The Martin Lewis Money Show Season 17 Episode 1

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00:00The UK's biggest credit reference agency, Experian, is about to tell

00:14millions of its customers their credit scores will drop. If that's you, what does

00:19it mean in practice? Credit scoring is shrouded by grey mist. Tonight, I want to

00:25blow them away. I'm going to show you the truth of how it really works, what you

00:31need to do, and I will finish with my crucial key tips to boost your acceptance

00:36odds. Now, this isn't just about the obvious mortgages and credit cards and

00:42loans, where credit scoring can even impact the rate you get. Credit checks

00:46may affect things you pay ahead for too, like mobile phone contracts and sometimes

00:52energy direct debit tariffs. Then, in my news you can use, new figures out show

00:591.1 million graduates have paid more student loan back than they should have

01:03done in just the last tax year. I will show you how to reclaim hundreds or

01:09thousands of pounds of it. And British savings bonds are about to get better,

01:13half-price Christmas trees, a Ryanair warning, and cheap theatre tickets. Now to

01:18our own showstopper, Jeanette Quachy, everybody. Thank you very much. I am your

01:25leading lady. I'm happy to be back, but we want to hear from you, so please do send us

01:28your questions on X or on threads. Use the hashtag MartinLewis or you can email the

01:33team MartinLewis at ITV.com. If we don't use your question tonight, we may use it in a

01:39future show and a huge welcome, as always, to our studio audience. Wave your wallet, everybody!

01:46We love that. That's right. So Martin, we had an enormous response to your call out last week,

01:51saying that people could leave O2 because it's hiking, it's price hike, if you like. Just wanted

01:55to show you a few messages. This is coming from Nicola. She's ditched and she switched. She says,

02:00I saw your O2 increase information this week, requested my PAC code and switched to a new

02:05provider. I got a great offer for three months, pocketed a saving of £38, £25 a month, £459 a

02:12year. New sim, up and running, O2 boycott. So if you watched last week, you know I got on my

02:18soapbox about this. O2 put up the price hike it had previously said when people signed up it would

02:23give them, so it was a price hike on the price hike mid-contract. Crucially, if you get that

02:28notification, you've got 30 days in which you can leave and then you might be able to go and save

02:33a lot of money and I'm encouraging people to do so because we want it to cost O2 in the pockets

02:38so that it never behaves like this again and other companies think we don't want to do that either.

02:43Yeah, Sean, he's taking your advice here and Sean has haggled. He said, I rang up O2 yesterday and after

02:49a phone call I stayed with them but saved £34 a month on my two contracts with more data, a huge saving

02:56of £408 a year. Great. Now this is the interesting one because when I told people their rights last

03:03week, normally when you're at the end of the contract you can use that as an opportunity to

03:07haggle, benchmark the best deal elsewhere, take it to your firm but because this is a unique experience,

03:12this 30-day notification that you can leave, I wasn't 100% sure it would work with O2 like it would

03:18at the end of the contract. So I asked people to try, Sean is a success and frankly I've had hundreds of

03:23other people who've taken this opportunity to go to O2 and say I will leave you unless you give me

03:27a better deal and they've got better deals, so that's working. Fabulous. Right, now there is a

03:31question though, it's coming from Shirley, a bit of a follow-up question. She said, I've seen your item

03:35on O2, I just asked for a PAC code and they've come back saying I need to pay the device off in full,

03:40is that correct? It's very interesting. So PAC code is the porting authorization code that you get when

03:45you're changing mobile phone number. Listen, I've seen some of those messages and what actually says it

03:51does say you need to pay this off in full. But I think that is a terrible piece of phrasing by O2,

03:57I'm going to hope it's accidental and not deliberate, certainly something the regulator

04:01should look at. What that means is you're still going to have to pay your handset. It doesn't mean

04:06you have to pay all of your handset now, you were paying it by the month and you can continue to pay

04:11it by the month but you'll have to pay everything that they owe them on the same plan. But when they say

04:15pay it off in full it sounds like you have to give them the money now, doesn't it? It's poor communication,

04:20bad phrasing. I hope it hasn't deliberately been done to put people off switching. If it has,

04:24that's something that regulators should look at. You can leave O2's airtime plan and keep paying your

04:29handset costs by the month just as you were doing before. You're free to leave, Shirley. Okay,

04:34hopefully that helps, Shirley. Now, I know we're going to get into credit scoring in the meat of the show.

04:39Something I wanted to ask you first though, it's a question that's coming from Amy O.

04:44There it is. I've heard there's a way you can claim back a student loan which you may have overpaid on.

04:49How do I do this and how do I know if this applies to me? Absolutely. We've just got brand

04:53new figures out on this from the student loans company so I'm going to do the first part of my

04:57news you can use now. Okay, so the new figures say 1.1 million university leavers and graduates have

05:06overpaid their student loans in the 24-25 tax year and that adds to at least 4 million people from

05:13figures and requests that we've given them for information in the past. So there could be a 5 million of

05:17you out there who are owed money. There are four reasons, but the first reason is the big reason.

05:25It's when you repaid your loan but you didn't earn enough to need to repay it. Over a million people

05:30in the last tax year did this. Now, the rules state absolutely plainly you only need to repay

05:35the student loan if you earn over the annual threshold in a tax year. What your annual threshold

05:41is depends which plan you're on. So we'll hold on this graphic so you can read your graphic as I go

05:46through. I'm going to focus on Plan 2 loans because that's the one with by far the most people on.

05:51England starters, it's when you started university and where you were resident,

05:552012 to 2022 and wealth starters from 2012 onwards. Your repayment threshold is £28,470 a year. You repay

06:039% of everything you earn over that in a year. That's how it works. But PAYE, payroll,

06:11it takes the money based on your monthly earnings. So £28,470 a year is equivalent to £2,372 a month.

06:20You repay 9% of everything you earn above that a month. Let me give you an example and you'll see

06:24why so many have overpaid this. Here we go. So there's the monthly repayment threshold. Let's imagine

06:31maybe you've just started after university and it's the next year or two. You've had a few months

06:35off. You didn't work in April. You didn't work in May. You didn't work in June. Then you've got

06:40yourself a job paying £36,000 a year. £3,000 a month done because it's easy maths. In each of those

06:47months you have to repay 9% of everything above the monthly threshold which is about a repayment of £56

06:55a month each month for the remaining 9 months. You understand why? OK. But now look at this.

07:04Your total tax year earnings were £27,000. The annual threshold is £28,470. You earned less

07:14than the threshold. You don't have to repay your student loan. Here are the payments that you made.

07:19£508. You can reclaim the £508. So this is big for many people. Who does it tend to most commonly

07:27affect? Well, it's those who only worked for part of the year, those who are on commission or those

07:33who are on variable incomes. If your income is going up and down and you didn't earn over that amount in

07:37the tax work, you are able to reclaim. You use SLC Refund Request Form at gov.uk or you can do it in your

07:44student loan company repayment app. You can do it for every year except the current tax year

07:50because the current tax year, you'll have to wait till it finishes. So for every year before that,

07:54you can go and reclaim your money. Yes, Jeanette? Just before you move on, we've got a success story

07:57on this one and it's a big one. Have a look at this. Danielle lives in Loughborough with her husband and

08:04two kids. Being a maths teacher was the career that I always wanted. I needed to take a student loan to

08:10pay for it. After my initial £16,000 I borrowed. I also had to borrow another £9,000 to pay for my

08:17teacher training. I've watched the Martin Lewis show for almost seven years now. There was one

08:23show back in November. Martin mentioned there's over a million students that have overpaid their

08:27student loan. Is that me? Have I ever paid? He gave numerous reasons. The one that stood out to me

08:32was gaps in employment. In the last few years, I have had to give up my job when I had my eldest child.

08:38He was born with a brain condition and requires a lot of care. Once Martin shared that you could

08:43possibly have overpaid your student loan, I acted instantly. It was as simple as log on to student

08:49finance, click manage your statements and click request refund. Within 48 hours of my application,

08:56I was told I got a refund of £2,213. It was a pinch-free moment. I was seven months pregnant. I'm not

09:04working. I don't get an income. Having that money was really helpful. I'm so glad I went through the

09:09process.

09:09Thank you so much for doing that film. So look, she said a million people have overpaid. That was

09:17the previous tax year. This is an annual figure and it's still a million people overpaying each year,

09:21which is why it's a clarion call for me that if you are a graduate or university leaver who's paying

09:26your student loan to cheque you haven't overpaid. Now, just before I move on, because we came in,

09:31there is one thing. This is a technicality and people ask me about this. It's a bit complex.

09:36If you overpaid in some months, but earned over the annual threshold, you cannot reclaim. So this is

09:41this is a negative. Let me explain that to you. So here's a scenario. Someone who earns £24,000 a

09:47year, normally standard salary. So £2,000 a month below the threshold. We'll stick with plan two again

09:52as an example here, but obviously from different plans, the numbers are different, but then got a £5,000

09:57bonus in December. So they've got a £5,000 bonus. Let's have a look. First of all,

10:03their total tax year earnings are £29,000 above the threshold, therefore. So they repaid

10:10nine percent in this month of everything above £2,372. They repaid 400, just over £400. Now,

10:18what you would might think is, hold on, they're only £500 above the annual threshold. They should be

10:23paying nine percent of that, about 45 quid. But no, it's done by the month. They've repaid £400

10:29of their student loan, even though they're only just above the threshold. And this is complicated,

10:34but effectively, the rule is this. You repay your student loan by the month through PAYE,

10:41and that is correct, unless your total annual earnings are below the threshold,

10:46and then you don't have to repay. If you think it seems unfair, that's because it's unfair,

10:50but that's the way the system works. Jeanette? Absolutely. I mean, I understood it,

10:55but you can move on. They're small. OK, good. You got it. Right. I've got more for you. Yes,

11:00you're right. Other reasons. Let's scroll up. There we go. I'll do these ones quickly. Reason to all

11:04much smaller, all in the tens of thousands, not over a million here. Wrong student loan repayment plan.

11:09If your employer doesn't know which plan you're on, it has to default to plan one, which is repayments

11:12above 26,000. But the biggest plan, plan two, and all the Scottish plans, plan four,

11:17the repayment threshold is higher. So you shouldn't be repaying as much. You should only be repaying

11:21above this amount, but you're repaying above that amount. If that's you, call the student loan

11:25company here for a refund. You can't do it online. Also, go and talk to your employer's payroll

11:29department and say, actually, this is my plan. Please change my setup so I'm paying on the right plan.

11:34Reason three, you started repaying the loan too early. Nearly 40,000 here. This is the rule. You only,

11:41regardless of what you earn, you only have to start qualifying to repay the student loan in the April,

11:45after you leave university. For most graduates, that's nine months after they graduate. So you'd

11:50leave in the July, the following April. But if your employer has the wrong details,

11:54it can take the money too soon. If that happens, you can get the money back by calling SLC for a

11:59refund. Good to have your pay slips if you're doing that one. And the final reason, often get asked about

12:03this, is money is deducted after you've fully cleared the loan. So once you've paid off everything

12:09that you owe. Nearly 60,000 people last year. The loan's normally wiped after 30 years. It depends

12:14on the plan. Every plan is different. So you can look that up online. But the student loan company

12:20takes time to notify PAYE, so they don't always stop it on time. If that happens, you don't need

12:24to reclaim. You will be paid back automatically. My top tip though, within the last two years of

12:30repaying your student loan, you can go online at student loan company and ask to set up a direct

12:36debit. So you pay it by direct debit, not through the payroll. And then you only pay the exact

12:40amount that you owed. And that is where we're finishing, I think, on student loans.

12:44One more. I know. I'm so sorry. There's one more question. It's coming from, I'm sorry. It's coming

12:50from Amy. Amy says, I recently received a student loan refund of £1,601 overpaid. A proportion of that

12:57will have paid off interest. When I claim the refund, won't the amount just be added to my student loan?

13:02Absolutely. Very important question. Yes, 100%. If you've overpaid and you get the money back,

13:08then your student loan account, you will owe more. Now, what you may be thinking is, hold on,

13:13doesn't he normally say it's best to overpay loans because then you pay less interest? The

13:17quicker you pay a loan, the better. You are right on normal loans. Student loans are not normal loans.

13:24For example, those on those Plan 2 loans, the biggest one being repaid off at the moment,

13:29the stats show only around one in three people will clear what they borrowed plus interest in

13:35the 30 years before it wipes. Most people will just pay 9% of what they earn above the threshold

13:41for 30 years. So if you've overpaid and you take the money and you're one of those two thirds of

13:47people lower to middle earners, well, you're still going to repay 9% of everything you earn over the

13:53threshold for the next 30 years. So taking that money back is not going to cost you anymore in future.

13:56The money in your pocket is better in your pocket. Now, with other plans, you are more likely to clear

14:02earlier because the loan amount's lower and the interest rate is lower. But what I would still

14:06say then is if you need the money, say, to clear expensive debts or to reduce your mortgage borrowing,

14:12on the other plans, the interest rate's only 3.2% and student loans have better terms than any other

14:17form of borrowing. You only repair it if you're earning enough and it's going to wipe at some point.

14:20So in that case, you may still be better to take the money, have it in your pocket so you can use

14:26it so you don't have other more expensive debts. But especially those on the Plan 2 loans,

14:31the majority of people are better to take the money rather than just to reduce a loan that won't

14:34necessarily mean they pay any less in the future anyway. OK, now...

14:37Do you understand that? Because it's really complex. Yeah.

14:40OK, I promise you're done now with that, I promise. Well, you can get in touch. Let us know

14:44about your student loan situation. Does this affect you? Always use that hashtag,

14:48Martin Lewis. But coming next, credit scoring. How does it work?

14:52And what is Experian about to do? We'll see you in four.

15:06Welcome back. We're live. We're going to be talking about credit scoring in a moment,

15:09but just before that, we're getting lots of reports that the student loan company website and app

15:13is struggling a bit, likely because of lots of demand. It's always what we do on this show. So

15:17be a bit patient, maybe check it in half an hour or an hour or so and it should be easier. It should be.

15:21There's lots coming in over the break. I'm going to sort it all out and come back to it. But let's

15:25go to Jo in the studio. Jo, you've got a question for Martin. Hi, Martin. Hi. Hi. Yeah, I've heard

15:31that the credit agencies are changing the rules, but I don't understand how they actually work in the

15:36first place. Could you explain? I can. And they're not changing the rules, they're changing the score. Ah.

15:42And the first thing you all need to understand is the difference between your credit score

15:47and the credit scoring process. Don't worry. I'm going to explain in my big briefing. Thank you.

15:54OK. The truth about credit scoring. The most important thing you all need to understand.

15:59You do not have a credit rating. You do not have a credit score in the UK. There is no single

16:07number that dictates acceptability. Each lender, when you apply, scores you differently based on

16:15its own individual profitability wish list. Profitability, not risk. Why do I say profitability?

16:22Well, in many cases it is. Are you a good or bad risk? But it may be a company that's trying to

16:26target people who are a poor risk so it can charge them more. And for them, poor risk are profitable

16:31customers. So it's a profitability wish list, not a risk wish list. That's the...

16:37No. Yeah. I was expecting that because this is what everyone says to me.

16:42But that's nonsense, Martin, because I have paid for my credit score. I know what my credit

16:45score is. I monitor my credit score very carefully. And I do have a credit score.

16:50Is that what you were thinking? Yes. OK. Let me explain. Here you go.

16:56The big credit reference agencies, there are three of them, they will show you a credit score,

17:01capitalised, because that is your credit score, not the credit scoring process. But they are just

17:07their illustration of how a typical lender may view you. They are not used by lenders. Now,

17:15just to prove my point, TransUnion is out of 710. Equifax is out of 1000. Experian is out of 999.

17:24But that's about to change. So it's out of 1250. The fact they're all different tells you something.

17:29Just before I go on, let's explore that Experian change for a moment. Here's what's happening.

17:34It's rolling out new scores from mid-November till the end of the year. Some of you will have had

17:37notifications today on this particular one. 44% of you will see your band drop. It might drop from

17:43excellent to very good. 42% will get a higher score. Some may be in a higher band. But crucially,

17:50this shouldn't change anything. Why? Because this is just their illustration of how a typical lender

17:57views you. The underlying data is what the lenders use. Your underlying data hasn't changed. Therefore,

18:05your acceptance by lenders won't change. We are too hung up on this. Now, we have a man from Experian

18:13here. John Webb. Thank you for joining us. John, why are you doing this? So what we've done is,

18:18as you've explained there, lenders are looking at the data on credit reports. We've added in more data

18:23into our credit score. Things like overpaying a mortgage, reducing your overdraft, taking cash

18:30from a credit card. These are the things that lenders are now looking at. We've included them

18:34into credit scores so we can give people the most accurate view of how a lender will view their

18:39credit report information when they apply. How a typical lender, but every lender does it differently.

18:44Why 1250, though? Why have you increased the number? I don't get that. I've heard your explanations.

18:48I still don't get it. So we did consider staying at the same score, but actually, the number one

18:54thing people tell us is that they want more information about how their credit score is

18:58calculated. By moving to the new range of up to 1250, it allows us to give people more detail

19:04than they've ever seen before about how their score is calculated, and more importantly, how to improve

19:09it, because typically, higher credit scores mean access to more affordable credit, better rates,

19:14better limits. You're obviously a cleverer man than me, because I can't see how doing it out of 999,

19:18creating it to an arbitrary figure of 1250 when you could just proportion it makes any difference.

19:21But hey, we'll move on. So let me move on a little bit. Here we go. The biggest single thing you need

19:27to understand about credit scoring is the biggest piece of information they miss. The biggest thing

19:31that lenders look at is on your application form. It's your income. Lenders also do affordability

19:38scoring. That isn't in your credit score. Think about it. You've got the best credit score in the world.

19:42It's been brilliant. You've just lost your job. You've got no income. You can't afford to repay

19:46what you want to borrow. They are not going to lend to you. Credit scoring is not the end of the story

19:52at all. So my big message to you, you know, people get in touch with me and say, my credit score's just

19:55me by seven points. What should I do? Don't sweat small moves in your credit score. It's just their

20:01illustration. But do sweat big ones that last longer, because that's likely an indication there's

20:08something more systemic going wrong in your file. Kevin has emailed you just on this. Have a look at

20:14this. My energy supply did a hard search on my credit report, but I decided to switch instead of

20:19after getting a better deal within the cooling off period. Does this affect my credit score? It seems

20:24to have dropped a little. And what can I do? Well, yeah, it does affect your credit score, but who cares?

20:29Would be my honest answer. I've got more detail on that, though, because this is what you need to

20:33consider. So we'll just break it down. What you've got there is a new credit account or an application

20:39or maybe a cash withdrawal on a credit card. What happens then? You'll get a small score dip,

20:44but it'll only last for up to about three months, and then it'll go back to normal. It bounced back.

20:48Don't worry. I mean, listen, it always depends on circumstance, but this is sort of guidance.

20:53Scale of magnitude. If you've been applying for lots of accounts in a short space of time,

20:57that is a more significant problem. You'll see a bigger drop in your score. It'll probably start

21:02reducing after three months, and then it should be gone after six months as long as you don't do

21:06any more. If you've missed the payment, we're starting to get onto this side now is the real

21:11problem side. You'll have a much bigger drop. It'll often go on for six months after it has been fixed.

21:17So you have to make sure you make the payment, and it's only improved if you're paying on time

21:21afterwards, or it could be even worse. Now, if you have an arrear where you are owing money to a lender,

21:27that is significantly damaging. It can take two years to recover from, and only if you manage to make it up

21:32to then. And then the really bad stuff, the stuff that is going to cause you problems with all lenders,

21:37if you have a default, a county court judgment and insolvency. Bankruptcy. IVA equivalent.

21:44It is very significantly damaging. It can impact your score for up to six years or possibly longer.

21:50Now, I'm talking here about the credit score that the credit reference agencies give you,

21:54but that is roughly symbolic of the way that most lenders would think too. So it's both the impact and the

21:59time span of the impact that matters. In the case of that question, they've gone in a few months.

22:04OK. How about this one from Sandra? She's asking,

22:07my son has a phone contract in my name. He recently had a late payment on the account,

22:11which is showing on my credit report. Do you have any advice?

22:15Well, just being... I need to make this blunt, and I don't mean to be rude, Sandra.

22:19You have a phone contract you're letting your son use. Therefore, the debt is yours. It's on your credit

22:25file of yours. Whatever your relationship between the son, when you give somebody else money in your name,

22:29it's you that owe it. The first thing you need to do is make sure you've paid and pay on time in

22:36future. There's very little you're going to be able to do about it. The truth is it's representing

22:41a real thing that's happened. It hasn't been paid. That's gone onto your credit file. It will have a

22:45negative effect. That's what credit scoring is all about. So you need to just protect yourself in

22:50future. We can't tidy up things that are real. We can learn how to correct errors that shouldn't be on

22:54your file. Let's just ask John. Anything else you can think of that I've not said?

22:58No, it's exactly right. It's her account, her contract. So actually, she's responsible for

23:02paying or showing up on her file. Bring it up to date as soon as possible and keep paying on time.

23:07And like you said, it will improve. It will improve. Within six months,

23:10it will start to get better. And within two years, it should it should mostly be gone.

23:13But let me get on to the most important thing you need to do when it comes to credit.

23:18It's not your credit score. It's your credit file, also called your credit report.

23:23You should check your file at least annually and definitely before any major application

23:28you're going to make. Because if there's an error that stops you getting one, you've got too many

23:31applications on your file and you can start to go into a vicious circle. So your credit file will

23:35list key information, the products you have, whether you've paid on time, any county court judgments

23:39against you, the electoral roll information. I want you to go through this line by line,

23:44be a pedant, be pedantic. And I will give you a tick because even a small address error on an open

23:53account could block you in fraud scoring line by line. Now, for a general check, I would just do

24:01one agency. But if you're about to do a big application by that, I really mean a mortgage.

24:04I would check all three agencies because you don't know which one they're using. And one,

24:08if there is an error, they will pass it on to the others. It's safer to do it that way.

24:11You can see your files for free. You can use the statutory credit reports which tend to be a bit

24:14slower or these ways are a bit quicker. For Equifax, Equifax Basic or ClearScore will give

24:19you a free report. For Experian, go to the free Experian app, relatively new that. For TransUnion,

24:24loads of bank websites and many credit help apps will also give you a TransUnion report.

24:30Big warning though, loads of them will try and sign you up to this. £15 a month credit monitoring

24:35service, everything you need. You don't need that to see your credit report and it's your

24:38credit report that really matters. So don't accidentally sign up for that if you don't

24:41need to. Final thought, we've been talking about student loans already. Student loan company loans

24:46do not go on your credit file. That isn't to say they can't affect your applications,

24:53but they don't affect it as debt. What they effectively do is they reduce your disposable

24:57income if you're paying off, if you're above that threshold and you're paying off the 9%.

25:01So it's a bit like you earn less and that can still lead to rejections or getting worse products,

25:06but it's not because it's a debt on your credit file, it's just because you have lower disposable

25:10income, if that makes sense. Absolutely. We've got a virtual wall this evening. Jane is here. Jane,

25:15you've got a question for Martin. Good evening, Jane. Hi Martin. Right, my question is,

25:21he used to have a good credit rating of about 750. After we manually underpaid by 55p,

25:31one bank loan instalment, the bank then incorrectly reported to the credit reference agency that we

25:39have missed six hold payments. I didn't find this out until earlier on this year when I had to check

25:45his credit file for something. We contacted the bank. The bank admitted they've made an error. They've

25:52corrected the file now, but it's not really improved his credit score. It's gone from 277,

25:58which is what it dropped to now to 377. And you are absolutely sure that they have corrected it

26:04on the credit file, that that information is right, and it's the same credit file that is of the report

26:09that you're looking at? Yeah. Well, that's a tough one. Luckily, I've got John here. John. Thank you.

26:15That is a tough one. So yeah, my first instinct would be to say, check all credit reports with the three

26:21credit reference agencies, make sure it's correct. It sounds a bit like they maybe haven't updated the

26:28credit reference agencies with the right information. But if that's the case, if it is correct, there

26:33might be other factors that are influencing the credit score. So go through your credit report,

26:38have a look, see if there's something else. How recently was this? How recent was it?

26:42Right. So we found out in September, contacted the bank. The bank admitted their mistake.

26:48It met... I think this could literally... Sorry, they're telling me to go to break. I think this could

26:52literally be that they've just not updated it in time. Keep monitoring over the next month to six

26:57weeks. If it hasn't worked, you apply to have a notification on your file, a notice of correction

27:03put on your file where you write that this was a mistake and hasn't really happened. You write back

27:07to the bank and you put in a dispute with the credit reference agency that something is going

27:11wrong and you want it fixed. And you absolutely have a right to do that. But I suspect some just don't

27:16update that quickly and it's probably just an updating issue and it will fix itself. It should fix itself,

27:20shouldn't it? Yeah, they update every month. Go to break, go to break, go to break. Thank you very much.

27:26Okay. Well, coming up, we're going to be talking about what actually happens

27:30when you apply for Credit Plus. Martin, you're taking us to your credit pub.

27:34My credit pub indeed. You will find out more. I'll have some water. Okay, we'll see you after this.

27:50Welcome back to our credit scoring special. We've got this question that's coming from

27:54Lainey just for you, Martin. I have a clear credit score of 1,000, but I can't get a 0%

28:00balance transfer card to help me clear my credit card debts. I keep getting refused. Why could this be?

28:06Well, I'm hoping you've started to work out why. Let's go straight back into the big briefing now.

28:11Well, there you go. I've written it there. What happens when you apply? You can still be rejected,

28:15Lainey, with a perfect credit score. Firms use information from your credit file, but they also

28:20use information from your application form, including that all-important income and any past

28:24dealings they've had with you. So if it's a bank that maybe you've had good dealings with,

28:29it might be more helpful. If it's a bank you've not had good dealings with,

28:32it might be more likely to reject than others. But remember, Lenders' Affordability Score 2,

28:39which is just as important. Let me delve into that into a little bit more detail with you now.

28:45Here we go. So this is just to give you an example of the type of things that's going on. I'm not

28:50going to labour it too much, because every lender will work slightly differently. Here's some of the

28:53type of things they will look at. Remember, it involves your income. You'll see how much of this

28:56does. First, your debt ratio. How much unsecured debt, loans, credit cards, overdrafts, not mortgages,

29:02not student loans, do you have as a percentage of your annual income? You've got £20,000 on credit

29:08cards. You earn £40,000. That's 50%, and it uses this scale. There you go. That's okay.

29:14It's not good. It's a bit of a problem. What do you do? Well, try and reduce your debt or,

29:19of course, try and improve your income, which may be a bit more difficult.

29:22The next one, credit utilisation. This is the amount of the available credit you have that you

29:27are using. It works on the same scale as the other. So £100 debt on a credit card with £1,000

29:32credit limit is 10% credit utilisation. But it's looking across all of your debts. Now,

29:38the really important thing here is when this is used, it only really matters if you have a high

29:43debt ratio. If you've got a lot of debt, this matters. If you've only got a tiny bit of debt,

29:47the fact that you're using all of it isn't that relevant if it's only a small proportion of your

29:50income. Again, you try and reduce your card or overdraft debt, or mathematically, you try and get

29:55more credit. But that causes you problems in other forms of credit scoring, so I probably wouldn't

29:59bother with that. It's the second thing they look at. And the third is your disposable income.

30:04The spare cash each month after bills and essentials. Now, with cards, loans and mortgages,

30:09actually, they're mostly doing a statistical estimate. They look at what your main outgoings

30:13are, but for your spending, they're not really looking at your spending. They're looking at what

30:17somebody in your position would statistically be likely to spend, so you can't impact it that much.

30:22But it's still worth before a mortgage application just being careful and going frugal. So you're

30:26starting to see how much more complicated than the pure credit score this is. And we get more.

30:31For credit card acceptance, because your acceptance tends to be on your credit score,

30:36will I get accepted or not? The affordability score dictates your credit limit. How much will

30:41you be able to borrow on the card? Because it's a variable credit limit. Acceptance is binary,

30:44this is variable. With a loan, it's more weighted to affordability score. This is why,

30:50think about this, this really explains everything. You are one person, you apply to one lender,

30:56they accept you for a £3,000 loan, they reject you for a £10,000 loan. You've got the same credit

31:01score, everything else is the same. It's not about your credit score, it's about your affordability

31:06score. Mortgage acceptance, again, more weighted towards affordability scoring. Now, one of the things

31:13going on there is probably over-application. You've applied too many times and that can be dangerous.

31:18Applying can mark your credit file, even if you don't get accepted. So if possible, don't apply. Go

31:24on to an eligibility comparison on a comparison site. That avoids hard searches and it shows you

31:31your likely odds of acceptance for different cards. Then you can home in on the best card. Crucially,

31:36these use soft searches. So you see these searches on your file, lenders can't factor them in,

31:42so they're safe to do. I suspect you've been over-applying. Go and do an eligibility calculator.

31:47If your score's low, give it six weeks or so and then try again and hopefully, or even three months

31:52and then things may have softened. Anything else, are we good? Exactly right. Take a break from applying

31:56for about three months and then use the eligibility check. OK, there we go. We both agree. Cool. OK,

32:00there's this that's coming as well from Stephen. He's asking, I've got an excellent credit score,

32:06but I want to change some interest-free balance transfer card. Will my credit score go down? Who cares?

32:12Stephen, I genuinely don't care. For a very simple reason. First of all, it's only your credit score.

32:17It's only an illustration. But more importantly, I tend to think of managing your credit worthiness

32:22like saving. I'm saving up for a rainy day in case I need it. What is the most important use of your

32:27credit score? To cut the cost of existing debt, which is what a balance transfer is. So use it. It is

32:34far better to have a lower credit score and better finances and cheaper debt than a good credit score and

32:39you're paying over the odds. That's what you're building your credit score for. If your credit

32:42score goes down, it goes down. You've got a card that cuts the cost of your debts. Hurrah!

32:47OK, Stephen.

32:50Sorry, Mayim. Right. This is coming from Ahmed. I think quite an important question. What's the safest

32:55checklist to build a strong credit history from 18?

32:58Can I have me pub? Bring me pub. Now, it's the borrower's return, everybody. And 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.

33:12There we go. Just wait until we don't need to get hurt. If you go and sit over there.

33:16This is a prop. Do not drink it. It might poison you. OK, so this, I just want so people understand

33:25how this works. We're going to play a game. You're in a pub. This is what happens. You're sitting there.

33:31Oh, Anne, how are you? Oh, it's lovely to see you. I forgot my wallet. Oh, I'm so sorry.

33:39Could you lend me 20 quid and I'll buy you, give it you back tomorrow and I'll buy you a pint as well.

33:44Now, I have done this about 40 times before and every single time I have done it, I have always paid

33:53back the next day and I have always bought a pint on top. Would you lend me 20 quid?

33:58Because it's you, Martin, I would. No, but even if it wasn't me. No, probably not.

34:03Oh, well. I'm a fan. As always. Yes, I would. Well, I'm very glad you said that.

34:13Next example. Here we go. Anne, how are you? Great, thank you. Oh, no, I forgot my wallet.

34:21Tell 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.

34:25Now, now, this person has done this 30 times before, always forgets to pay back the next day,

34:32never buys the pint on top and always has to be chased to give the money. Would you lend it to them?

34:38If their name was Martin Lewis, yes, but no otherwise. No one else, so you're not giving it?

34:43Good. No. Final one.

34:47She's hard work. Simple example.

34:50Hi. Hi. Nice to meet you. Oh, no, I forgot my wallet. Would you lend me 20 quid and I'll buy you a pint tomorrow?

35:02You have never met this person before in your life. You do not know who they are. It's not Martin Lewis.

35:09Would you lend to them? No. No. Okay. This is credit scoring. First example has a good credit history.

35:16We know that they're repaid. We can predict their future behaviour based on their past. They're a pretty safe bet.

35:20Second person, we predict their future behaviour based on their past. They're not a safe bet. Third person may be lovely,

35:26but you don't know them. You have no data. No data gets rejection. That's how credit scoring works.

35:31And if you'd like to go back there before they move the putter away, thank you very much for that, everybody.

35:37I know we're on the wrong channel. Get my pub out of here. Okay. Thanks, chaps. Well, they do that.

35:45Two biggest reasons people are rejected. Your past behaviour and they don't have enough data.

35:50How do you build data? You need credit to get credit, but how do you get credit when you don't have it?

35:57You get what's called a build or a rebuild credit card. Easy to get. They have high interest.

36:02Go on to an eligibility calculator for a rebuild card. If you can get them,

36:06there are a couple that give spending rewards. Tesco Foundation card, Asda money. Terrible interest rates.

36:10Here's how you use them at no cost. Spend 50 to 100 quid a month on them. Just your normal spending.

36:15Don't spend anything that you wouldn't spend. Pay it off. In full. Preferably by direct debit.

36:21Never miss repayments. Never withdraw cash. That's always bad. Never bust your credit limit.

36:25After a year or so, with no other issues, your credit worthiness should improve.

36:30My problem with an 18-year-old, only do it with an 18-year-old who's trusted and will do this sensibly

36:35and not realise it's just free money. Just know it's a way to build their credit score.

36:39You could even do it with two cards. And don't use credit re-builder schemes.

36:42Can you tell again they're going, go to break, go to break? But hopefully that makes sense.

36:47Get yourself a credit, but use it carefully. Never overspend. Pay it off in full.

36:52Absolutely. Thank you very much, Martin. Now, coming up next, 10 ways to be financially fit

36:57and the rest of news you can use, including half-priced Christmas trees.

37:11Well, welcome back to the show. They are loving this credit score special. But Martin, what I want to know,

37:18how do you actually boost your credit worthiness? That's what we want to know.

37:22Well, the honest truth about this is, I don't know if I can use this phrase,

37:25but it's what we called it when I was growing up. It's a bit like going on the pool.

37:28Mmm. Financially. You all right, Anne?

37:33So, the truth about going on the pool is there's lots you can do to make yourself look better,

37:37but different people are attracted to different things. So there's no perfect solution.

37:41But what I've got here is 10 tips to make you financially fitter and more fanciable.

37:52Here we are. So, the first one, use consistent answers on every application.

37:57Now, what do I mean by that? If you... First of all, they like stability, but more importantly,

38:00if you get it wrong, you can be triggered out of fraud scoring. So, if you could be

38:04a marketing assistant or a promotions assistant, don't vary the term. Use the same term every time.

38:09If you've got more than one mobile, use the same mobile on every application. Of course,

38:13if your job changes, then you change what you put in. But stability is important.

38:17Next, get on the electoral roll if you want. It's a big problem for credit scoring if you're not.

38:21You can still opt out of the open register. That's the thing that stops you getting junk mail.

38:25Opt out of the open register to not get junk mail. For a national, then you can ask for a notice of

38:30correction and that can prove your residency and help. Yes? Yes. Yes. Right. Finally, you can snog

38:36or marry who you like. You have my permission. Financially. That will not affect your credit.

38:42What will a joint products? Mortgage, loan, bank accounts. No such thing as a joint credit card.

38:48It's a second card holder. If you even apply, not have, but you apply for a joint product,

38:54that can financially link you. That means they can look at the other person's file when you're

39:00applying for credit. So if they've got a bad credit history, this could kibosh your applications.

39:04Be very, very careful before getting joint products. By the way, if you were jointly,

39:09had joint products with someone and you're no longer financially linked to them,

39:12then you apply for a notice of disassociation to all the credit reference agencies. But you have to

39:18be generally financially separate. Next one. Fascinating, this one. The first time I've said this.

39:22Overpaying your mortgage may start to boost your credit worthiness. Check you shouldn't be saving.

39:27Go to a mortgage overpayment calculator to check. This is because Experian, the biggest reference

39:32for Reddits Agency, is adding it in its credit score and they advise companies on how they should

39:36do their own credit scoring. So we're likely to see more of it coming in the future overpaying your

39:41mortgage. Carrying on. Let's get to more. Never miss or be late on repayments. That is so important.

39:47If you're not good, but you want to pay variable amounts, well, at least set up a direct debit to

39:52pay the minimum each month and you can manually overpay on top. But at least that way you will

39:56never miss a repayment. Buy now, pay later is increasingly appearing on credit reports. Klarna and

40:02Zilch already report. The rest are likely to start doing so once regulation starts in the middle of next

40:08year. It might not feel like a debt, but buy now, pay later is a debt. So if you pay it off on time,

40:16it can be positive. If you miss payments, it can be negative for your credit file.

40:22Not for credit files, it doesn't go on your credit score, but it can be negative for

40:25lenders can see it negatively. An overuse of it could be a danger sign. So think of it as a debt.

40:30Don't withdraw cash on credit cards. Always a bad thing to do. It's expensive and if you do it a lot,

40:34it can be seen as poor money management. I know some of you are saying, but I do it abroad. If

40:38you're doing it one offer abroad because you've got a specialist overseas card, that's not so bad.

40:41It'll disappear off your file in a few months, the score lower. But be careful with that one.

40:46Time application is right. I talked earlier about the impact on your credit score, but actually

40:51some things only last on your credit file for a set time. The bad stuff, CCJs, defaults, finished

40:56bankruptcy, stay for six years. Applications only for one year. So if something's just about to lapse,

41:02wait a week till it's gone before you do your application. Makes sense, doesn't it?

41:06Now, one I'm asked about all the time. Logically, if I pay £1,500 a month in rent,

41:13that should be a good indication that I can afford to pay £1,500 of mortgage, shouldn't it?

41:18It should. It doesn't work like that. It should. But it's starting to be changed. There are ways you can

41:24apply to have paying rent on time factored into your credit score, which could, of course, improve your

41:31mortgage acceptability in future. So if you're a tenant, you can sign up to Canopy, which reports to

41:38the Experian credit file for free. You could sign up to Credit Ladder, which will report to one agency

41:44for free. So using those two in conjunction, you can get two of the three agencies. If you want all three

41:49of the agencies, you can pay Credit Ladder £60 a year, and you'll get it to report to all three of

41:55the credit reference agencies. Clearly great if you pay your rent on time. Clearly not good for you

42:01if you miss or are late paying rents. Makes sense. Also worth noting, some big landlords, social housing

42:09landlords with over 500 properties, have the Experian rental exchange initiative. They should have told you

42:14about it. That means they're reporting to credit files, but you could choose to opt out, for example,

42:18if you wanted. But paying rent on time, I wouldn't. And my final one, don't do little applications

42:24before a big one. If you want a credit reward card, but you're about to apply for a mortgage, do it after

42:31the mortgage application. The mortgage application is what matters. Applications do impact your credit

42:36worthiness, so put things in the right order when you're applying. And those together is how to be

42:42financially fitter and more fanciable. How are you doing?

42:49Okay, you have got time for some quick news you can use. Okey-doke.

42:56Right, time for some quickies. First of all, state-owned bank or financial institution,

43:02NSNI has boosted its British savings bond rates. You can see them there. They're all over 4%. Now,

43:06these are just fixed-rate savings by another name. Let's not get overcomplicated. The rate is good.

43:12It's not top. It's about 0.2 percentage points or 0.3 percentage points behind the very top

43:18open market fixed-rate payer. But many people want a big name with their savings. NSNI is as big as it

43:24gets. And crucially, most savings are protected up to £85,000 per person per financial institution by the

43:31state. This is owned by the state. So every penny in there, even if it's more than that,

43:35is protected. So it's a good option for those with very large amounts. Maybe you sold your house

43:40seven months ago and you want to know what to do with the money. Next, a heads up. You can get

43:44£10 to £60 West End theatre tickets if you've got a MasterCard. Starts next Tuesday, 10am. I'm

43:50doing it now because sun shows sell out quickly, so you want to be on at the exact moment. It's the

43:54official London Theatre New Year sale. First dibs for those people who got a MasterCard on 2026

44:00performances, including Wicked, The Devil's Wears Prada, Back to the Future, The Producers,

44:04and six. That was just for my daughter, by the way. If you're watching, I love you.

44:11From tomorrow, Ryanair won't accept home-printed boarding passes. You must check in online or

44:15Varexat first. If not, you'll be charged up to £55. But if you have checked in online and your phone

44:21ran out of battery, they're no longer going to charge £20 for printing a boarding pass at the

44:25airport. You can now do that for free. So in some ways, it's a win for some people.

44:28And then from Thursday, you can get 50% off three Christmas trees at Tesco. The club card holds us

44:35only in store. There's a six-foot Nordman fur. These are all real trees. £20, so half 40 down to 20.

44:41Three and a half foot potty tree for £15, or a four-foot tree with lights for £20.

44:45And while we're speaking about Christmas, next Tuesday is the big one. We do it every year.

44:52Big audience, festive forecast, the Black Friday special, Christmas deals. It's all coming in.

44:58I'm even going to have to sing at the start of the show, because that has sadly become a tradition too.

45:03It's all going on, so do not miss it. Set your diary, eight o'clock next Tuesday,

45:07and have a pen and pencil or some note-taking with you, because at the end,

45:10I'm running through all those deals, and I'm going to be running through them

45:12at serious speed, Jeanette.

45:14Well, there you go.

45:17I've got one question for you. How is your voice doing?

45:20My voice is all right now, but you know I can't speak out when I've done the festive

45:23forecast that we'll go through next week. Ladies and gentlemen, thank you so much.

45:26You've got questions about Christmas deals, or free cash from bank switching,

45:29or children's savings. I'll be covering them all next week.

45:31Use the hashtag Martin Lewis. Any questions on what we've done today,

45:34get in touch with that as well. Jeanette, you've been wonderful.

45:36The audience here has been wonderful. A round of applause for John Webb and Anne.

45:43And you know what? If I drank, I'd say I'd be off to my pub now,

45:47but I don't really, so I just can't pretend afterwards anyway.

45:49That's it. Take care, everybody. Good night.

45:56The brand new series came to an explosive end last night as the truth came out. Don't miss

46:17Vicky McClure in Trigger Point, streaming now on MyTVX. Next tonight, it's documentary,

46:24TikTok, Murder Gone Viral.

46:34you

46:35is

46:39different.

46:41So

46:43everyone

46:45is

46:46very

46:47amazing

46:48Karen

46:51is

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