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The Martin Lewis Money Show - Season 16 Episode 11
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09:07Tôi có 7 months pregnant, I'm not working, I don't get an income.
09:10Having that money was really helpful.
09:12I'm so glad I went through the process.
09:17Thank you so much for doing that film.
09:19So look, she said a million people have overpaid.
09:21That was the previous tax year, this is an annual figure
09:24and it's still a million people overpaying each year
09:26which is why it's a clarion call for me
09:28that if you are a graduate or university leaver
09:30who's paying your student loan to cheque, you haven't overpaid.
09:33Now, just before I move on, because we came in,
09:36there is one thing, this is a technicality
09:38and people ask me about this, it's a bit complex.
09:40If you overpaid in some months but earned over the annual threshold
09:44you cannot reclaim, so this is a negative.
09:46Let me explain that to you.
09:48So here's a scenario, someone who earns £24,000 a year
09:51normally standard salary, so £2,000 a month below the threshold
09:55will stick with Plan 2 again as an example here
09:57but 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, let's have a look.
10:05First of all, their total tax year earnings are £29,000 above the threshold therefore.
10:12So they repaid 9% in this month of everything above £2,372.
10:19They repaid 400, just over £400.
10:22Now what you might think is, hold on, they're only £500 above the annual threshold,
10:27they should be paying 9% of that, about £45.
10:30But no, it's done by the month.
10:32They've repaid £400 of their student loan even though they're only just above the threshold.
10:37And this is complicated but effectively the rule is this.
10:40You 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.
10:52If you think it seems unfair, that's because it's unfair but that's the way the system works.
10:56Jeanette?
10:57Absolutely.
10:58I mean, I understood it but you can move on.
11:01They're small.
11:02OK, good.
11:03You got it.
11:04Right, I've got more for you.
11:05Yes, you're right.
11:06Other reasons.
11:07Let's scroll up.
11:08There we go.
11:09I'll do these ones quickly.
11:10Reason to all much smaller, all in the tens of thousands, not over a million here.
11:12Wrong student loan repayment plan.
11:13If your employer doesn't know which plan you're on, it has to default to Plan 1, which is repayments above £26,000.
11:18But the biggest plan, Plan 2, and all the Scottish plans, Plan 4, the repayment threshold is higher.
11:23So 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.
11:38Reason three, you started repaying the loan too early.
11:41Nearly £40,000 here.
11:43This is the rule.
11:44You only, regardless of what you earn, you only have to start qualifying to repay the student loan in the April after you leave university.
11:51For most graduates, that's nine months after they graduate, so you'd leave in the July the following April.
11:56But if your employer has the wrong details, it can take the money too soon.
11:59If that happens, you can get the money back by calling SLC for a refund.
12:03Good to have your pay slips if you're doing that one.
12:05And 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.
12:14Nearly 60,000 people last year.
12:16The loan's normally wiped after 30 years.
12:18It depends on the plan.
12:19Every plan is different.
12:20So you can look that up online.
12:22But the student loan company takes time to notify PAYE, so they don't always stop it on time.
12:27If that happens, you don't need to reclaim.
12:29You 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.
12:40So you pay it by direct debit, not through the payroll, and then you only pay the exact amount that you owed.
12:45And that is where we're finishing, I think, on student loans.
12:48One more. I know.
12:50I'm so sorry. There's one more question.
12:53Oh, go on. It's coming from... I'm sorry. It's coming from Amy.
12:55Amy says, I recently received a student loan refund of £1,601 overpaid. A proportion of that will have paid off interest.
13:03When I claim the refund, won't the amount just be added to my student loan?
13:06Absolutely. Very important question.
13:08Yes, 100%.
13:10If you've overpaid and you get the money back, then your student loan account, you will owe more.
13:15Now, what you may be thinking is, hold on, doesn't he normally say it's best to overpay loans because then you pay less interest?
13:21The quicker you pay a loan, the better. You are right on normal loans. Student loans are not normal loans.
13:28For example, those on those Plan 2 loans, the biggest one being repaid off at the moment,
13:33the 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.
13:46So 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.
13:58So taking that money back is not going to cost you any more in future. The 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.
14:09But 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.
14:22You only repair it if you're earning enough and it's going to wipe at some point.
14:25So 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.
14:32But 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.
14:41OK, now...
14:42Mate, do you understand that? Because it's really complicated.
14:44OK, I promise you're done now with that, I promise.
14:47Well, you can get in touch. Let us know about your student loan situation.
14:50Does this affect you? Always use that hashtag, Martin Lewis.
14:53But coming next, credit scoring. How does it work?
14:56And what is Experian about to do? We'll see you in four.
15:10Welcome back. We're live. We're going to be talking about credit scoring in a moment.
15:13But just before that, we're getting lots of reports that the student loan company website and app is struggling a bit,
15:18likely because of lots of demand. It's always what we do on this show.
15:21So be a bit patient, maybe check it in half an hour or an hour or so and it should be easier.
15:25It should be. There's lots coming in over the break. I'm going to sort it all out and come back to it.
15:29But let's go to Jo in the studio. Jo, you've got a question for Martin.
15:32Hi, Martin.
15:33Hi.
15:34Hi.
15:35Yeah, I've heard that the credit agencies are changing the rules, but I don't understand how they actually work in the first place.
15:41Could you explain?
15:43I can. And they're not changing the rules, they're changing the score.
15:46Ah.
15:47And the first thing you all need to understand is the difference between your credit score and the credit scoring process.
15:53Don't worry, I'm going to explain in my big briefing.
15:55Thank you.
15:59OK. The truth about credit scoring.
16:01The most important thing you all need to understand.
16:03You do not have a credit rating.
16:06You do not have a credit score in the UK.
16:09There is no single number that dictates acceptability.
16:14Each lender, when you apply, scores you differently based on its own individual profitability wishlist.
16:23Profitability, not risk. Why do I say profitability?
16:26Well, in many cases it is, are you a good or bad risk?
16:29But it may be a company that's trying to target people who are at poor risk so it can charge them more.
16:33And for them, poor risk are profitable customers.
16:36So it's a profitability wishlist, not a risk wishlist.
16:39That's the...
16:41Nope.
16:42Yeah.
16:43I 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.
16:49I know what my credit score is.
16:50I monitor my credit score very carefully.
16:52And I do have a credit score.
16:54Is that what you were thinking?
16:56Yes.
16:57OK.
16:58Let me explain.
16:59Here you go.
17:00The big credit reference agencies, there are three of them,
17:03they will show you a credit score, capitalised, because that is your credit score, not the credit scoring process.
17:09But they are just their illustration of how a typical lender may view you.
17:16They are not used by lenders.
17:19Now, just to prove my point, TransUnion is out of 710.
17:24Equifax is out of 1,000.
17:26Experian is out of 999.
17:29But 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.
17:37Here's what's happening.
17:38It's rolling out new scores from mid-November till the end of the year.
17:41Some of you will have had notifications today on this particular one.
17:4444% of you will see your band drop.
17:47It might drop from excellent to very good.
17:4942% will get a higher score.
17:51Some may be in a higher band.
17:53But crucially, this shouldn't change anything.
17:56Why?
17:57Because this is just their illustration of how a typical lender views you.
18:02The underlying data is what the lenders use.
18:05Your underlying data hasn't changed.
18:08Therefore, your acceptance by lenders won't change.
18:13We are too hung up on this.
18:15Now, we have a man from Experian here.
18:17John Webb.
18:18Thank you for joining us.
18:19John, why are you doing this?
18:20So, what we've done is, as you've explained there, lenders are looking at the data on credit reports.
18:25We've added in more data into our credit score.
18:28Things like overpaying a mortgage, reducing your overdraft, taking cash from a credit card.
18:35These are the things that lenders are now looking at.
18:38We've included them into credit scores so we can give people the most accurate view of how a lender will view their credit report information when they apply.
18:46How a typical lender does it differently.
18:48Why 1250, though?
18:49Why have you increased the number?
18:51I don't get that.
18:52I've heard your explanations.
18:53I still don't get it.
18:54So, we did consider staying at the same score.
18:56But actually, the number one thing people tell us is that they want more information about how their credit score is calculated.
19:03By moving to the new range of up to 1250, it allows us to give people more detail than they've ever seen before about how their score is calculated and, more importantly, how to improve it.
19:14Because, typically, higher 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 creating it to an arbitrary figure of 1250 when you can just proportion it makes any difference.
19:26But, hey, we'll move on.
19:27So, let me move on a little bit.
19:29Here we go.
19:30The biggest single thing you need to understand about credit score is the biggest piece of information they miss.
19:35The biggest thing that lenders look at is on your application form.
19:38It's your income.
19:40Lenders also do affordability scoring.
19:42That isn't in your credit score.
19:44Think about it.
19:45You've got the best credit score in the world.
19:46It's been brilliant.
19:47You've just lost your job.
19:48You've got no income.
19:49You can't afford to repay what you want to borrow.
19:51They are not going to lend to you.
19:53Credit scoring is not the end of the story at all.
19:56So, my big message to you.
19:57You know, people get in touch with me and say, my credit score has just moved by seven points.
20:01What should I do?
20:02Don't sweat small moves in your credit score.
20:05It's just their illustration.
20:07But do sweat big ones that last longer because that's likely an indication there's something more systemic going wrong in your file.
20:15Kevin has emailed you just on this.
20:18Have a look at this.
20:19So, my energy supply did a hard search on my credit report, but I decided to switch instead of after getting a better deal within the cooling off period.
20:27Does this affect my credit score?
20:29Seems to have dropped a little.
20:30And what can I do?
20:31Well, yeah, it does affect your credit score, but who cares?
20:34Would be my honest answer.
20:35I've got more detail on that, though, because this is what you need to consider.
20:38So, we'll just break it down.
20:40What you've got there is a new credit account or an application or maybe a cash withdrawal on a credit card.
20:46What happens then?
20:47You'll get a small score dip, but it'll only last for up to about three months, and then it'll go back to normal.
20:52It bounced back.
20:53Don't worry.
20:54I mean, listen, it always depends on circumstance, but this is sort of guidance.
20:57Scale of magnitude.
20:58If you've been applying for lots of accounts in a short space of time, that is a more significant problem.
21:03You'll see a bigger drop in your score.
21:05It'll probably start reducing after three months, and then it should be gone after six months as long as you don't do any more.
21:11If you've missed the payment, we're starting to get onto this side now is the real problem side.
21:16You'll have a much bigger drop.
21:18It'll often go on for six months after it has been fixed.
21:21So, you have to make sure you make the payment, and it's only improved if you're paying on time afterwards, or it could be even worse.
21:27Now, if you have an arrear where you are owing money to a lender, that is significantly damaging.
21:33It can take two years to recover from, and only if you manage to make it up to then.
21:37And then the really bad stuff, the stuff that is going to cause you problems with all lenders, if you have a default, a county court judgment and insolvency.
21:46Bankruptcy. IVA equivalent.
21:49It 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, but 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?
22:10She's asking, my son has a phone contract in my name.
22:13He recently had a late payment on the account, which is showing on my credit report.
22:17Do 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.
22:30Whatever your relationship between the son.
22:32When 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.
22:41There'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.
22:49It will have a negative effect. That's what credit scoring is all about.
22:52So, 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.
22:59Let'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.
23:05So, actually, she's responsible for paying or showing up on her file.
23:08Bring it up to date as soon as possible and keep paying on time.
23:11And like you said, it will improve.
23:13It will improve. Within six months, it will start to get better.
23:15And in 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.
23:22It's not your credit score. It's your credit file, also called your credit report.
23:26You should check your file at least annually and definitely before any major application you're going to make.
23:32Because if there's an error that stops you getting one, you've got too many applications on your file
23:36and you can start to go into a vicious circle.
23:38So, your credit file will list key information, the products you have,
23:41whether you've paid on time, any county court judgements against you,
23:44the electoral roll information. I want you to go through this line by line.
23:48Be a pedant. Be pedantic and I will give you a tick.
23:52Because even a small address error on an open account could block you in fraud scoring line by line.
24:02Now, for a general check, I would just do one agency.
24:05But if you're about to do a big application by that, I really mean a mortgage.
24:08I would check all three agencies because you don't know which one they're using.
24:11And one, if there is an error, they will pass it on to the others.
24:13It's safer to do it that way. You can see your files for free.
24:16You can use the statutory credit reports which tend to be a bit slower or these ways are a bit quicker.
24:20For Equifax, Equifax Basic or ClearScore will give you a free report.
24:24For Experian, go to the free Experian app. Relatively new that.
24:27For TransUnion, loads of bank websites and many credit help apps will also give you a TransUnion report.
24:34Big warning though, loads of them will trans-sign you up to this.
24:37£15 a month credit monitoring service, everything you need.
24:40You 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.
24:46Final thought, we've been talking about student loans already.
24:49Student loan company loans do not go on your credit file.
24:53That isn't to say they can't affect your applications, but they don't affect it as debt.
24:59What they effectively do is they reduce your disposable income if you're paying off,
25:03if you're above that threshold and you're paying off the 9%.
25:06So it's a bit like you earn less.
25:08And that can still lead to rejections or getting worse products,
25:11but it's not because it's a debt on your credit file,
25:13it's just because you have lower disposable income, if that makes sense.
25:16Absolutely.
25:17We've got a virtual wall this evening.
25:19Jane is here.
25:20Jane, you've got a question for Martin.
25:21Good evening, Jane.
25:23Hi, Martin.
25:24Right, my question is, he used to have a good credit rating of about 750.
25:31After we manually underpaid by 55p, one bank loan instalment, the bank then incorrectly reported to the credit reference agency that we have missed six hold payments.
25:46Didn't find this out until earlier on this year when I had to check his credit file for something.
25:53We contacted the bank.
25:54The bank admitted they made an error.
25:56They'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,
26:11and it's the same credit file that is of the report that you're looking at.
26:15Yeah.
26:16Well, that's a tough one.
26:17Luckily, I've got John here.
26:18John.
26:19Thank you.
26:20That 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.
26:40So, go through your credit report, have a look, see if there's something else that's interesting.
26:44How recently was this?
26:45How recent was it?
26:46Right.
26:47So, we found out in September, contacted the bank.
26:51The bank admitted their mistake.
26:53I think this could literally...
26:55Sorry, they're telling me to go to break.
26:56I think this could literally be that they've just not updated it in time.
27:00Keep 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
27:14that 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
27:21and it's probably just an updating issue and it will fix itself.
27:23It should fix itself, shouldn't it?
27:25Yeah, they update every month.
27:26Go to break, go to break, go to break.
27:28Thank you very much.
27:30OK.
27:31Well, coming up, we're going to be talking about what actually happens
27:34when you apply for Credit Plus.
27:36Martin, you're taking us to your credit pub.
27:38My credit pub indeed.
27:39You will find out more.
27:40I'll have some water.
27:41OK, we'll see you after this.
27:54Welcome back to our credit scoring special.
27:56We've got this question that's coming from Lainey just for you, Martin.
27:59I have a clear score, credit score of 1,000, but I can't get a 0% balance transfer card
28:05to help me clear my credit card debts.
28:08I keep getting refused.
28:09Why could this be?
28:10Well, I'm hoping you've started to work out why.
28:13Let's go straight back into the big briefing now.
28:15Well, there you go.
28:16I'd written it there.
28:17What happens when you apply?
28:18You can still be rejected, Lainey, with a perfect credit score.
28:22Firms use information from your credit file, but they also use information
28:25from your application form, including that all-important income
28:28and any past dealings they've had with you.
28:30So if it's a bank that maybe you've had good dealings with,
28:33it might be more helpful.
28:34If it's a bank you've not had good dealings with,
28:36it might be more likely to reject than others.
28:39But remember, lender's affordability score 2, which is just as important.
28:46Let me delve into that into a little bit more detail with you now.
28:49Here 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.
29:00You'll see how much of this does.
29:01First, your debt ratio.
29:02How much unsecured debt, loans, credit cards, overdrafts, not mortgages, not student loans,
29:08do you have as a percentage of your annual income?
29:10You've got £20,000 on credit cards, you earn £40,000.
29:14That's 50% and it uses this scale.
29:17There you go.
29:18That's OK.
29:19It's not good.
29:20It's a bit of a problem.
29:21What do you do?
29:22Well, try and reduce your debt or, of course, try and improve your income,
29:24which may be a bit more difficult.
29:25The next one, credit utilisation.
29:28This is the amount of the available credit you have that you are using.
29:32It works on the same scale as the other.
29:34So, £100 debt on a credit card with £1,000 credit limit is 10% credit utilisation,
29:39but it's looking across all of your debts.
29:42Now, the really important thing here is when this is used,
29:45it only really matters if you have a high debt ratio.
29:48If you've got a lot of debt, this matters.
29:50If you've only got a tiny bit of debt, the fact you're using all of it
29:52isn't that relevant if it's only a small proportion of your income.
29:54Again, you try and reduce your card or overdraft debt,
29:57or mathematically, you try and get more credit.
30:00But that causes you problems in other forms of credit scoring,
30:02so I probably wouldn't bother with that.
30:04It's the second thing they look at.
30:05And the third is your disposable income.
30:07The spare cash each month after bills and essentials.
30:11Now, with cards, loans and mortgages, actually,
30:14they're mostly doing a statistical estimate.
30:16They look at what your main outgoings are, but for your spending,
30:19they're not really looking at your spending.
30:21They're looking at what somebody in your position
30:23would statistically be likely to spend, so you can't impact it that much.
30:26But it's still worth, before a mortgage application,
30:28just being careful and going frugal.
30:30So you're starting to see how much more complicated
30:33than the pure credit score this is.
30:34And we get more.
30:35For credit card acceptance, because your acceptance tends
30:39to be on your credit score.
30:40Will I get accepted or not?
30:42The affordability score dictates your credit limit.
30:44How much will you be able to borrow on the card?
30:46Because it's a variable credit limit.
30:48Acceptance is binary.
30:49This is variable.
30:50With a loan, it's more weighted to affordability score.
30:54This is why, think about this, this really explains everything.
30:57You are one person.
30:59You apply to one lender.
31:00They accept you for a £3,000 loan.
31:02They reject you for a £10,000 loan.
31:05You've got the same credit score.
31:06Everything else is the same.
31:07It's not about your credit score.
31:09It'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.
31:26So if possible, don't apply.
31:28Go onto an eligibility comparison on a comparison site.
31:33That avoids heart searches and it shows you your likely odds of acceptance
31:37for different cards.
31:38Then you can home in on the best card.
31:40Crucially, these use soft searches.
31:42So you see these searches on your file, lenders can't factor them in.
31:46So they're safe to do.
31:47I suspect you've been over-applying.
31:49Go and do an eligibility calculator.
31:51If your score's low, give it six weeks or so.
31:53And then try again and hopefully, or even three months,
31:56and then things may have softened.
31:57Anything else? Are we good?
31:58Exactly right.
31:59Take a break from applying for about three months
32:01and then use the eligibility check.
32:03Perfect.
32:04We both agree. Cool.
32:05OK, there's this that's coming as well from Stephen.
32:07He's asking, I've got an excellent credit score, but I want to change
32:11to an interest-free balance transfer card.
32:13Will my credit score go down?
32:15Who cares?
32:16Stephen, I genuinely don't care.
32:18For a very simple reason.
32:20First of all, it's only your credit score.
32:21It's only an illustration.
32:22But more importantly, I tend to think of managing your credit worthiness like saving.
32:27I'm saving up for a rainy day in case I need it.
32:30What is the most important use of your credit score?
32:32To cut the cost of existing debt, which is what a balance transfer is.
32:36So use it.
32:37It 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.
32:44That's what you're building your credit score for.
32:46If your credit score goes down, it goes down.
32:48You've got a card that cuts the cost of your debts.
32:50Hurrah!
32:51Yes, Stephen.
32:52Yay!
32:53Sorry, Mayan.
32:54Right.
32:55This is coming from Ahmed.
32:57I think quite an important question.
32:58What's the safest checklist to build a strong credit history from 18?
33:02Can I have me pub?
33:04Bringing me pub.
33:05Now, it's the borrower's return, everybody.
33:10And is it Anne?
33:12Anne volunteered in the break that she's going to come and sit in my pub.
33:16Come up the stairs, my love.
33:17There we go.
33:18Just wait until we don't need to get hurt.
33:19If you go and sit over there.
33:22This is the prop.
33:24Do not drink it.
33:25It might poison you.
33:26Okay.
33:27So this, I just want so people understand how this works.
33:30We're going to play a game.
33:31You're in a pub.
33:32This is what happens.
33:34You're sitting there.
33:35Ooh!
33:36Anne, how are you?
33:38Oh, it's lovely to see you.
33:40I forgot my wallet.
33:41Oh, I'm so sorry.
33:43Could you lend me 20 quid and I'll buy you, give it your back tomorrow and I'll buy you a pint as well.
33:48Now, 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.
34:00Would you lend me 20 quid?
34:02Because it's you, Martin, I would.
34:04No, but even if it wasn't me.
34:05No, probably not.
34:06Oh, well.
34:07I'm a fan.
34:08There's always one.
34:09Yes, I would.
34:10I'm very glad you said that.
34:11Next example.
34:12Here we go.
34:13Anne, how are you?
34:14Great, thank you.
34:15Oh, no, I forgot my wallet.
34:16Tell 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.
34:30Now, 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?
34:42Oh, if their name was Martin Lewis, yes, but no otherwise.
34:46No one else, so you're not giving it?
34:48Good.
34:49No.
34:50Final one.
34:51She's hard work.
34:54Simple example.
34:59Hi.
35:00Hi.
35:01Nice to meet you.
35:02Oh, no, I forgot my wallet.
35:04Would you lend me 20 quid and I'll buy you a pint tomorrow?
35:07You have never met this person before in your life.
35:10You do not know who they are.
35:11It's not Martin Lewis.
35:13Would you lend to them?
35:15No.
35:16No.
35:17Okay.
35:18This is credit scoring.
35:19First example has a good credit history.
35:20We know that they're repaid.
35:21We can predict their future behaviour based on their past.
35:23They're a pretty safe bet.
35:24Second person, we predict their future behaviour based on their past.
35:27They're not a safe bet.
35:28Third person may be lovely, but you don't know them.
35:32You have no data.
35:33No data gets rejection.
35:34That's how credit scoring works.
35:35Anne, if you'd like to go back there before they move the putt away.
35:37Thank you very much for that, everybody.
35:38I know we're on the wrong channel.
35:43Get my pub out of here.
35:46Okay.
35:47Thanks, chaps.
35:48Well, they do that.
35:49Two biggest reasons people are rejected.
35:52Your past behaviour and they don't have enough data.
35:54How do you build data?
35:55You need credit to get credit, but how do you get credit when you don't have it?
36:01You get what's called a build or a rebuild credit card.
36:04Easy to get.
36:05They have high interest.
36:06Go on to an eligibility calculator for a rebuild card.
36:09If you can get them, there are a couple that give spending rewards.
36:11Tesco Foundation card.
36:12Asda money.
36:13Terrible interest rates.
36:14Here's how you use them.
36:15At no cost.
36:16Spend 50 to 100 quid a month on them.
36:18Just your normal spending.
36:19Don't spend anything that you wouldn't spend.
36:20Pay it off.
36:21In full.
36:22In full.
36:23Preferably by direct debit.
36:25Never miss repayments.
36:27Never withdraw cash.
36:28That's always bad.
36:29Never bust your credit limit.
36:30After a year or so, with no other issues, your credit worthiness should improve.
36:34My problem with an 18-year-old, only do it with an 18-year-old who's trusted and will
36:39do 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 schemes.
36:47Can you tell again they're going, go to break, go to break?
36:50But hopefully that makes sense.
36:52Get yourself a credit, but use it carefully.
36:54Never overspend.
36:55Pay it off in full.
36:56Absolutely.
36:57Thank you very much, Martin.
36:58Now, coming up next, 10 ways to be financially fit and the rest of news you can use,
37:03including half-price Christmas trees.
37:05Well, welcome back to the show.
37:18They are loving this credit score special.
37:21But Martin, what I want to know, how do you actually boost your credit worthiness?
37:25That's what we want to know.
37:26Well, the honest truth about this is, I don't know if I can use this phrase,
37:29but it's what we called it when I was growing up.
37:31It's a bit like going on the pool, financially.
37:34You all right, Anne?
37:37So, the truth about going on the pool is there's lots you can do to make yourself look better,
37:42but different people are attracted to different things,
37:44so there's no perfect solution.
37:46But what I've got here is 10 tips to make you financially fitter and more fanciable.
37:56Here we are.
37:57So, the first one, use consistent answers on every application.
38:01Now, what do I mean by that?
38:02First of all, they like stability, but more importantly, if you get it wrong,
38:05you can be triggered out of fraud scoring.
38:07So, if you could be a marketing assistant or a promotions assistant,
38:11don'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.
38:17Of course, if your job changes, then you change what you put in.
38:20But stability is important.
38:21Next, get on the electoral roll if you want.
38:23It's a big problem for credit scoring if you're not.
38:25You can still opt out of the open register.
38:27That's the thing that stops you getting junk mail.
38:29Opt out of the open register to not get junk mail.
38:31Foreign national, then you can ask for a notice of correction
38:35and that can prove your residency and help. Yes?
38:37Yes.
38:38Yes.
38:39Right.
38:40Finally, you can snog or marry who you like.
38:42You have my permission.
38:43Financially.
38:44That will not affect your credit.
38:47What will a joint product's mortgage, loan, bank accounts?
38:51No such thing as a joint credit card.
38:53It's a second card holder.
38:54If you even apply, not have, but you apply for a joint product,
38:58that can financially link you.
39:00That means they can look at the other person's file
39:03when you're applying for credit.
39:05So if they've got a bad credit history,
39:07this could kibosh your applications.
39:09Be very, very careful before getting joint products.
39:11By the way, if you were jointly, had joint products with someone
39:14and you're no longer financially linked to them,
39:16then you apply for a notice of disassociation
39:20to all the credit reference agencies,
39:22but you have to be generally financially separate.
39:24Next one.
39:25Fascinating, this one.
39:26The first time I've said this.
39:27Overpaying your mortgage may start to boost your credit worthiness.
39:30Check you shouldn't be saving.
39:32Go to a mortgage overpayment calculator to check.
39:34This is because Experian, the biggest reference for Reddit's agency,
39:37is 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,
39:44overpaying your mortgage.
39:46Carrying on.
39:47Let's get to more.
39:48Never miss or be late on repayments.
39:50That is so important.
39:51If you're not good, but you want to pay variable amounts,
39:54well, at least set up a direct debit to pay the minimum each month
39:57and you can manually overpay on top,
39:59but at least that way you will never miss a repayment.
40:02Buy now, pay later is increasingly appearing on credit reports.
40:06Klarna and Zilch already report.
40:08The rest are likely to start doing so
40:10once 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.
40:22If you miss payments, it can be negative for your credit file.
40:25Not for credit files, it doesn't go on your credit score,
40:28but it can be negative for lenders, can see it negatively.
40:31An overuse of it could be a danger sign.
40:33So, think of it as a debt.
40:34Don't withdraw cash on credit cards.
40:36Always a bad thing to do.
40:37It's expensive, and if you do it a lot,
40:38it can be seen as poor money management.
40:40I know some of you are saying, but I do it abroad.
40:42If you're doing it one-off abroad
40:43because you've got a specialist overseas card,
40:45that's not so bad.
40:46It will disappear off your file in a few months, the score lower.
40:48But be careful with that one.
40:50Time application is right.
40:52I talked earlier about the impact on your credit score,
40:55but actually, some things only last on your credit file for a set time.
40:58The bad stuff, CCJs, defaults, finished bankruptcy,
41:01stay for six years.
41:02Applications only for one year.
41:04So, if something's just about to lapse,
41:06wait a week till it's gone before you do your application.
41:09Makes sense, doesn't it?
41:10Now, one I'm asked about all the time.
41:12Logically, if I pay £1,500 a month in rent,
41:17that should be a good indication
41:19that I can afford to pay £1,500 of mortgage.
41:22shouldn't it?
41:23It should.
41:24It doesn't work like that.
41:25It should.
41:26But it's starting to be changed.
41:28There are ways you can apply to have paying rent on time
41:31factored 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,
41:42which reports to the Experian credit file for free.
41:45You could sign up to Credit Ladder,
41:47which will report to one agency for free.
41:49So, using those two in conjunction,
41:51you can get two of the three agencies.
41:53If you want all three of the agencies,
41:55you can pay Credit Ladder £60 a year
41:58and you'll get it to report to all three of the credit reference agencies.
42:01Clearly great if you pay your rent on time.
42:04Clearly not good for you if you miss or are late paying rents.
42:08That makes sense.
42:09Also worth noting, some big landlords, social housing landlords with over 500 properties,
42:15have the Experian rental exchange initiative.
42:18They should have told you about it.
42:19That means they're reporting to credit files,
42:21but you could choose to opt out, for example, if you wanted.
42:23If you're paying rent on time, I wouldn't.
42:25And my final one, don't do little applications before a big one.
42:29If you want a credit reward card, but you're about to apply for a mortgage,
42:34do it after the mortgage application.
42:36The mortgage application is what matters.
42:38Applications do impact your credit worthiness,
42:41so put things in the right order when you're applying.
42:44And those together is how to be financially fitter and more fanciable.
42:49How are 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,
43:07NS&I has boosted its British savings bond rates.
43:09You can see them there.
43:10They're all over 4%.
43:11Now, these are just fixed-rate savings by another name.
43:13Let's not get over-complicated.
43:15The rate is good.
43:16It's not top.
43:17It's about 0.2 percentage points or 0.3 percentage points
43:20behind the very top open-market fixed-rate payer.
43:24But many people want a big name with their savings.
43:26NS&I is as big as it gets.
43:29And crucially, most savings are protected up to £85,000 per person
43:33per financial institution by the state.
43:35This is owned by the state, so every penny in there,
43:38even 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
43:45and you want to know what to do with the money.
43:46Next, a heads-up.
43:47You can get £10 to £60 West End theatre tickets
43:50if you've got a MasterCard.
43:52Starts next Tuesday, 10am.
43:53I'm doing it now because Sun shows sell out quickly,
43:55so you want to be on at the exact moment.
43:57It's the official London Theatre New Year sale.
44:00First dibs for those people who got a MasterCard
44:02on 2026 performances, including Wicked, The Devil's Wears Prada,
44:06Back to the Future of the Producers.
44:08And six...
44:10That was just for my daughter, by the way.
44:12If you're watching, I love you.
44:14From tomorrow, Ryanair won't accept home-printed boarding passes.
44:18You must check in online or Varex out first.
44:20If not, you'll be charged up to £55.
44:22But if you have checked in online and your phone ran out of battery,
44:26they're no longer going to charge £20 for printing a boarding pass at the airport.
44:29You can now do that for free.
44:30So, in some ways, it's a win for some people.
44:32And then from Thursday, you can get 50% off three Christmas trees at Tesco.
44:38The club card holds us only in store.
44:40There's a six-foot Nordmann fur.
44:42These are all real trees.
44:4320 quid.
44:44So, half 40 down to 20.
44:45Three-and-a-half-foot potted tree for 15 quid.
44:47Or a four-foot tree with lights for 20 quid.
44:49And while we're speaking about Christmas,
44:51next Tuesday is the big one.
44:55We do it every year.
44:56Big audience, festive forecast,
44:58the Black Friday special, Christmas deals.
45:01It's all coming in.
45:03I'm even going to have to sing at the start of the show
45:05because that has suddenly become a tradition too.
45:07It's all going on.
45:08So, do not miss it.
45:09Set your diary, eight o'clock next Tuesday,
45:11and have a pen and pencil or some note-taking with you
45:13because at the end, I'm running through all those deals
45:15and I'm going to be running through them at serious speed, Jeanette.
45:18Well, there you go.
45:20I've got one question for you.
45:23How is your voice doing?
45:25My voice is all right now, but you know I can't speak
45:27how we've 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,
45:38get in touch with that as well.
45:39Jeanette, you've been wonderful.
45:40The audience here has been wonderful.
45:41A round of applause for John Webb and Anne.
45:43CHEERING AND APPLAUSE
45:48And you know what?
45:49If I drank, I'd say I'd be off to my pub now,
45:51but I don't really, so I'll just go and pretend afterwards anyway.
45:54That's it. Take care, everybody. Good night.
45:56CHEERING AND APPLAUSE
46:15The 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,
46:23streaming now on ITVX.
46:25Next tonight, it's documentary,
46:28TikTok, murder gone viral.
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