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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 millions of its customers their credit scores will drop.
00:23If that's you, what does it mean in practice? Credit scoring is shrouded by grey mist.
00:29Tonight, I want to blow them away.
00:32I'm going to show you the truth of how it really works, what you need to do, and I will finish with my crucial key tips to boost your acceptance odds.
00:42Now, this isn't just about the obvious mortgages and credit cards and loans, where credit scoring can even impact the rate you get.
00:50Credit checks may affect things you pay ahead for, too, like mobile phone contracts and sometimes energy direct debit tariffs.
00:59Then, in my news you can use, new figures out show 1.1 million graduates have paid more student loan back than they should have done in just the last tax year.
01:11I will show you how to reclaim hundreds or thousands of pounds of it.
01:16And British savings bonds are about to get better, half-priced Christmas trees, a Ryanair warning and cheap theatre tickets.
01:23Now, to our own showstopper, Jeanette Quachy, everybody.
01:26Thank you very much.
01:29I am your leading lady.
01:30I'm happy to be back, but we want to hear from you, so please do send us your questions on X or on threads.
01:36Use the hashtag MartinLewis, or you can email the team, MartinLewis at ITV.com.
01:41If we don't use your question tonight, we may use it in a future show.
01:45And a huge welcome, as always, to our studio audience.
01:47Wave your wallet, everybody.
01:48Wave your wallet.
01:48We love that.
01:50You're amazing.
01:51That's right.
01:52So, Martin, we had an enormous response to your call-out last week, saying that people could leave O2 because it's hiking, it's priced hike, if you like.
02:00Just wanted to show you a few messages.
02:02This is coming from Nicola.
02:03She's ditched and she's switched.
02:04She says, I 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 of £38, £25 a month, £459 a year.
02:17Wow.
02:17New sim up and running, O2 boycott.
02:21So, if you watched last week, you know I got on my soapbox about this.
02:24O2 put up the price hike it had previously said when people signed up it would give them.
02:29So, it was a price hike on the price hike mid-contract.
02:31Crucially, if you get that notification, you've got 30 days in which you can leave.
02:36And then you might be able to go and save a lot of money.
02:38And I'm encouraging people to do so because we want it to cost O2 in the pockets so that it never behaves like this again.
02:45And other companies think, we don't want to do that either.
02:48Yeah.
02:49Sean, he's taking your advice here.
02:50And Sean has haggled.
02:52He said, I rang up O2 yesterday.
02:54And after a phone call, I stayed with them but saved £34 a month on my two contracts.
02:58With more data, a huge saving of £408 a year.
03:04Great.
03:04Now, this is the interesting one because when I told people their rights last week, normally when you're at the end of the contract, you can use that as an opportunity to haggle, benchmark the best deal elsewhere, take it to your firm.
03:15But because this is a unique experience, this 30-day notification that you can leave, I wasn't 100% sure it would work with O2 like it would at the end of a contract.
03:24So I asked people to try, Sean is a success and frankly, I've had hundreds of other people who've taken this opportunity to go to O2 and say, I will leave you unless you give me a better deal and they've got better deals.
03:34So that's working.
03:35Fabulous.
03:35Right.
03:35Now, there is a question though.
03:37It's coming from Shirley.
03:38It's a follow-up question.
03:39She said, I've seen your item on O2.
03:41I just asked for a PAC code and they've come back saying I need to pay the device off in full.
03:45Is that correct?
03:47It's very interesting.
03:48So PAC code is a porting authorisation code that you get when you're changing mobile phone number.
03:52Listen, I've seen some of those messages and what actually says it is, it does say you need to pay this off in full.
03:59But I think that is a terrible piece of phrasing by O2.
04:02I'm going to hope it's accidental and not deliberate.
04:05Certainly something the regulator should look at.
04:06What that means is you're still going to have to pay your handset.
04:11It doesn't mean you have to pay all of your handset now.
04:14You were paying it by the month and you can continue to pay it by the month, but you'll have to pay everything that they owe them on the same plan.
04:19But when they say pay it off in full, it sounds like you have to give them the money now, doesn't it?
04:23It's poor communication, bad phrasing.
04:26I hope it hasn't deliberately been done to put people off switching.
04:28If it has, that's something the regulator should look at.
04:31You can leave O2's airtime plan and keep paying your handset costs by the month, just as you were doing before.
04:37You're free to leave, Shirley.
04:38OK, hopefully that helps, Shirley.
04:40Now, I know we're going to get into credit scoring in the meat of the show.
04:44So, something I wanted to ask you first, though, it's a question that's coming from Amy O.
04:48Oh, there it is.
04:49I've heard there's a way you can claim back a student loan which you may have overpaid on.
04:54How do I do this and how do I know if this applies to me?
04:57Absolutely.
04:57We'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 loans in the 24-25 tax year.
05:15And that adds to at least 4 million people from figures and requests that we've given them for information in the past.
05:21So, there could be 5 million of you out there who are owed money.
05:24There are four reasons, but the first reason is the big reason.
05:29It's when you repaid your loan, but you didn't earn enough to need to repay it.
05:34Over a million people in the last tax year did this.
05:36Now, the rules state absolutely plainly, you only need to repay the student loan if you earn over the annual threshold in a tax year.
05:44What your annual threshold is depends which plan you're on.
05:48So, we'll hold on this graphic so you can read your graphic as I go through.
05:51I'm going to focus on Plan 2 loans, because that's the one with by far the most people on.
05:57England starters, it's when you started university and where you were resident, 2012 to 2022, and wealth starters from 2012 onwards.
06:04Your repayment threshold is £28,470 a year.
06:08You repay 9% of everything you earn over that in a year.
06:11That's how it works.
06:13But PAYE, payroll, it takes the money based on your monthly earnings.
06:20So, £28,470 a year is equivalent to £2,372 a month.
06:25You repay 9% of everything you earn above that a month.
06:28Let me give you an example and you'll see why so many have overpaid this.
06:32Here we go.
06:33So, there's the monthly repayment threshold.
06:36Let's imagine maybe you've just started after university and it's the next year or two.
06:39You've had a few months off.
06:40You didn't work in April.
06:41You didn't work in May.
06:43You didn't work in June.
06:44Then you've got yourself a job paying £36,000 a year.
06:48£3,000 a month.
06:49Done.
06:49Because it's easy maths.
06:51In each of those months, you have to repay 9% of everything above the monthly threshold.
06:57Which is about a repayment of £56 a month each month for the remaining nine months.
07:03Do you understand why?
07:04OK.
07:04But, now look at this.
07:08Your total tax year earnings were £27,000.
07:12The annual threshold is £28,470.
07:17You earned less than the threshold.
07:21You don't have to repay your student loan.
07:22Here are the payments that you made.
07:24£508.
07:25You can reclaim the £508.
07:28So, this is big for many people.
07:31Who does it tend to most commonly affect?
07:32Well, it's those who only worked for part of the year.
07:36Those who are on commission.
07:38Or those who are on variable incomes.
07:39If your income is going up and down and you didn't earn over that amount in the tax work,
07:43you are able to reclaim.
07:45You use SLC Refund Request Form at gov.uk
07:48or you can do it in your student loan company repayment app.
07:52You can do it for every year except the current tax year.
07:55Because the current tax year, you'll have to wait until it finishes.
07:57So, for every year before that, you can go and reclaim your money.
08:00Yes, Jeanette?
08:00Just before you move on, we've got a success story on this one and it's a big one.
08:04Have a look at this.
08:07Daniella lives in Loughborough with her husband and two kids.
08:10Being a maths teacher was the career that I always wanted.
08:14I needed to take a student loan to pay for it.
08:16After my initial £16,000 I borrowed,
08:19I also had to borrow another £9,000 to pay for my teacher training.
08:24I've watched the Martin Lewis show for almost seven years now.
08:27There was one show back in November.
08:29Martin mentioned there's over a million students that have overpaid their student loan.
08:33Is that me?
08:34Have I ever paid?
08:34He gave numerous reasons.
08:36The one that stood out to me was gaps in employment.
08:40In the last few years, I have had to give up my job when I had my eldest child.
08:43He was born with a brain condition and requires a lot of care.
08:47Once Martin shared that you could possibly have overpaid your student loan,
08:50I acted instantly.
08:52It was as simple as log on to your student finance,
08:55click manage your statements and click request refund.
08:59Within 48 hours of my application, I was told I got a refund of £2,213.
09:05It was a pinch-free moment.
09:07I was seven months pregnant.
09:09I'm not working.
09:09I don't get an income.
09:10Having that money was really helpful.
09:13I'm so glad I went through the process.
09:16Yeah.
09:18Thank you so much for doing that film.
09:19So, look, she said a million people have overpaid.
09:22That was the previous tax year.
09:23This is an annual figure,
09:24and it's still a million people overpaying each year,
09:26which is why it's a clarion call for me
09:28that if you are a graduate or university leaver
09:31who's paying your student loan to cheque, you haven't overpaid.
09:33Now, just before I move on, because we came in,
09:36there is one thing.
09:37This is a technicality, and people ask me about this.
09:39It's a bit complex.
09:41If you overpaid in some months but aren't over the annual threshold,
09:44you cannot reclaim.
09:46So, this is a negative.
09:47Let me explain that to you.
09:48So, here's a scenario.
09:50Someone who earns £24,000 a year normally standard salary,
09:53so £2,000 a month, below the threshold.
09:56We'll stick with plan two again as an example here,
09:58but obviously from different plans, the numbers are different.
10:00But then got a £5,000 bonus in December.
10:03So, they've got a £5,000 bonus.
10:05Let's have a look.
10:06First of all, their total tax year earnings are £29,000,
10:11above the threshold, therefore.
10:12So, they repaid 9% in this month of everything above £2,372.
10:19They repaid £400, just over £400.
10:23Now, what you might think is, hold on,
10:26they're only £500 above the annual threshold.
10:28They should be paying 9% of that, about £45.
10:31But no, it's done by the month.
10:33They've repaid £400 of their student loan,
10:36even though they're only just above the threshold.
10:38And this is complicated, but effectively, the rule is this.
10:41You repay your student loan by the month through PAYE,
10:46and that is correct,
10:48unless your total annual earnings are below the threshold,
10:51and then you don't have to repay.
10:53If you think it seems unfair, that's because it's unfair,
10:55but that's the way the system works.
10:57Jeanette?
10:58Absolutely.
10:59I mean, I understood it,
11:00but you can move on, they're small.
11:02OK, good, you got it.
11:03Right, I've got more for you.
11:05Yes, you're right, other reasons.
11:06Let's scroll up.
11:07There we go.
11:08I'll do these ones quickly.
11:09Reason to all much smaller,
11:10all in the tens of thousands, not over a million here.
11:12Wrong student loan repayment plan.
11:14If your employer doesn't know which plan you're on,
11:15it has to default to plan 1,
11:17which is repayments above £26,000.
11:19But the biggest plan, plan 2,
11:20and all the Scottish plans, plan 4,
11:22the repayment threshold is higher.
11:24So you shouldn't be repaying as much.
11:25You should only be repaying above this amount,
11:27but you're repaying above that amount.
11:28If that's you,
11:29call the student loan company here for a refund.
11:31You can't do it online.
11:32Also, go and talk to your employer's payroll department
11:35and say, actually, this is my plan.
11:36Please change my setup so I'm paying on the right plan.
11:39Reason three,
11:40you started repaying the loan too early.
11:42Nearly £40,000 here.
11:44This is the rule.
11:45You only, regardless of what you earn,
11:47you only have to start qualifying to repay the student loan
11:50in the April after you leave university.
11:52For most graduates,
11:53that's nine months after they graduate,
11:55so you'd leave in the July, the following April.
11:56But if your employer has the wrong details,
11:59it can take the money too soon.
12:00If that happens,
12:01you can get the money back by calling SLC for a refund.
12:04Good to have your pay slips if you're doing that one.
12:06And the final reason,
12:08often get asked about this,
12:09is money is deducted after you've fully cleared the loan.
12:12So once you've paid off everything that you owe.
12:15Nearly 60,000 people last year.
12:17The loan's normally wiped after 30 years.
12:19It depends on the plan.
12:20Every plan is different,
12:21so you can look that up online.
12:23But the student loan company takes time to notify PAYE,
12:27so they don't always stop it on time.
12:28If that happens,
12:29you don't need to reclaim.
12:30You will be paid back automatically.
12:32My top tip, though,
12:33within the last two years of repaying your student loan,
12:37you can go online at student loan company
12:39and ask to set up a direct debit,
12:41so you pay it by direct debit,
12:42not through the payroll,
12:44and then you only pay the exact amount that you owed.
12:46And that is where we're finishing, I think, on student loans.
12:49One more.
12:50I know.
12:52I'm so sorry.
12:53There's one more question.
12:54It's coming from...
12:55I'm sorry.
12:55It's coming from Amy.
12:57Amy says,
12:57I recently received a student loan refund of £1,601 overpaid.
13:01A proportion of that will have paid off interest.
13:04When I claim the refund,
13:05won't the amount just be added to my student loan?
13:07Absolutely.
13:08Very important question.
13:09Yes, 100%.
13:11If you've overpaid and you get the money back,
13:14then your student loan account,
13:15you will owe more.
13:16Now, what you may be thinking is,
13:18hold on,
13:18doesn't he normally say it's best to overpay loans
13:21because then you pay less interest?
13:22The quicker you pay a loan, the better.
13:23You are right on normal loans.
13:26Student loans are not normal loans.
13:29For example, those on those Plan 2 loans,
13:31the biggest one being repaid off at the moment,
13:34the stats show only around one in three people
13:38will clear what they borrowed plus interest
13:40in the 30 years before it wipes.
13:43Most people will just pay 9% of what they earn
13:45above the threshold for 30 years.
13:47So if you've overpaid and you take the money
13:50and you're one of those two-thirds of people,
13:53lower to middle earners,
13:55well, you're still going to repay 9% of everything
13:57you earn over the threshold for the next 30 years.
13:59So taking that money back is not going to cost you
14:01any more in future.
14:01The money in your pocket is better in your pocket.
14:04Now, with other plans,
14:05you are more likely to clear earlier
14:07because the loan amount's lower
14:08and the interest rate is lower.
14:09But what I would still say then
14:12is if you need the money, say, to clear expensive debts
14:15or to reduce your mortgage borrowing,
14:17on the other plans, the interest rate's only 3.2%
14:19and student loans have better terms
14:21than any other form of borrowing.
14:23You only repair it if you're earning enough
14:24and it's going to wipe at some point.
14:26So in that case, you may still be better
14:28to take the money, have it in your pocket
14:30so you can use it so you don't have other more expensive debts.
14:33But especially those on the Plan 2 loans,
14:36the majority of people are better to take the money
14:38rather than just to reduce a loan
14:39that won't necessarily mean they pay any less
14:41in the future anyway.
14:42OK, now...
14:42Do you understand that?
14:43Because it's really complex.
14:44Yeah?
14:45OK, I promise you're done now with that, I promise.
14:48Well, you can get in touch.
14:48Let us know about your student loan situation.
14:51Does this affect you?
14:52Always use that hashtag, Martin Lewis.
14:54But coming next, credit scoring.
14:56How does it work?
14:57And what is Experian about to do?
14:58We'll see you in four.
15:05Welcome back.
15:12We're live.
15:12We're going to be talking about credit scoring in a moment.
15:14But just before that, we're getting lots of reports
15:16that the student loan company website and app
15:18is struggling a bit, likely because of lots of demand.
15:20It's always what we do on this show.
15:22So be a bit patient, maybe check it in half an hour
15:24or an hour or so and it should be easier.
15:26It should be.
15:26There's lots coming in over the break.
15:28I'm going to sort it all out and come back to it.
15:30But let's go to Jo in the studio.
15:32Jo, you've got a question for Martin.
15:33Hi, Martin.
15:34Hi.
15:35Hi.
15:35Yeah, I've heard that the credit agencies
15:38are changing the rules, but I don't understand
15:40how they actually work in the first place.
15:42Could you explain?
15:44I can.
15:44And they're not changing the rules,
15:46they're changing the score.
15:47Ah.
15:47And the first thing you all need to understand
15:49is the difference between your credit score
15:51and the credit scoring process.
15:54Don't worry, I'm going to explain in my big briefing.
15:59OK.
16:00The truth about credit scoring.
16:02The most important thing you all need to understand
16:04is that you do not have a credit rating.
16:07You do not have a credit score in the UK.
16:10There is no single number that dictates acceptability.
16:15Each lender, when you apply,
16:18scores you differently based on its own
16:21individual profitability wish list.
16:24Profitability, no, not risk.
16:26Why do I say profitability?
16:27Well, in many cases it is, are you a good or bad risk?
16:30But it may be a company that's trying to target people
16:32who are a poor risk so it can charge them more.
16:34And for them, poor risk are profitable customers.
16:37So it's a profitability wish list, not a risk wish list.
16:40That's the point.
16:42Nope.
16:43Yeah.
16:43I was expecting that because this is what everyone says to me.
16:47But that's nonsense, Martin, because I have paid for my credit score.
16:50I know what my credit score is.
16:51I monitor my credit score very carefully.
16:53And I do have a credit score.
16:55Is that what you were thinking?
16:57Yes.
16:58OK.
16:58Let me explain.
16:59Here you go.
17:01The big credit reference agencies, there are three of them,
17:04they will show you a credit score, capitalised,
17:07because that is your credit score, not the credit scoring process.
17:10But they are just their illustration of how a typical lender may view you.
17:17They are not used by lenders.
17:20Now, just to prove my point, TransUnion is out of 710.
17:25Equifax is out of 1,000.
17:27Experian is out of 999.
17:29But that's about to change.
17:30So it's out of 1,250.
17:32The fact they're all different tells you something.
17:34Just before I go on, let's explore that Experian change for a moment.
17:38Here's what's happening.
17:39It's rolling out new scores from mid-November till the end of the year.
17:42Some of you will have had notifications today on this particular one.
17:4544% of you will see your band drop.
17:48It might drop from excellent to very good.
17:5042% will get a higher score.
17:52Some may be in a higher band.
17:54But crucially, this shouldn't change anything.
17:57Why?
17:58Because this is just their illustration of how a typical lender views you.
18:03The underlying data is what the lenders use.
18:07Your underlying data hasn't changed.
18:09Therefore, your acceptance by lenders won't change.
18:14We are too hung up on this.
18:16Now, we have a man from Experian here.
18:18John Webb.
18:19Thank you for joining us.
18:20John, why are you doing this?
18:21So, what we've done is, as you've explained there, lenders are looking at the data on credit reports.
18:26We've added in more data into our credit score.
18:29Things like overpaying a mortgage, reducing your overdraft, taking cash from a credit card.
18:36These are the things that lenders are now looking at.
18:39We've included them into credit scores so we can give people the most accurate view of how a lender will view their credit report information when they apply.
18:46How a typical lender, but every lender does it differently.
18:49Why 1250, though?
18:51Why have you increased the number?
18:52I don't get that.
18:53I've heard your explanations.
18:54I still don't get it.
18:55So, we did consider staying at the same score.
18:57But actually, the number one thing people tell 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 they've ever seen before about how their score is calculated.
19:13And more importantly, how to improve it, because typically, higher credit scores mean access to more affordable credit.
19:18Better rates, better limits.
19:19You're obviously a cleverer man than me, because I can't see how doing it out of 999, creating it to an arbitrary figure of 1250, when you could just proportion it, makes any difference.
19:27But, hey, we'll move on.
19:28So, let me move on a little bit.
19:30Here we go.
19:31The biggest single thing you need to understand about credit scoring is the biggest piece of information they miss.
19:35The biggest thing that lenders look at is on your application form.
19:39It's your income.
19:40Lenders also do affordability scoring.
19:43That isn't in your credit score.
19:45Think about it.
19:45You've got the best credit score in the world.
19:47It's been brilliant.
19:48You've just lost your job.
19:49You've got no income.
19:50You can't afford to repay what you want to borrow.
19:52They are not going to lend to you.
19:54Credit scoring is not the end of the story at all.
19:57So, my big message to you, you know, people get in touch with me and say,
20:00my credit score's just me by seven points.
20:01What should I do?
20:03Don't sweat small moves in your credit score.
20:06It's just their illustration.
20:07But do sweat big ones that last longer because that's likely an indication there's something more systemic going wrong in your file.
20:16Kevin has emailed you just on this.
20:18Have a look at this.
20:19My energy supply did a hard search on my credit report, but I decided to switch instead of after getting a better deal within the cooling off period.
20:28Does this affect my credit score?
20:29Seems to have dropped a little.
20:31And what can I do?
20:32Well, yeah, it does affect your credit score.
20:33But who cares?
20:35Would be my honest answer.
20:36I've got more detail on that, though, because this is what you need to consider.
20:39So, we'll just break it down.
20:41What you've got there is a new credit account or an application or maybe a cash withdrawal on a credit card.
20:47What happens then?
20:48You'll get a small score dip, but it'll only last for up to about three months.
20:52And then it'll go back to normal.
20:53It'll bounce back.
20:53Don't worry.
20:55Listen, it always depends on circumstance, but this is sort of guidance.
20:58Scale of magnitude.
20:59If you've been applying for lots of accounts in a short space of time, that is a more significant problem.
21:04You'll see a bigger drop in your score.
21:06It'll probably start reducing after three months, and then it should be gone after six months as long as you don't do any more.
21:12If you've missed the payment, we're starting to get onto this side now is the real problem side.
21:17You'll have a much bigger drop.
21:18It'll often go on for six months after it has been fixed.
21:22So, you have to make sure you make the payment, and it's only improved if you're paying on time afterwards, or it could be even worse.
21:27Now, if you have an arrear where you are owing money to a lender, that is significantly damaging.
21:34It can take two years to recover from, and only if you manage to make it up to then.
21:38And then the really bad stuff, the stuff that is going to cause you problems with all lenders, if you have a default, a county court judgment and insolvency.
21:47Bankruptcy.
21:48IVA equivalent.
21:49It is very significantly damaging.
21:52It can impact your score for up to six years, or possibly longer.
21:54Now, I'm talking here about the credit score that the credit reference agencies give you, but that is roughly symbolic of the way that most lenders would think, too.
22:03So, it's both the impact and the time span of the impact that matters.
22:06In the case of that question, they've gone in a few months.
22:09OK.
22:09How about this one from Sandra?
22:11She's asking,
22:11Well, just being...
22:22I need to make this blunt, and I don't mean to be rude, Sandra.
22:24You have a phone contract you're letting your son use.
22:27Therefore, the debt is yours.
22:29It's on your credit file of yours.
22:31Whatever your relationship between the son.
22:32When you give somebody else money in your name, it's you that owe it.
22:36The first thing you need to do is make sure you've paid and pay on time in future.
22:42There's very little you're going to be able to do about it.
22:44The truth is, it's representing a real thing that's happened.
22:47It hasn't been paid.
22:48That's gone onto your credit file.
22:50It will have a negative effect.
22:51That's what credit scoring is all about.
22:53So, you need to just protect yourself in future.
22:55We can't tidy up things that are real.
22:57We can learn how to correct errors that shouldn't be on your file.
23:00Let's just ask John, anything else you can think of that I've not said?
23:03No, it's exactly right.
23:04It's her account, her contract.
23:06So, actually, she's responsible for paying it on her file.
23:09Bring it up to date as soon as possible and keep paying on time.
23:12And like you said, it will improve.
23:13It will improve.
23:14Within six months, it will start to get better.
23:16And in two years, it should mostly be gone.
23:18But let me get on to the most important thing you need to do when it comes to credit.
23:23It's not your credit score.
23:25It's your credit file, also called your credit report.
23:27You should check your file at least annually and definitely before any major application you're going to make.
23:34Because if there's an error that stops you getting one, you've got too many applications on your file and you can start to go into a vicious circle.
23:39So, your credit file will list key information, the products you have, whether you've paid on time,
23:43any 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 a tick.
23:54Because even a small address error on an open account could block you in fraud scoring, line by line.
24:03Now, for a general check, I would just do one agency.
24:07But if you're about to do a big application by that, I really mean a mortgage.
24:09I would check all three agencies because you don't know which one they're using.
24:13And one, if there is an error, they will pass it on to the others.
24:15It's safer to do it that way. You can see your files for free.
24:17You can use the statutory credit reports, which tend to be a bit slower or these ways are a bit quicker.
24:21For Equifax, Equifax Basic or ClearScore will give you a free report.
24:25For Experian, go to the free Experian app, relatively new that.
24:29For TransUnion, loads of bank websites and many credit help apps will also give you a TransUnion report.
24:35Big warning, though, loads of them will try and sign you up to this.
24:38£15 a month credit monitoring service, everything you need.
24:41You don't need that to see your credit report and it's your credit report that really matters.
24:45So don't accidentally sign up for that if you don't need to.
24:47Final thought, we've been talking about student loans already.
24:50Student loan company loans do not go on your credit file.
24:54That isn't to say they can't affect your applications, but they don't affect it as debt.
25:00What they effectively do is they reduce your disposable income if you're paying off, if you're above that threshold and you're paying off the 9%.
25:06So it's a bit like you earn less.
25:08And that can still lead to rejections or getting worse products, but it's not because it's a debt on your credit file.
25:13It's just because you have lower disposable income, if that makes sense.
25:16Absolutely.
25:17We've got a virtual wall this evening.
25:19Jane is here.
25:20Jane, you've got a question for Martin.
25:22Good evening, Jane.
25:22Hi, Martin.
25:25My question is, he used to have a good credit rating of about 750.
25:31After we manually underpaid by 55p, one bank loan instalment, the bank then incorrectly reported to the credit reference agency that we have missed six hold payments.
25:46Didn't find this out until earlier on this year when I had to check his credit file for something.
25:53We contacted the bank.
25:55The bank admitted they've made an error.
25:57They've corrected the file now, but it's not really improved his credit score.
26:01It's gone from 277, which is what it dropped to now, to 377.
26:06And you are absolutely sure that they have corrected it on the credit file, that that information is right.
26:12And it's the same credit file that is of the report that you're looking at.
26:16Yeah.
26:17Well, that's a tough one.
26:18Luckily, I've got John here.
26:19John.
26:20That is a tough one.
26:21So, yeah, my first instinct would be to say, check all credit reports with the three credit reference agencies.
26:28Make sure it's correct.
26:29It sounds a bit like they maybe haven't updated the credit reference agencies with the right information.
26:35But if that's the case, if it is correct, there might be other factors that are influencing the credit score.
26:41So, go through your credit report.
26:43Have a look.
26:43See if there's something else that's interesting.
26:44How recently was this?
26:45How recent was it?
26:47Right.
26:47So, we found out in September, contacted the bank.
26:52The bank admitted their mistake.
26:53I think this could literally...
26:55Sorry, they're telling me to go to break.
26:56I think this could literally be that they've just not updated it in time.
27:00Keep monitoring over the next month to six weeks.
27:02If it hasn't worked, you apply to have a notification on your file, a notice of correction put on your file where you write that this was a mistake and hasn't really happened.
27:11You write back to the bank and you put in a dispute with the credit reference agency that something is going wrong and you want it fixed.
27:18And you absolutely have a right to do that.
27:19But I suspect some just don't update that quickly and it's probably just an updating issue and it will fix itself.
27:24It should fix itself, shouldn't it?
27:25Yeah, they update every month.
27:27Go to break, go to break, go to break.
27:28Thank you very much.
27:29OK, well, coming up, we're going to be talking about what actually happens when you apply for Credit Plus.
27:36Martin, you're taking us to your credit pub.
27:39My credit pub indeed.
27:40You will find out more.
27:41I'll have some water.
27:42OK, we'll see you after this.
27:55Welcome back to our credit scoring special.
27:57We've got this question that's coming from Lainey just for you, Martin.
28:01I have a clear score, credit score of 1,000, but I can't get a 0% balance transfer card to help me clear my credit card debts.
28:08I keep getting refused.
28:10Why could this be?
28:11Well, I'm hoping you've started to work out why.
28:13Let's go straight back into the big briefing now.
28:16Well, there you go.
28:17I'd written it there.
28:17What happens when you apply?
28:19You can still be rejected, Lainey, with a perfect credit score.
28:23Firms use information from your credit file, but they also use information from your application form,
28:27including that all-important income and any past dealings they've had with you.
28:31So if it's a bank that maybe you've had good dealings with, it might be more helpful.
28:35If it's a bank you've not had good dealings with, it might be more likely to reject than others.
28:39But remember, lender's affordability score 2, which is just as important.
28:46Let me delve into that into a little bit more detail with you now.
28:50Here we go.
28:51So, this is just to give you an example of the type of things that's going on.
28:55I'm not going to labour it too much, because every lender will work slightly differently.
28:57Here's some of the type of things they will look at.
28:59Remember, it involves your income.
29:01You'll see how much of this does.
29:02First, your debt ratio.
29:03How much unsecured debt, loans, credit cards, overdrafts, not mortgages, not student loans,
29:09do you have as a percentage of your annual income?
29:11You've got £20,000 on credit cards.
29:13You earn £40,000, that's 50%, and it uses this scale, there you go, that's OK, it's not good, it's a bit of a problem.
29:22What do you do?
29:22Well, try and reduce your debt, or of course try and improve your income, which may be a bit more difficult.
29:27The next one, credit utilisation.
29:29This is the amount of the available credit you have that you are using.
29:33It works on the same scale as the other.
29:35So, £100 debt on a credit card with a £1,000 credit limit is 10% credit utilisation.
29:40But it's looking across all of your debts.
29:43Now, the really important thing here is when this is used, it only really matters if you have a high debt ratio.
29:49If you've got a lot of debt, this matters.
29:51If you've only got a tiny bit of debt, the fact you're using all of it isn't that relevant if it's only a small proportion of your income.
29:56Again, you try and reduce your card or overdraft debt, or mathematically, you try and get more credit.
30:01But that causes you problems in other forms of credit scoring, so I probably wouldn't bother with that.
30:05It's the second thing they look at.
30:06And the third is your disposable income.
30:08The spare cash each month after bills and essentials.
30:12Now, with cards, loans and mortgages, actually, they're mostly doing a statistical estimate.
30:17They look at what your main outgoings are, but for your spending, they're not really looking at your spending.
30:22They're looking at what somebody in your position would statistically be likely to spend, so you can't impact it that much.
30:27But it's still worth, before a mortgage application, just being careful and going frugal.
30:31So, you're starting to see how much more complicated than the pure credit score this is.
30:35And we get more.
30:36For credit card acceptance, because your acceptance tends to be on your credit score.
30:41Will I get accepted or not?
30:43The affordability score dictates your credit limit.
30:45How much will you be able to borrow on the card?
30:47Because it's a variable credit limit.
30:49Acceptance is binary.
30:50This is variable.
30:51With a loan, it's more weighted to affordability score.
30:55This is why.
30:55Think about this.
30:56This really explains everything.
30:58You are one person.
31:00You apply to one lender.
31:01They accept you for a £3,000 loan.
31:03They reject you for a £10,000 loan.
31:06You've got the same credit score.
31:07Everything else is the same.
31:08It's not about your credit score.
31:10It's about your affordability score.
31:12Mortgage acceptance, again, more weighted towards affordability scoring.
31:17Now, one of the things going on there is probably over-application.
31:21You've applied too many times, and that can be dangerous.
31:24Applying can mark your credit file, even if you don't get accepted.
31:27So, if possible, don't apply.
31:29Go on to an eligibility comparison on a comparison site.
31:34That avoids heart searches, and it shows you your likely odds of acceptance for different cards.
31:39Then you can home in on the best card.
31:41Crucially, these use soft searches, so you see these searches on your file.
31:46Lenders can't factor them in, so they're safe to do.
31:48I suspect you've been over-applying.
31:50Go and do an eligibility calculator if your score's low.
31:53Give it six weeks or so, and then try again, or even three months,
31:57and then things may have softened.
31:58Anything else, or are we good?
31:59Exactly right.
32:00Take a break from applying for about three months, and then use the eligibility check.
32:04OK, there we go.
32:04We both agree.
32:05Cool.
32:05OK, there's this that's coming as well from Stephen.
32:08He's asking, I've got an excellent credit score, but I want to change to an interest-free,
32:13balanced transfer card.
32:15Will my credit score go down?
32:16Who cares?
32:17Stephen, I genuinely don't care, for a very simple reason.
32:21First of all, it's only your credit score.
32:23It's only an illustration.
32:23But more importantly, I tend to think of managing your credit worthiness like saving.
32:28I'm saving up for a rainy day in case I need it.
32:31What is the most important use of your credit score?
32:33To cut the cost of existing debt, which is what a balance transfer is.
32:37So use it.
32:39It is far better to have a lower credit score and better finances and cheaper debt
32:43than a good credit score, and you're paying over the odds.
32:45That's what you're building your credit score for.
32:47If your credit score goes down, it goes down.
32:49You've got a card that cuts the cost of your debts.
32:51Hurrah!
32:51I guess, Stephen.
32:55Sorry, Mayan.
32:56Right, this is coming from Ahmed.
32:58I think quite an important question.
32:59What's the safest checklist to build a strong credit history from 18?
33:04Can I have me pub?
33:05Bring me pub.
33:08It's the borrower's return, everybody.
33:12And is it Anne?
33:14Anne volunteered in the break that she's going to come and sit in my pub.
33:17Come up the stairs, my love.
33:18There we go.
33:18Just wait until we don't need to get hurt.
33:20If you go and sit over there.
33:21This is a prop.
33:25Do not drink it.
33:25It might poison you.
33:28Okay.
33:28So this, I just want so people understand how this works.
33:31We're going to play a game.
33:32You're in a pub.
33:33This is what happens.
33:35You're sitting there.
33:37Oh!
33:37Anne, how are you?
33:39Oh, it's lovely to see you.
33:41I forgot my wallet.
33:43Oh, I'm so sorry.
33:44Could you lend me 20 quid and I'll buy you, give it you back tomorrow and I'll buy you a pint as well.
33:49Now, I have done this about 40 times before and every single time I have done it, I have always paid back the next day and I have always bought a pint on top.
34:01Would you lend me 20 quid?
34:03Because it's you, Martin, I would.
34:05No, but even if it wasn't me.
34:07No, probably not.
34:08Oh, well.
34:11I'm a fan.
34:12It's always.
34:15Yes, I would.
34:16I'm very glad you said that.
34:17Next example.
34:19Here we go.
34:21Anne, how are you?
34:23Great, thank you.
34:25Oh, no, I forgot my wallet.
34:26Tell you what, could you lend me 20 quid and I'll give it you back tomorrow and I'll buy you a pint as well.
34:31Now, this person has done this 30 times before, always forgets to pay back the next day, never buys the pint on top and always has to be chased to give the money.
34:40Would you lend it to them?
34:43If their name was Martin Lewis, yes, but no otherwise.
34:47No one else, so you're not giving it.
34:49Good.
34:49No.
34:49Final one.
34:52She's hard work.
34:54Simple example.
34:59Hi.
35:00Hi.
35:01Nice to meet you.
35:03Oh, no, I forgot my wallet.
35:04Would you lend me 20 quid and I'll buy you a pint tomorrow?
35:07You 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.
35:17Okay.
35:18This is credit scoring.
35:19First 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, thank you very much.
35:38I know we're on the wrong channel.
35:43Get my pub out of here.
35:46Thanks, chaps.
35:48Well, they do that.
35:49Two biggest reasons people are rejected.
35:52Your past behaviour and they don't have enough data.
35:55How 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.
36:13Tesco Foundation card, Asda money, terrible interest rates.
36:15Here's how you use them at no cost.
36:18Spend 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 by direct debit.
36:26Never miss repayments.
36:28Never 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.
36:35My problem with an 18-year-old, only do it with an 18-year-old who's trusted and will do this sensibly and not realise it's just free money.
36:42Just know it's a way to build their credit score.
36:44You could even do it with two cards.
36:46And don't use credit rebuilder 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.
36:57Thank you very much, Martin.
36:59Now, coming up next, 10 ways to be financially fit and the rest of news you can use, including half-priced Christmas trees.
37:16Well, welcome back to the show.
37:18They are loving this credit score special.
37:22But, Martin, what I want to know, how do you actually boost your credit worthiness?
37:25That's what we want to know.
37:27Well, the honest truth about this is, I don't know if I can use this phrase, but it's what we called it when I was growing up.
37:32It's a bit like going on the pool.
37:34Mmm.
37:34Financially.
37:35You all right, Anne?
37:36So, the truth about going on the pool is there's lots you can do to make yourself look better, but different people are attracted to different things.
37:45So, there's no perfect solution.
37:47But what I've got here is 10 tips to make you financially fitter and more fanciable.
37:54Here we are.
37:58So, the first one, use consistent answers on every application.
38:02Now, what do I mean by that?
38:03First of all, they like stability, but more importantly, if you get it wrong, you can be triggered out of fraud scoring.
38:07So, if you could be a marketing assistant or a promotions assistant, don't vary the term.
38:13Use the same term every time.
38:15If you've got more than one mobile, use the same mobile on every application.
38:18Of course, if your job changes, then you change what you put in.
38:20But stability is important.
38:22Next, get on the electoral roll if you want.
38:24It's a big problem for credit scoring if you're not.
38:26You can still opt out of the open register.
38:28That's the thing that stops you getting junk mail.
38:30Opt out of the open register to not get junk mail.
38:32For a national, then you can ask for a notice of correction, and that can prove your residency and help.
38:38Yes?
38:38Yes.
38:39Yes.
38:39Right.
38:40Finally, 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.
38:55If you even apply, not have, but you apply for a joint product, that can financially link you.
39:01That means they can look at the other person's file when you're applying for credit.
39:06So if they've got a bad credit history, this could kibosh your applications.
39:09Be very, very careful before getting joint products.
39:12By the way, if you were jointly, had joint products with someone, and you're no longer financially linked to them, then you apply for a notice of disassociation to all the credit reference agencies, but you have to be generally financially separate.
39:25Next one, fascinating this one.
39:26The 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.
39:35This is because Experian, the biggest reference for Reddits Agency, is adding it in its credit score, and 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.
39:47Carrying on, let's get to more.
39:49Never miss or be late on repayments.
39:50That 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, and you can manually overpay on top.
40:00But 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.
40:23If you miss payments, it can be negative for your credit file.
40:27Not for credit files, it doesn't go on your credit score, but it can be negative for lenders, can see it negatively.
40:32An 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.
40:47It'll disappear off your file in a few months, the score lower.
40:49But be careful with that one.
40:51Time application's right.
40:53I talked earlier about the impact on your credit score, but 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?
41:11Now, 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.
41:25It doesn't work like that.
41:26It should.
41:27But 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.
41:40So if you're a tenant, you can sign up to Canopy, which reports to the Experian credit file for free.
41:46You could sign up to Credit Ladder, which will report to one agency for free.
41:50So using those two in conjunction, you can get two of the three agencies.
41:53If you want all three of the agencies, you can pay Credit Ladder £60 a year,
41:58and you'll get it to report to all three of the credit reference agencies.
42:01Clearly great if you pay your rent on time.
42:05Clearly 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,
42:16have the Experian Rental Exchange Initiative.
42:19They should have told you about it.
42:20That means they're reporting to credit files, but you could choose to opt out, for example, if you wanted.
42:24If you're paying rent on time, I wouldn't.
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.
42:50How are you doing?
42:50OK, you have got time for some quick news you can use.
42:57Okey-doke.
43:01Right, time for some quickies.
43:04First of all, state-owned bank or financial institution,
43:07NS&I has boosted its British savings bond rates.
43:09You can see them there.
43:10They're all over 4%.
43:11Now, these are just fixed-rate savings by another name.
43:13Let's not get overcomplicated.
43:15The rate is good.
43:17It's not top.
43:18It's about 0.2 percentage points or 0.3 percentage points
43:21behind the very top open market fixed-rate payer.
43:25But many people want a big name with their savings.
43:28NS&I is as big as it gets.
43:30And crucially, most savings are protected up to £85,000 per person
43:34per financial institution by the state.
43:36This is owned by the state, so every penny in there,
43:39even 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
43:46and 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
43:51if you've got a MasterCard.
43:53Starts next Tuesday, 10am.
43:55I'm doing it now because sunshows sell out quickly,
43:57so 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've got a MasterCard
44:04on 2026 performances,
44:05including Wicked, The Devil's Wears Prada,
44:08Back to the Future, The Producers,
44:09and six...
44:11That was just for my daughter, by the way.
44:14If you're watching, I love you.
44:16From tomorrow, Ryanair won't accept home-printed boarding passes.
44:19You must check in online or Varysat first.
44:21If not, you'll be charged up to £55.
44:23But if you have checked in online
44:25and your phone ran out of battery,
44:27they're no longer going to charge £20
44:29for 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
44:36three 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.
44:44£20, so half 40 down to 20.
44:46Three-and-a-half-foot potty tree for £15,
44:48or a four-foot tree with lights for £20.
44:50And while we're speaking about Christmas,
44:52next Tuesday is the big one.
44:56We do it every year.
44:57Big audience, festive forecast,
44:59the Black Friday special, Christmas deals.
45:02It's all coming in.
45:03I'm even going to have to sing at the start of the show
45:05because that has suddenly become a tradition too.
45:08It's all going on, so do not miss it.
45:10Set your diary, 8 o'clock next Tuesday,
45:12and have a pen and pencil or some note-taking with you
45:14because at the end, I'm running through all those deals
45:16and I'm going to be running through them
45:17at serious speed, Jeanette.
45:19Well, 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
45:27out when I've done the festive forecast
45:29that we'll go through next week.
45:29Ladies and gentlemen, thank you so much.
45:31You've got questions about Christmas deals
45:33or 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,
45:39get in touch with that as well.
45:40Jeanette, you've been wonderful.
45:41The audience here has been wonderful.
45:42A round of applause for John Webb and Anne.
45:44And you know what?
45:50If I drank, I'd say I'd be off to my pub now,
45:52but I don't really, so I'll just go and pretend afterwards anyway.
45:55That's it.
45:55Take care, everybody.
45:56Good night.
45:57The brand-new series came to an explosive end last night
46:20as the truth came out.
46:21Don't miss Vicky McClure in Trigger Point,
46:24streaming now on ITVX.
46:26Next tonight, it's documentary,
46:29TikTok, murder gone viral.
46:31The brand-new series came out.
46:31The brand-new series came out.
46:32The brand-new series came out.
46:32The brand-new series came out.
46:33The brand-new series came out.
46:33The brand-new series came out.
46:34The brand-new series came out.
46:35The brand-new series came out.
46:35The brand-new series came out.
46:35The brand-new series came out.
46:36The brand-new series came out.
46:36The brand-new series came out.
46:37The brand-new series came out.
46:38The brand-new series came out.
46:38The brand-new series came out.
46:39The brand-new series came out.
46:40The brand-new series came out.
46:41The brand-new series came out.
46:42The brand-new series came out.
46:43The brand-new series came out.
46:44The brand-new series came out.
46:45The brand-new series came out.
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