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00:00The UK's biggest credit reference agency, Experian, is about to tell millions of its customers
00:20their credit scores will drop. If that's you, what does it mean in practice? Credit scoring
00:27is shrouded by grey mist. Tonight, I want to blow them away. I want to show you the truth
00:34of how it really works, what you need to do, and I will finish with my crucial key tips
00:39to boost your acceptance odds. Now, this isn't just about the obvious mortgages and credit
00:46cards and loans, where credit scoring can even impact the rate you get. Credit checks
00:51may affect things you pay ahead for, too, like mobile phone contracts and sometimes
00:57energy direct debit tariffs. Then, in my news you can use, new figures out show 1.1 million
01:05graduates have paid more student loan back than they should have done in just the last
01:10tax year. I will show you how to reclaim hundreds or thousands of pounds of it. And British savings
01:17bonds are about to get better, half-price Christmas trees, a Ryanair warning, and cheap theatre
01:22tickets. Now, to our own showstopper, Jeanette Quachy, everybody.
01:26Thank you very much. I am your leading lady. I'm happy to be back, but we want to hear from
01:32you, so please do send us your questions on X or on threads. Use the hashtag MartinLewis,
01:38or you can email the team MartinLewis at ITV.com. If we don't use your question tonight, we may
01:43use it in a future show. And a huge welcome, as always, to our studio audience.
01:47Wave your wallet, everybody!
01:48Wave your wallet!
01:50We 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
01:57could leave O2 because it's hiking, it's price hike, if you like. Just wanted to show you
02:01a few messages. This is coming from Nicola. She's ditched and she's switched. She says,
02:05I saw your O2 increase information this week, requested my pack 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.
02:17New sim, up and running, O2 boy coach.
02:21So, if you watched last week, you know I got on my soapbox about this. O2 put up the
02:25price hike it had previously said when people signed up it would give them, so it was a
02:29price hike on the price hike mid-contract. Crucially, if you get that notification, you've got 30
02:34days in which you can leave, and then you might be able to go and save a lot of money, and
02:38I'm encouraging people to do so because we want it to cost O2 in the pockets so that
02:44it never behaves like this again, and other companies think we don't want to do that either.
02:48Yeah. Sean, he's taking your advice here, and Sean has haggled. He said,
02:52I rang up O2 yesterday, and after a phone call, I stayed with them but saved £34 a month on
02:57my two contracts, with more data, a huge saving of £408 a year.
03:02Great.
03:05Now, this is the interesting one, because when I told people their rights last week, normally
03:09when you're at the end of the contract, you can use that as an opportunity to haggle, benchmark
03:13the best deal elsewhere, take it to your firm. But because this is a unique experience, this
03:1730-day notification that you can leave, I wasn't 100% sure it would work with O2 like it would
03:23at the end of the contract. So I asked people to try. Sean is a success, and frankly, I've
03:27had hundreds of other people who've taken this opportunity to go to O2 and say, I will
03:31leave you unless you give me a better deal, and they've got better deals. So that's working.
03:35Fabulous. Right. Now, there is a question, though. It's coming from Shirley. It's a follow-up
03:38question. She said, I've seen your item on O2. I just asked for a PAC code, and they've
03:43come back saying I need to pay the device off in full. Is that correct?
03:47It's very interesting. So a PAC code is a porting authorisation code that you get when you're
03:51changing mobile phone number. Listen, I've seen some of those messages, and what actually
03:55says it is, it does say you need to pay this off in full. But I think that is a terrible
04:01piece of phrasing by O2. I'm going to hope it's accidental and not deliberate. Certainly
04:05something the regulators should look at. What that means is you're still going to have to
04:10pay your handset. It doesn't mean you have to pay all of your handset now. You were paying
04:14it by the month, and you can continue to pay it by the month, but you'll have to pay everything
04:18that they owe them on the same plan. But when they say pay it off in full, it sounds like
04:21you have to give them the money now, doesn't it? It's poor communication, bad phrasing.
04:26I hope it hasn't deliberately been done to put people off switching. If it has, that's
04:29something the regulators should look at. You can leave O2's airtime plan and keep paying
04:34your handset costs by the month, just as you were doing before. You're free to leave, Shirley.
04:38OK, hopefully that helps, Shirley. Now, I know we're going to get into credit scoring in the
04:42meat of the show. Something I wanted to ask you first, though, is a question that's coming
04:46from Amy O. Oh, there it is. I've heard there's a way you can claim back a student loan which
04:52you may have overpaid on. How do I do this, and how do I know if this applies to me?
04:57Absolutely. We'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.
05:03OK, so the new figures say 1.1 million university leavers and graduates have overpaid their student
05:12loans in the 24-25 tax year, and that adds to at least 4 million people from figures and
05:18requests that we've given them for information in the past. So there could be 5 million of
05:22you out there who are owed money. There are four reasons, but the first reason is the big
05:28reason. It'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. Now, the rules state absolutely plainly
05:38you 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, so we'll hold on this graphic
05:49so you can read your graphic as I go through. I'm going to focus on plan 2 loans because that's
05:55the one with by far the most people on. England starters, it's when you started university
05:59and where you were resident, 2012 to 2022, and wealth starters from 2012 onwards. Your
06:05repayment threshold is £28,470 a year. You repay 9% of everything you earn over that in a
06:10year. That's how it works. But PAYE, payroll, it takes the money based on your monthly earnings.
06:19So, £28,470 a year is equivalent to £2,372 a month. You repay 9% of everything you earn above
06:27that a month. Let me give you an example and you'll see why so many have overpaid this.
06:31Here we go. So, there's the monthly repayment threshold. Let's imagine maybe you've just
06:37started after university and it's the next year or two. You've had a few months off. You didn't work
06:41in April. You didn't work in May. You didn't work in June. Then you've got yourself a job paying
06:46£36,000 a year. £3,000 a month. Done, because it's easy maths. In each of those months, you
06:53have to repay 9% of everything above the monthly threshold, which is about a repayment of £56
06:59a month each month for the remaining nine months. You understand why? OK. But, now look at this.
07:07Your total tax year earnings were £27,000. The annual threshold is £28,470. You earned less
07:19than the threshold. You don't have to repay your student loan. Here are the payments that
07:23you made. £508. You can reclaim the £508. So, this is big for many people. Who does it
07:31tend to most commonly affect? Well, it's those who only worked for part of the year, those
07:36who are on commission, or those who are on variable incomes. If your income is going up
07:40and down and you didn't earn over that amount in the tax work, you are able to reclaim. You
07:45use SLC Refund Request Form at gov.uk, or you can do it in your student loan company repayment
07:51app. You can do it for every year except the current tax year, because the current tax year,
07:56you'll have to wait till it finishes. So, for every year before that, you can go and reclaim
07:59any money. Yes, Jeanette. Just before you move on, we've got a success story on this
08:03one, and it's a big one. Have a look at this.
08:07Danielle lives in Loughborough with her husband and two kids.
08:10Being a maths teacher was the career that I always wanted. I needed to take the student
08:15loan to pay for it. After my initial £16,000 I borrowed, I also had to borrow another £9,000
08:21to pay for my teacher training. I've watched the Martin Lewis show for almost seven years
08:27now. There was one show back in November, Martin mentioned there's over a million students
08:32that have overpaid their student loan. Is that me? Have I overpaid? He gave numerous reasons.
08:36The one that stood out to me was gaps in employment. In the last few years, I have had to give up
08:41my job when I had my eldest child. He was born with a brain condition and requires a lot of
08:46care. Once 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
08:58request refund. Within 48 hours of my application, I was told I got a refund of £2,213. It was
09:06a pinch me moment. I was seven months pregnant, I'm not working, I don't get an income. Having
09:11that money was really helpful. I'm so glad I went through the process.
09:15Thank you so much for doing that film. So look, she said a million people have overpaid. That
09:22was the previous tax year. This is an annual figure and it's still a million people overpaying
09:26each year, which is why it's a clarion call for me that if you are a graduate or university
09:30leaver who's paying your student loan to check, you haven't overpaid. Now, just before I move
09:34on, because we came in, there is one thing. This is a technicality and people ask me about
09:39this. It's a bit complex. If you overpaid in some months, but aren't over the annual threshold,
09:44you cannot reclaim. So this is a negative. Let me explain that to you. So here's a scenario.
09:50Someone who earns £24,000 a year, normally standard salary, so £2,000 a month below the
09:55threshold. We'll stick with plan two again as an example here, but obviously from different
09:59plans, the numbers are different, but then got a £5,000 bonus in December. So they've
10:04got a £5,000 bonus. Let's have a look. First of all, their total tax year earnings are
10:09£29,000 above the threshold, therefore. So they repaid 9% in this month of everything
10:17above £2,372. They repaid 400, just over £400. Now, what you might think is, hold on,
10:26they're only £500 above the annual threshold. They should be paying 9% of that, about £45.
10:30But no, it's done by the month. They've repaid £400 of their student loan, even though they're
10:36only just above the threshold. And 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
10:49annual earnings are below the threshold, and then you don't have to repay. If you think
10:53it seems unfair, that's because it's unfair, but that's the way the system works. Jeanette?
10:58Absolutely. I mean, I understood it, but you can move on. They're small.
11:02OK, good. You got it. Right, I've got more for you. Yes, you're right. Other reasons.
11:06Let's scroll up. There we go. I'll do these ones quickly. Reason to all much smaller,
11:10all in the tens of thousands, not over a million here. Wrong 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
11:17above £26,000. But the biggest plan, plan 2, and all the Scottish plans, plan 4, the repayment
11:23threshold is higher. So you shouldn't be repaying as much. You should only be repaying above
11:26this amount, but you're repaying above that amount. If that's you, call the student loan
11:30company here for a refund. You can't do it online. Also, go and talk to your employer's
11:34payroll department and say, actually, this is my plan. Please change my setup so I'm paying
11:38on the right plan. Reason three, you started repaying the loan too early. Nearly £40,000
11:43here. This is the rule. You only, regardless of what you earn, you only have to start qualifying
11:48to repay the student loan in the April after you leave university. For most graduate,
11:53graduates, that's nine months after they graduate, so you'd leave in the July, the following
11:56April. But if your employer has the wrong details, it can take the money too soon. If
12:00that happens, you can get the money back by calling SLC for a refund. Good to have your
12:05pay slips if you're doing that one. And the final reason, often get asked about this, is
12:09money is deducted after you've fully cleared the loan. So once you've paid off everything
12:14that you owe. Nearly 60,000 people last year. The loan's normally wiped after 30 years.
12:19It depends on the plan. Every plan is different. So you can look that up online. But the student
12:24loan company takes time to notify PAYE, so they don't always stop it on time. If that
12:28happens, you don't need to reclaim. You will be paid back automatically. My top tip, though,
12:33within the last two years of repaying your student loan, you can go online at student loan
12:39company and ask to set up a direct debit. So you pay it by direct debit, not through the
12:43payroll. And then you only pay the exact amount that you owed. And that is where we're finishing,
12:48I think, on student loans. One more. I know. I'm so sorry. There's one more question. It's
12:54coming from, I'm sorry, it's coming from Amy. Amy says, I recently received a student loan
12:58refund of £1,601 overpaid. A proportion of that will have paid off interest. When I claim
13:04the refund, won't the amount just be added to my student loan? Absolutely. Very important
13:08question. Yes, 100%. If you've overpaid and you get the money back, then your student loan
13:14account, you will owe more. Now, what you may be thinking is, hold on, doesn't he normally
13:19say it's best to overpay loans because then you pay less interest? The quicker you pay a
13:23loan, the better. You are right on normal loans. Student loans are not normal loans. For example,
13:30those on those Plan 2 loans, the biggest one being repaid off at the moment, the stats show
13:35only around one in three people will clear what they borrowed plus interest in the 30 years
13:41before it wipes. Most people will just pay 9% of what they earn above the threshold for
13:4630 years. So if you've overpaid and you take the money and you're one of those two-thirds
13:52of people, lower to middle earners, well, you're still going to repay 9% of everything you earn
13:57over the threshold for the next 30 years. So taking that money back is not going to cost
14:00you any more in future. The money in your pocket is better in your pocket. Now, with other plans,
14:05you are more likely to clear earlier because the loan amount's lower and the interest rate
14:09is lower. But what I would still say then is if you need the money, say, to clear expensive
14:14debts or to reduce your mortgage borrowing, on the other plans, the interest rate's only
14:183.2% and student loans have better terms than any other form of borrowing. You only repair
14:23it if you're earning enough and it's going to wipe at some point. So in that case, you
14:26may still be better to take the money, have it in your pocket so you can use it so you don't
14:31have other more expensive debts. But especially those on the Plan 2 loans, the majority of people
14:37are better to take the money rather than just to reduce a loan that won't necessarily mean
14:40they pay any less in the future anyway. OK, now...
14:42Mate, do you understand that? Because it's really complex.
14:44Yeah? OK, I promise you're done now with that, I promise. Well, you can get in touch.
14:48Let us know about your student loan situation. Does this affect you? Always use that hashtag
14:53Martin Lewis. But coming next, credit scoring. How does it work? And what is Experian about
14:58to do? We'll see you in four.
15:11Welcome 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
15:18and app is struggling a bit, likely because of lots of demand. It's always what we do on
15:21this show. So be a bit patient, maybe check it in half an hour or an hour or so and it should
15:25be easier. It should be. There's lots coming in over the break. I'm going to sort it all
15:29out and come back to it. But let's go to Jo in the studio. Jo, you've got a question
15:32for Martin. Hi, Martin. Hi. Hi. Yeah, I've heard that the credit agencies are changing
15:38the rules, but I don't understand how they actually work in the first place. Could you
15:42explain? I can. And they're not changing the rules, they're changing the score. Ah. And
15:47the first thing you all need to understand is the difference between your credit score and
15:52the credit scoring process. Don't worry, I'm going to explain in my big briefing. Thank
15:56you.
15:57OK. The truth about credit scoring, the most important thing you all need to understand.
16:05You do not have a credit rating. You do not have a credit score in the UK. There is no single
16:12number that dictates acceptability. Each lender, when you apply, scores you differently based
16:20on its own individual profitability wish list. Profitability, no, not risk. Why do I say
16:26profitability? Well, in many cases it is. Are you a good or bad risk? But it may be a company
16:31that is trying to target people who are a poor risk so it can charge them more. And for them,
16:35poor risk are profitable customers. So it's a profitability wish list, not a risk wish list.
16:41Absolutely. Nope. Yeah. I 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. I know what my credit
16:50score is. I monitor my credit score very carefully. And I do have a credit score. Is that what
16:56you were thinking? Yes.
16:57OK. Let me explain. Here you go. The big credit reference agencies, there are three of them,
17:04they will show you a credit score, capitalised, because that is your credit score, not the
17:08credit scoring process. But they are just their illustration of how a typical lender may view
17:16you. They are not used by lenders. Now, just to prove my point, TransUnion is out of 710.
17:24Equifax is out of 1000. Experian is out of 999. But that's about to change. So it's out of
17:311250. The fact they're all different tells you something. Just before I go on, let's
17:35explore that Experian change for a moment. Here's what's happening. It's rolling out new
17:40scores from mid-November till the end of the year. Some of you will have had notifications
17:43today on this particular one. 44% of you will see your band drop. It might drop from excellent
17:49to very good. 42% will get a higher score. Some may be in a higher band. But crucially, this
17:55shouldn't change anything. Why? Because this is just their illustration of how a typical
18:02lender views you. The underlying data is what the lenders use. Your underlying data hasn't
18:09changed. Therefore, your acceptance by lenders won't change. We are too hung up on this. Now,
18:17we have a man from Experian here, John Webb. Thank you for joining us. John, why are you doing
18:20this? So what we've done is, as you've explained there, lenders are looking at the data on credit
18:25reports. We've added in more data into our credit score. Things like overpaying a mortgage,
18:34reducing your overdraft, taking cash from a credit card. These are the things that lenders
18:37are now looking at. We've included them into credit scores so we can give people the most
18:42accurate view of how a lender will view their credit report information when they apply.
18:46Now, a typical lender, but every lender does it differently. Why 1250, though? Why have
18:51you increased the number? I don't get that. I've heard your explanations. I still don't
18:54get it. So we did consider staying at the same score. But actually, the number one thing people
18:59tell us is 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 than
19:10they've ever seen before about how their score is calculated, and more importantly, how to improve
19:14it. Because typically, higher credit scores mean access to more affordable credit, better
19:18rates, better limits. You're obviously a cleverer man than me because I can't see how doing
19:21it out of 999 creating it to an arbitrary figure of 1250 when you could just proportion it makes
19:26any difference. But hey, we'll move on. So, let me move on a little bit. Here we go.
19:31The biggest single thing you need to understand about credit scoring is the biggest piece of
19:34information they miss. The biggest thing that lenders look at is on your application form. It's
19:39your income. Lenders also do affordability scoring. That isn't in your credit score. Think
19:45about it. You've got the best credit score in the world. It's been brilliant. You've just
19:48lost your job. You've got no income. You can't afford to repay what you want to borrow. They
19:52are not going to lend to you. Credit scoring is not the end of the story at all. So my big
19:57message to you... Now, people get in touch with me and say, my credit score's just moved by
20:01seven points. What should I do? Don't sweat small moves in your credit score. It's just their
20:06illustration. But do sweat big ones that last longer, because that's likely an indication
20:13there's something more systemic going wrong in your file. Kevin has emailed you just on
20:18this. Have a look at this. My energy supply did a hard search on my credit report, but I
20:22decided 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? Would be my honest answer. I've
20:36got more detail on that, though, because this is what you need to consider. So we'll just
20:39break it down. What you've got there is a new credit account or an application or maybe
20:45a cash withdrawal on a credit card. What happens then? You'll get a small score dip, but it'll
20:50only last for up to about three months. And then it'll go back to normal. It bounced back.
20:53Don't worry. 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, that is a more significant
21:04problem. You'll see a bigger drop in your score. It'll probably start reducing after
21:08three months, and then it should be gone after six months as long as you don't do any more.
21:12If you've missed the payment, we're starting to get onto this side now is the real problem
21:16side. You'll have a much bigger drop. It'll often go on for six months after it has been
21:21fixed. So you have to make sure you make the payment, and it's only improved if you're paying
21:25on time afterwards, or it can be even worse. Now, if you have an arrear where you are owing
21:31money to a lender, that is significantly damaging. It can take two years to recover from and only
21:36if you manage to make it up to then. And then the really bad stuff, the stuff that is going
21:40to cause you problems with all lenders, if you have a default, a county court judgment
21:45and insolvency. Bankruptcy, IVA equivalent. It is very significantly damaging. It can impact
21:52your score for up to six years or possibly longer. Now, I'm talking here about the credit
21:56score that the credit reference agencies give you, but that is roughly symbolic of the way
22:01that most lenders would think too. So it's both the impact and the time span of the impact
22:06that matters. In the case of that question, they've gone in a few months.
22:09OK. How about this one from Sandra? She's asking, my son has a phone contract in my name.
22:14He recently had a late payment on the account, which is showing on my credit report. Do you
22:18have any advice? Well, just being... I need to make this blunt, and I don't mean to be rude,
22:23Sandra. You have a phone contract you're letting your son use. Therefore, the debt is yours.
22:29It's on your credit file of yours. Whatever your relationship between the son, when you give
22:33somebody else money in your name, it's you that owe it. The first thing you need to do is make
22:38sure you've paid and pay on time in future. There's very little you're going to be able
22:44to do about it. The truth is, it's representing a real thing that's happened. It hasn't been
22:48paid. That's gone onto your credit file. It will have a negative effect. That's what credit
22:52scoring is all about. So you need to just protect yourself in future. We can't tidy up things
22:56that are real. We can learn how to correct errors that shouldn't be on your file. Let's just
23:00ask John. Anything else you can think of that I've not said? No, it's exactly right. It's her
23:05account, her contract. So actually, she's responsible for paying it on her file. Bring
23:09it up to date as soon as possible and keep paying on time. And like you said, it will
23:13improve. It will improve. Within six months, it will start to get better. In two years,
23:16it should mostly be gone. But let me get on to the most important thing you need to do
23:21when it comes to credit. It's not your credit score. It's your credit file, also called your
23:26credit report. You should check your file at least annually and definitely before any major
23:32application you're going to make. Because if there's an error that stops you getting
23:35one, you've got too many applications on your file and you can start to go into a vicious
23:38circle. So your credit file will list key information, the products you have, whether
23:42you've paid on time, any county court judgments 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
23:53a tick because even a small address error on an open account could block you in fraud
24:01scoring line by line. Now, for a general check, I would just do one agency. But if you're about
24:07to do a big application by that, I really mean a mortgage. I would check all three agencies
24:10because you don't know which one they're using. And one, if there is an error, they will pass
24:14it on to the others. It's safer to do it that way. You can see your files for free. You can
24:17use 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. For Experian, go to
24:26the free Experian app. Relatively new that. For TransUnion, loads of bank websites and many
24:31credit help apps will also give you a TransUnion report. Big warning, though. Loads of them
24:37will sign you up to this. £15 a month credit monitoring service. Everything you need. You
24:41don't need that to see your credit report and it's your credit report that really matters.
24:45So don't accidentally sign up for that if you don't need to. Final thought. We've been talking
24:48about student loans already. Student 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. What they
25:00effectively do is they reduce your disposable income if you're paying off, if you're above
25:04that threshold and you're paying off the 9%. So it's a bit like you earn less. And that
25:09can still lead to rejections or getting worse products, but it's not because it's a debt on
25:12your 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
25:21Martin. Good evening, Jane. Hi, Martin. My question is, he used to have a good credit rating of about
25:29750. After we manually underpaid by 55p, one bank loan instalment, the bank then incorrectly
25:41reported to the credit reference agency that we have missed six hold payments. Didn't find
25:48this out until earlier on this year when I had to check his credit file for something. We
25:54contacted the bank. The bank admitted they've made an error. They've corrected the file now,
25:59but it's not really improved his credit score. It's gone from 277, which is what it dropped
26:04to now to 377. And you are absolutely sure that they have corrected it on the credit file,
26:10that that information is right, and it's the same credit file that is of the report that
26:14you're looking at? Yeah. Well, that's a tough one. Luckily, I've got John here. John.
26:19Thank you. That is a tough one. So, yeah, my first instinct would be to say, check all credit
26:26reports with the three credit reference agencies, make sure it's correct. It sounds a bit like they
26:30maybe haven't updated the credit reference agencies with the right information. But if
26:36that's the case, if it is correct, there might be other factors that are influencing the credit
26:41score. So, go through your credit report, have a look, see if there's something else. How
26:44recently was this? How recent was it? Right. So, we found out in September, contacted the bank.
26:52The bank admitted their mistake. I think this could literally... Sorry, they're telling me to go to
26:56break. I think this could literally be that they've just not updated it in time. Keep monitoring
27:01over the next month to six weeks. If it hasn't worked, you apply to have a notification on
27:05your file, a notice of correction put on your file where you write that this was a mistake
27:10and hasn't really happened. You write back to the bank and you put in a dispute with the
27:13credit reference agency that something is going wrong and you want it fixed. And you absolutely
27:18have a right to do that. But I suspect some just don't update that quickly and it's probably
27:22just an updating issue and it will fix itself. It should fix itself, shouldn't it? Yeah. They update
27:26every month, about 46 weeks. Go to break, go to break, go to break. Thank you very
27:29much. OK. Well, coming up, we're going to be talking about what actually happens when
27:35you apply for Credit Plus. Martin, you're taking us to your credit pub. My credit pub indeed.
27:40You will find out more. I'll have some water. OK. We'll see you after this.
27:57Thank you very special. We've got this question that's coming from Lainey just for you,
28:00Martin. I have a clear credit score of 1,000, but I can't get a 0% balance transfer card
28:06to help me clear my credit card debts. I keep getting refused. Why could this be?
28:11Well, I'm hoping you've started to work out why. Let's go straight back into the big briefing
28:15now. Well, there you go. I'd written it there. What happens when you apply? You can still
28:20be rejected, Lainey, with a perfect credit score. Firms use information from your credit
28:24file, but they also use information from your application form, including that all-important
28:28income and any past dealings they've had with you. So if it's a bank that maybe you've
28:33had good dealings with, it might be more helpful. If it's a bank you've not had good dealings
28:37it might be more likely to reject than others. But remember, lenders affordability score 2,
28:44which is just as important. Let me delve into that into a little bit more detail with you
28:49now. Here we go. So, this is just to give you an example of the type of things that's
28:54going on. I'm not going to labour it too much because every lender will work slightly
28:57differently. Here's some of the type of things they will look at. Remember, it involves your
29:00income. You'll see how much of this does. First, your debt ratio. How much unsecured debt,
29:05loans, credit cards, overdrafts, not mortgages, not student loans, do you have as a percentage
29:10of your annual income? You'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. The next one, credit utilisation. This is the amount
29:30of the available credit you have that you are using. It works on the same scale as the
29:35other. 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
29:45this is used, it only really matters if you have a high debt ratio. If you've got a lot
29:49of debt, this matters. If you've only got a tiny bit of debt, the fact you're using all
29:52of it isn't that relevant if it's only a small proportion of your income. Again, you try and reduce your card
29:57or overdraft yet, or mathematically, you try and get more credit. But that causes you problems
30:02in other forms of credit scoring, so I probably wouldn't bother with that. It's the second thing
30:05they look at. And the third is your disposable income. The spare cash each month after bills
30:10and essentials. Now, with cards, loans and mortgages, actually, they're mostly doing a
30:15statistical estimate. They look at what your main outgoings are, but for your spending, they're not
30:20really looking at your spending. They're looking at what somebody in your position would statistically
30:24be likely to spend, so you can't impact it that much. But it's still worth before a mortgage
30:28application just being careful and going frugal. So you're starting to see how much more complicated
30:33than the pure credit score this is. And we get more. For credit card acceptance, because
30:38your acceptance tends to be on your credit score. Will I get accepted or not? The affordability
30:43score dictates your credit limit. How much will you be able to borrow on the card? Because
30:47it's a variable credit limit. Acceptance is binary. This is variable. With a loan, it's more weighted
30:53to affordability score. This 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
31:04you for a £10,000 loan. You've got the same credit score. Everything else is the same. It's
31:08not about your credit score. It's about your affordability score. Mortgage acceptance, again,
31:13more weighted towards affordability scoring. Now, one of the things going on there is probably
31:19over-application. You've applied too many times and that can be dangerous. Applying can mark
31:24your credit file, even if you don't get accepted. So if possible, don't apply. Go on to an
31:30eligibility comparison on a comparison site. That avoids heart searches and it shows you
31:36your likely odds of acceptance for different cards. Then you can home in on the best card.
31:41Crucially, these use soft searches. So you see these searches on your file, lenders can't
31:46factor them in, so they're safe to do. I suspect you've been over-applying. Go
31:50and do an eligibility calculator if your score's low. Give it six weeks or so. And then try
31:55again and hopefully, or even three months, and then things may have softened. Anything
31:58else or are we good? Exactly right. Take a break from applying for about three months and
32:02then use the eligibility check. OK, there we go. We both agree. Cool. OK, there's this that's
32:06coming as well from Stephen. He's asking, I've got an excellent credit score, but I want to change
32:11to an interest-free balance transfer card. Will my credit score go down?
32:16Who cares? Stephen, I genuinely don't care. For a very simple reason. First of all, it's
32:21only your credit score. It's only an illustration. But more importantly, I tend to think of managing
32:26your credit worthiness like saving. I'm saving up for a rainy day in case I need it. What is
32:31the most important use of your credit score? To cut the cost of existing debt, which is what a
32:35balance transfer is. So use it. It is far better to have a lower credit score and better finances
32:41and cheaper debt than a good credit score and you're paying over the odds. That's what you're
32:45building your credit score for. If your credit score goes down, it goes down. You've got a card
32:49that cuts the cost of your debts. Hurrah!
32:52Stephen! Sorry, Mayim. Right. This is coming from Ahmed. I think quite an important question.
32:58What's the safest checklist to build a strong credit history from 18?
33:03Can I have me pub? Bring me me pub. Now, 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 the prop. Do not drink it. It might poison you.
33:26OK. 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. I forgot my wallet.
33:42Oh, I'm so sorry. Could you lend me 20 quid and I'll buy you...
33:47Give it your back tomorrow and I'll buy you a pint as well. Now, I have done this about 40 times before
33:54and every single time I have done it, I have always paid back the next day
33:58and I have always bought a pint on top. Would 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. Well...
34:08I'm a fan. It's always one.
34:12It's always one.
34:14Yes, I would.
34:16I'm very glad you said that.
34:18Next example. Here we go.
34:20Anne, how are you?
34:22Great, thank you.
34:24Oh, no, I forgot my wallet.
34:26Tell you what, could you lend me 20 quid and I'll give it you back tomorrow
34:29and 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,
34:37never 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.
35:02Oh, no.
35:03I 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.
35:11You do not know who they are.
35:12It's not Martin Lewis.
35:14Would you lend to them?
35:16No.
35:17No.
35:18Okay.
35:19This is credit scoring.
35:20This person, for example, has a good credit history.
35:21We know that they're repaid.
35:22We can predict their future behaviour based on their past.
35:24They're a pretty safe bet.
35:25Second person, we predict their future behaviour based on their past.
35:28They're not a safe bet.
35:29Third person may be lovely, but you don't know them.
35:32You have no data.
35:33No data gets rejection.
35:35That's how credit scoring works.
35:36And if you'd like to go back there before they move the put away,
35:38thank you very much for that, everybody.
35:39I know we're on the wrong channel.
35:43Get my pub out of here.
35:47Okay.
35:48Thanks, chaps.
35:49How do you do that?
35:50Two biggest reasons people are rejected.
35:52Your 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?
36:02You get what's called a build or a rebuild credit card.
36:05Easy to get.
36:06They have high interest.
36:07Go on to an eligibility calculator for a rebuild card.
36:10If you can get them, there are a couple that give spending rewards.
36:12Tesco Foundation card, Asda money, terrible interest rates.
36:15Here's how you use them at no cost.
36:17Spend 50 to 100 quid a month on them.
36:19Just your normal spending.
36:20Don't spend anything that you wouldn't spend.
36:22Pay it off.
36:23In full.
36:24In full.
36:25Preferably provide direct debit.
36:26Never 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.
36:55Never overspend.
36:56Pay it off in full.
36:57Absolutely.
36:58Thank you very much, Martin.
36:59Now, coming up next, 10 ways to be financially fit and the rest of news you can use, including
37:04half-price Christmas trees.
37:16Well, welcome back to the show.
37:18They are loving this credit score special, but Martin, what I want to know, how do you
37:23actually 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, but it's what
37:30we called it when I was growing up.
37:32It's a bit like going on the pool, financially.
37:35You all right, Anne?
37:37So, the truth about going on the pool is there's lots you can do to make
37:41yourself look better, but 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.
37:55Here we are.
37:57So, the first one, use consistent answers on every application.
38:01Now, what do I mean by that?
38:03First of all, they like stability, but more importantly, if you get it wrong, you can be
38:06triggered out of fraud scoring.
38:07So, if you could be a marketing assistant or a promotions assistant, don't vary the term.
38:12Use 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, but 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.
38:31For a national, then you can ask for a notice of correction and that can prove your residency and help.
38:37Yes?
38:38Yes.
38:39Yes.
38:40Right.
38:41Finally, you can snog or marry who you like.
38:42You have my permission.
38:44Financially.
38:45That will not affect your credit.
38:47What will a joint products?
38:50Mortgage, loan, bank accounts.
38:52No 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, that can financially link you.
39:00That means they can look at the other person's file when you're applying for credit.
39:05So 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.
39:26Fascinating, this one.
39:27The first time I've said this, overpaying your mortgage may start to boost your credit worthiness.
39:31Check you shouldn't be saving.
39:32Go to a mortgage overpayment calculator to check.
39:34This is because Experian, the biggest reference for Reddits 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.
39:48Never miss or be late on repayments. That is so important.
39:52If 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,
39:58and 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.
40:07Klarna and Zilch already report.
40:09The rest are likely to start doing so once regulation starts in the middle of next year.
40:14It might not feel like a debt, but buy now, pay later is a debt.
40:19So, if you pay it off on time, it can be positive.
40:22If you miss payments, it can be negative for your credit file.
40:26Not 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.
41:05So, 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?
41:10Now, 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.
41:26But 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,
41:57and 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.
42:08Makes 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, but 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.
42:30If you want a credit reward card, but you're about to apply for a mortgage,
42:35do it after the mortgage application.
42:37The mortgage application is what matters.
42:39Applications 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.
42:49How are you doing?
42:51OK.
42:52You have got time for some quick news you can use.
42:57Okey-doke.
43:01Right.
43:02Time 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.
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 behind the very top open market fixed-rate payer.
43:24But many people want a big name with their savings.
43:27NS&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.
43:36This is owned by the state, so every penny in there, even if it's more than that, is protected.
43:41So it's a good option for those with very large amounts.
43:44Maybe you sold your house seven months ago and you want to know what to do with the money.
43:47Next, a heads up.
43:48You can get £10 to £60 West End theatre tickets if you've got a MasterCard.
43:53Starts next Tuesday, 10am.
43:54I'm doing it now because Sun shows sell out quickly, so you want to be on at the exact moment.
43:59It'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.
44:13If you're watching, I love you.
44:15From tomorrow, Ryanair won't accept home-printed boarding passes.
44:19You must check in online or Variks at first.
44:21If 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.
44:31So 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.
44:41There's a six-foot Nordman fur.
44:43These are all real trees, £20.
44:45So half 40 down to 20.
44:46Three-and-a-half foot potted tree for £15.
44:47Or a four-foot tree with lights for £20.
44:49And while we're speaking about Christmas, next Tuesday is the big one.
44:55We do it every year.
44:57Big audience, festive forecast, the 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 because 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, and have a pen and pencil or some note-taking with you.
45:14Because at the end, I'm running through all those deals and I'm going to be running through them at serious speed, Jeanette.
45:18Well, there you go.
45:22I've got one question for you.
45:24How is your voice doing?
45:25My voice is all right now, but you know I can't speak out when we've done the festive forecast that we're going through next week.
45:29Ladies and gentlemen, thank you so much.
45:31You've got questions about Christmas deals or free cash from bank switching or children's savings?
45:35I'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.
45:40The audience here has been wonderful.
45:42A round of applause for John Webb and Anne.
45:48And you know what?
45:50If I drank, I'd say I'd be off to my pub now, but I don't really, so I just go and pretend afterwards anyway.
45:54That's it.
45:55Take care, everybody.
45:56Good night.
46:12The brand new series came to an explosive end last night as the truth came out.
46:21Don't miss Vicky McClure in Trigger Point streaming now on ITVX.
46:26Next tonight, it's documentary, TikTok, murder gone viral.
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