but I can't get a 0% balance transfer card to help me clear my credit card debts.
28:08I keep getting refused. Why could this be?
28:10Well, I'm hoping you've started to work out why. Let's go straight back into the big briefing now.
28:15Well, there you go. I'd written it there. What happens when you apply?
28:19You can still be rejected, Lainey, with a perfect credit score.
28:22Firms use information from your credit file, but they also use information from your application form,
28:27including that all-important income and any past dealings they've had with you.
28:31So if it's a bank that maybe you've had good dealings with, it might be more helpful.
28:35If it's a bank you've not had good dealings with, it might be more likely to reject than others.
28:39But remember, lenders affordability score 2, which is just as important.
28:46Let me delve into that into a little bit more detail with you now. Here we go.
28:50So, this is just to give you an example of the type of things that's going on.
28:54I'm not going to labour it too much because every lender will work slightly differently.
28:57Here's some of the type of things they will look at.
28:59Remember, it involves your income. You'll see how much of this does.
29:02First, your debt ratio. How much unsecured debt, loans, credit cards, overdrafts, not mortgages, not student loans,
29:08do you have as a percentage of your annual income?
29:11You've got £20,000 on credit cards. You earn £40,000. That's 50%.
29:16And it uses this scale. There you go. That's OK. It's not good. It's a bit of a problem.
29:21What do you do? Well, try and reduce your debt or, of course, try and improve your income,
29:25which may be a bit more difficult.
29:27The next one, credit utilisation. This is the amount of the available credit you have that you are using.
29:33It works on the same scale as the other. So, £100 debt on a credit card with £1,000 credit limit is 10% credit utilisation.
29:40But it's looking across all of your debts. Now, the really important thing here is when this is used,
29:46it only really matters if you have a high debt ratio. If you've got a lot of debt, this matters.
29:51If you've only got a tiny bit of debt, the fact you're using all of it isn't that relevant if it's only a small proportion of your income.
29:55Again, you try and reduce your card or overdraft debt, or mathematically, you try and get more credit.
30:01But that causes you problems in other forms of credit scoring, so I probably wouldn't bother with that.
30:04That's the second thing they look at. And the third is your disposable income.
30:08The spare cash each month after bills and essentials.
30:12Now, with cards, loans and mortgages, actually, they're mostly doing a statistical estimate.
30:17They look at what your main outgoings are, but for your spending, they're not really looking at your spending.
30:21They're looking at what somebody in your position would statistically be likely to spend, so you can't impact it that much.
30:27But it's still worth before a mortgage application just being careful and going frugal.
30:31So you're starting to see how much more complicated than the pure credit score this is.
30:35And we get more. For credit card acceptance, because your acceptance tends to be on your credit score.
30:41Will I get accepted or not? The affordability score dictates your credit limit.
30:45How much will you be able to borrow on the card? Because it's a variable credit limit. Acceptance is binary, this is variable.
30:50With a loan, it's more weighted to affordability score.
30:54This is why, think about this, this really explains everything.
30:58You are one person, you apply to one lender, they accept you for a £3,000 loan, they reject you for a £10,000 loan.
31:05You've got the same credit score, everything else is the same.
31:07It's not about your credit score, it's about your affordability score.
31:11Mortgage acceptance, again, more weighted towards affordability scoring.
31:16Now, one of the things going on there is probably over-application.
31:20You've applied too many times and that can be dangerous.
31:23Applying can mark your credit file, even if you don't get accepted.
31:27So if possible, don't apply. Go onto an eligibility comparison on a comparison site.
31:34That avoids heart searches and it shows you your likely odds of acceptance for different cards.
31:39Then you can home in on the best card. Crucially, these use soft searches.
31:43So you see these searches on your file, lenders can't factor them in.
31:47So they're safe to do. I suspect you've been over-applying.
31:50Go and do an eligibility calculator if your score's low, give it six weeks or so.
31:54And then try again and hopefully, or even three months and then things may have softened.
31:58Anything else or are we good? Exactly right.
32:00Take a break from applying for about three months and then use the eligibility check.
32:03OK, there we go. We both agree. Cool.
32:05OK, there's this that's coming as well from Stephen.
32:08He's asking, I've got an excellent credit score, but I want to change to an interest-free balance transfer card.
32:14Will my credit score go down?
32:16Who cares? Stephen, I genuinely don't care. For a very simple reason.
32:21First of all, it's only your credit score. It's only an illustration.
32:23But more importantly, I tend to think of managing your credit worthiness like saving.
32:28I'm saving up for a rainy day in case I need it.
32:31What is the most important use of your credit score? To cut the cost of existing debt, which is what a balance transfer is.
32:37So use it. It is far better to have a lower credit score and better finances and cheaper debt than a good credit score and you're paying over the odds.
32:45That's what you're building your credit score for. If your credit score goes down, it goes down.
32:49You've got a card that cuts the cost of your debts. Hurrah!
32:51Well, I guess, Stephen.
32:53Sorry, Mayim. Right. This is coming from Ahmed. I think quite an important question.
32:59What's the safest checklist to build a strong credit history from 18?
33:03Can I have me pub? Bring me me pub.
33:07Now, it's the borrower's return, everybody.
33:11And is it Anne? Anne volunteered in the break that she's going to come and sit in my pub. Come up the stairs, my love.
33:17There we go. Just wait until we don't need to get hurt. If you go and sit over there.
33:21This is a prop. Do not drink it. It might poison you.
33:27OK. So this, I just want so people understand how this works. We're going to play a game.
33:32You're in a pub. This is what happens. You're sitting there.
33:36Ooh! Anne, how are you? Oh, it's lovely to see you.
33:41I forgot my wallet. Oh, I'm so sorry.
33:44Could you lend me 20 quid and I'll buy you, give it your back tomorrow and I'll buy you a pint as well.
33:49Now, I have done this about 40 times before and every single time I have done it, I have always paid back the next day and I have always bought a pint on top.
34:01Would you lend me 20 quid?
34:02Because it's you, Martin, I would.
34:04No, but even if it wasn't me...
34:06No, probably not.
34:08Oh, well...
34:11I'm a fan.
34:12There's always one.
34:15Yes, I would.
34:16Well, I'm very glad you said that.
34:18Next example. Here we go.
34:21Anne, how are you?
34:23Great, thank you.
34:25Oh, no, I forgot my wallet.
34:26Tell you what, could you lend me 20 quid and I'll give it you back tomorrow and I'll buy you a pint as well.
34:31Now, this person has done this 30 times before, always forgets to pay back the next day, never buys the pint on top and always has to be chased to give the money.
34:40Would you lend it to them?
34:43If their name was Martin Lewis, yes, but no otherwise.
34:47No one else, so you're not giving it, good.
34:49No.
34:50Final one.
34:52She's hard work.
34:54Simple example.
34:59Hi.
35:00Hi.
35:01Nice to meet you.
35:03Oh, no, I forgot my wallet.
35:04Would you lend me 20 quid and I'll buy you a pint tomorrow?
35:08You have never met this person before in your life, you do not know who they are, it's not Martin Lewis.
35:14Would you lend to them?
35:15No.
35:17No.
35:18Okay.
35:19This is credit scoring.
35:20First example has a good credit history, we know that they're repaid, we can predict their future behaviour based on their past, they're a pretty safe bet.
35:26Second person, we predict their future behaviour based on their past, they're not a safe bet.
35:30Third person may be lovely, but you don't know them, you have no data, no data gets rejection.
35:35That's how credit scoring works.
35:36And if you'd like to go back there before they move the putt away, thank you very much for that, everybody.
35:40I know we're on the wrong channel.
35:43Get my pub out of here!
35:47Okay.
35:48Thanks, chaps.
35:49Well, they do that.
35:50Two biggest reasons people are rejected.
35:53Your past behaviour and they don't have enough data.
35:55How do you build data?
35:56You need credit to get credit, but how do you get credit when you don't have it?
36:03You get what's called a build or a rebuild credit card. Easy to get, they have high interest.
36:08Go onto an eligibility calculator for a rebuild card. If you can get them, there are a couple that give spending rewards.
36:12Tesco Foundation card, Asda money, terrible interest rates. Here's how you use them. At no cost.
36:17Spend 50 to 100 quid a month on them. Just your normal spending, don't spend anything that you wouldn't spend.
36:22Pay it off?
36:23In full!
36:24In full! Preferably provide direct debit.
36:26Never miss repayments, never withdraw cash, that's always bad.
36:29Never bust your credit limit. After a year or so, with no other issues, your credit worthiness should improve.
36:35My problem with an 18-year-old, only do it with an 18-year-old who's trusted and will do this sensibly and not realise it's just free money.
36:42Just know it's a way to build their credit score.
36:44You could even do it with two cards and don't use credit rebuild the schemes.
36:47Can you tell again they're going, go to break, go to break?
36:51But hopefully that makes sense. Get yourself a credit, but use it carefully.
36:55Never overspend. Pay it off in full.
36:57Absolutely. Thank you very much, Martin.
36:59Now, coming up next, 10 ways to be financially fit and the rest of news you can use, including half-priced Christmas trees.
37:17Well, welcome back to the show. They are loving this credit score special, but Martin, what I want to know,
37:23how do you actually boost your credit worthiness? That's what we want to know.
37:26Well, the honest truth about this is, I don't know if I can use this phrase, but it's what we called it when I was growing up.
37:32It's a bit like going on the pool. Financially.
37:35You all right, Anne?
37:36So, the truth about going on the pool is there's lots you can do to make yourself look better, but different people are attracted to different things, so there's no perfect solution.
37:46But what I've got here is 10 tips to make you financially fitter and more fanciable.
37:54Here we are. So, the first one, use consistent answers on every application. Now, what do I mean by that?
38:03First of all, they like stability, but more importantly, if you get it wrong, you can be triggered out of fraud scoring.
38:07So, if you could be a marketing assistant or a promotions assistant, don't vary the term. Use the same term every time.
38:14If you've got more than one mobile, use the same mobile on every application. Of course, if your job changes, then you change what you put in, but stability is important.
38:21Next, get on the electoral roll if you want. It's a big problem for credit scoring if you're not. You can still opt out of the open register.
38:28That's the thing that stops you getting junk mail. Opt out of the open register to not get junk mail.
38:32For a national, then you can ask for a notice of correction, and that can prove your residency and help. Yes?
38:38Yes. Yes.
38:39Right. Finally, you can snog or marry who you like. You have my permission. Financially.
38:45That will not affect your credit. What will a joint products?
38:50Mortgage. Loan. Bank accounts. No such thing as a joint credit card. It's a second cardholder.
38:54If you even apply, not have, but you apply for a joint product, that can financially link you.
39:00That means they can look at the other person's file when you're applying for credit.
39:06So, if they've got a bad credit history, this could kibosh your applications.
39:09Be very, very careful before getting joint products.
39:12By the way, if you were jointly, had joint products with someone, and you're no longer financially linked to them,
39:17then you apply for a notice of disassociation to all the credit reference agencies,
39:22but you have to be generally financially separate.
39:25Next one. Fascinating, this one. The first time I've said this.
39:27Overpaying your mortgage may start to boost your credit worthiness.
39:31Check you shouldn't be saving. Go to a mortgage overpayment calculator to check.
39:34This is because Experian, the biggest reference for Reddit's agency, is adding it in its credit score,
39:39and they advise companies on how they should do their own credit scoring,
39:42so we're likely to see more of it coming in the future, overpaying your mortgage.
39:46Carrying on, let's get to more. Never miss or be late on repayments. That is so important.
39:51If you're not good, but you want to pay variable amounts, well, at least set up a direct debit to pay the minimum each month,
39:57and you can manually overpay on top, but at least that way you will never miss a repayment.
40:03Buy now, pay later is increasingly appearing on credit reports.
40:06Klarna and Zilch already report. The rest are likely to start doing so once regulation starts in the middle of next year.
40:13It might not feel like a debt, but buy now, pay later is a debt.
40:18So, if you pay it off on time, it can be positive. If you miss payments, it can be negative for your credit file.
40:26Not for credit files, it doesn't go on your credit score, but it can be negative for lenders, can see it negatively.
40:31An overuse of it could be a danger sign, so think of it as a debt.
40:35Don't withdraw cash on credit cards, always a bad thing to do.
40:38It's expensive, and if you do it a lot, it can be seen as poor money management.
40:41I know some of you are saying, but I do it abroad.
40:43If you're doing it one-off abroad because you've got a specialist overseas card, that's not so bad.
40:46It'll disappear off your file in a few months, the score lower, but be careful with that one.
40:51Time application's right. I talked earlier about the impact on your credit score,
40:55but actually, some things only last on your credit file for a set time.
40:59The bad stuff, CCJs, defaults, finished bankruptcy, stay for six years.
41:03Applications only for one year. So if something's just about to lapse, wait a week till it's gone before you do your application.
41:09Makes sense, doesn't it? Now, one I'm asked about all the time.
41:12Logically, if I pay £1,500 a month in rent, that should be a good indication that I can afford to pay £1,500 of mortgage, shouldn't it?
41:23It should. It doesn't work like that. It should. But it's starting to be changed.
41:28There are ways you can apply to have paying rent on time factored into your credit score,
41:34which could, of course, improve your mortgage acceptability in future.
41:39So if you're a tenant, you can sign up to Canopy, which reports to the Experian credit file for free.
41:45You could sign up to Credit Ladder, which will report to one agency for free.
41:49So using those two in conjunction, you can get two of the three agencies.
41:52If you want all three of the agencies, you can pay Credit Ladder £60 a year and you'll get it to report to all three of the credit reference agencies.
42:01Clearly great if you pay your rent on time. Clearly not good for you if you miss or are late paying rents. Makes sense.
42:09Also worth noting, some big landlords, social housing landlords with over 500 properties, have the Experian Rental Exchange initiative.
42:19They should have told you about it. That means they're reporting to credit files, but you could choose to opt out, for example, if you wanted.
42:24If you're paying rent on time, I wouldn't. And my final one, don't do little applications before a big one.
42:30If you want a credit reward card, but you're about to apply for a mortgage, do it after the mortgage application.
42:37The mortgage application is what matters. Applications do impact your credit worthiness.
42:42So put things in the right order when you're applying.
42:45And those together is how to be financially fitter and more fanciable. How you doing?
42:54OK, you have got time for some quick news you can use.
42:57Okey-doke.
43:01Right, time for some quickies.
43:04First of all, state-owned bank or financial institution, NS&I has boosted its British savings bond rates.
43:09You can see them there. They're all over 4%.
43:11Now, these are just fixed-rate savings by another name. Let's not get over-complicated.
43:15The rate is good. It's not top. It's about 0.2 percentage points or 0.3 percentage points behind the very top open-market fixed-rate payer.
43:24But many people want a big name with their savings. NS&I is as big as it gets.
43:29And crucially, most savings are protected up to £85,000 per person per financial institution by the state.
43:35This is owned by the state, so every penny in there, even if it's more than that, is protected.
43:40So it's a good option for those with very large amounts.
43:43Maybe you sold your house seven months ago and you want to know what to do with the money.
43:46Next, a heads-up. You can get £10 to £60 West End theatre tickets if you've got a MasterCard.
43:52Starts next Tuesday, 10am. I'm doing it now because Sun shows sell out quickly, so you want to be on at the exact moment.
43:58It's the official London Theatre New Year sale.
44:01First dibs for those people who got a MasterCard on 2026 performances, including Wicked, The Devil's Wears Prada, Back to the Future, The Producers, and Six!
44:10That was just for my daughter, by the way. If you're watching, I love you.
44:15From tomorrow, Ryanair won't accept home-printed boarding passes.
44:19You must check in online or Varysat first. If not, you'll be charged up to £55.
44:23But if you have checked in online and your phone ran out of battery,
44:27they're no longer going to charge £20 for printing a boarding pass at the airport.
44:30You can now do that for free. So in some ways, it's a win for some people.
44:33And then from Thursday, you can get 50% off three Christmas trees at Tesco.
44:39The club card holds us only in store. There's a six-foot Nordman fur.
44:43These are all real trees. £20, so half 40 down to 20.
44:46Three-and-a-half-foot potted tree for £15, or a four-foot tree with lights for £20.
44:50And while we're speaking about Christmas, next Tuesday is the big one.
44:56We do it every year. Big audience, festive forecast, the Black Friday special, Christmas deals.
45:02It's all coming in. I'm even going to have to sing at the start of the show
45:05because that has sadly become a tradition too. It's all going on.
45:09So do not miss it. Set your diary, 8 o'clock next Tuesday,
45:12and have a pen and pencil or some note-taking with you
45:14because at the end, I'm running through all those deals
45:16and I'm going to be running through them at serious speed, Jeanette.
45:19APPLAUSE
45:20Well, there you go.
45:22I've got one question for you. How is your voice doing?
45:25My voice is all right now, but you know I can't speak out
45:27I haven't done the festive forecast that we'll go through next week.
45:29Ladies and gentlemen, thank you so much.
45:30You've got questions about Christmas deals
45:32or free cash from bank switching or children's savings?
45:34I'll be covering them all next week.
45:36Use the hashtag Martin Lewis.
45:37Any questions on what we've done today, get in touch with that as well.
45:39Jeanette, you've been wonderful. The audience here has been wonderful.
45:42A round of applause for John Webb and Anne.
45:44APPLAUSE
45:46And you know what?
45:49If I drank, I'd say I'd be off to my pub now, but I don't really,
45:53so I'll just go and pretend afterwards anyway.
45:55That's it. Take care, everybody. Good night.
45:57CHEERING AND APPLAUSE
46:00The brand new series came to an explosive end last night
46:19as the truth came out.
46:21Don't miss Vicky McClure in Trigger Point, streaming now on YTV Next.
46:26Next tonight, it's documentary, TikTok, murder gone viral.
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