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00:00¡Gracias!
00:30I want to blow them away.
00:32I want to show you the truth of how it really works, what you need to do, and I will finish
00:37with 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
00:48can even impact the rate you get.
00:50Credit checks may affect things you pay ahead for too, like mobile phone contracts and sometimes
00:57energy direct debit tariffs.
01:01Then in my news you can use, new figures out show 1.1 million graduates have paid more
01:07student 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-price Christmas trees, a Ryanair
01:21warning and cheap theatre tickets.
01:23Now to our own showstopper, Jeanette Kwachi, everybody.
01:26Thank you very much.
01:29I am your leading lady, I am happy to be back, but we want to hear from you, so please do
01:33send 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.
01:45A huge welcome, as always, to our studio audience.
01:47Wave your wallet, everybody.
01:48Wave your wallet.
01:49We love that.
01:50You're amazing.
01:51That's right.
01:52So Martin, we had an enormous response to your call out last week, saying that people
01:57could leave O2 because it's hiking, it's price hike if you like.
02:00Just wanted to show you a few messages.
02:01This is coming from Nicola, she's ditched and she's switched.
02:04She says, I saw your O2 increase information this week, requested my PAC code and switched
02:09to a new provider.
02:11I 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 boycats.
02:22So 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
02:44it never behaves like this again.
02:45And other companies think, we don't want to do that either.
02:48Yeah.
02:48Sean, he's taking your advice here and Sean has haggled.
02:51He said, I rang up O2 yesterday and after a phone call, I stayed with them but saved £34
02:56a month on my two contracts with more data, a huge saving of £408 a year.
03:04Great.
03:05Now, this is the interesting one because when I told people their rights last week,
03:09normally when you're at the end of the contract, you can use that as an opportunity to haggle,
03:12benchmark 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,
03:20I wasn't 100% sure it would work with O2 like it would at the end of the contract.
03:24So I asked people to try.
03:25Sean is a success and frankly, I've had hundreds of other people who've taken this opportunity
03:29to go to O2 and say, I will leave you unless you give me a better deal.
03:33And they've got better deals.
03:34So that's working.
03:34Fabulous.
03:35Right.
03:35Now, there is a question though.
03:36It's coming from Shirley.
03:37It's a bit of 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 authorization code that you get when you're changing mobile phone number.
03:52Listen, I've seen some of those messages.
03:55And what it actually says 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.
04:13You were paying it by the month and you can continue to pay it by the month,
04:17but you'll have to pay everything that they owe them on the same plan.
04:19But when they say pay it off in full,
04:21it sounds like you have to give them the money now, doesn't it?
04:23It's poor communication, bad phrasing.
04:25I 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,
04:36just as you were doing before.
04:37You're free to leave, Shirley.
04:38OK, hopefully that helps, Shirley.
04:40Now, I know we're going to get into credit scoring in the meat of the show.
04:44Something I wanted to ask you first, though,
04:45it's a question that's coming from Amy O.
04:49There it is.
04:49I've heard there's a way you can claim back a student loan,
04:52which 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.
05:06OK, so the new figures say 1.1 million university leavers and graduates
05:11have overpaid their student loans in the 24-25 tax year.
05:15And that adds to at least four million people from figures and requests
05:19that we've given them for information in the past.
05:20So there could be five million of you out there who are owed money.
05:24There are four reasons, but the first reason is the big reason.
05:30It'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
05:41if you earn over the annual threshold in a tax year.
05:44What your annual threshold is depends which plan you're on.
05:48So we'll hold on this graphic so you can read your graphic as I go through.
05:52I'm going to focus on Plan 2 loans, because that's the one with by far the most people on.
05:56England starters, it's when you started university and where you were resident,
06:002012 to 2022, and wealth starters from 2012 onwards. Your repayment threshold is £28,470 a year.
06:08You repay 9% of everything you earn over that in a year. That'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. You repay 9% of everything you earn above
06:27that a month. Let me give you an example and you'll see why so many have overpaid this.
06:32Here we go. So, there's the monthly repayment threshold. Let's imagine maybe you've just
06:37started after university and it's the next year or two. You've had a few months off,
06:40you didn't work in April, you didn't work in May, you didn't work in June,
06:44then you got yourself a job paying £36,000 a year. £3,000 a month. Done, because 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 9 months. You understand why?
07:04OK. But, now look at this.
07:09Your total tax year earnings were £27,000. The annual threshold is £28,470.
07:17You earned less than the threshold. You don't have to repay your student loan.
07:22Here are the payments that you made. £508, you can reclaim the £508.
07:28So, this is big for many people. Who does it tend to most commonly affect? Well, it's those who only
07:34worked for part of the year, those who are on commission or 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. You use slcrefundrequestform at gov.uk or you can do it in your student loan
07:50company repayment app. You can do it for every year except the current tax year, because the
07:55current tax year, you'll have to wait till it finishes. So, for every year before that,
07:59you can go and reclaim your money. Yes, Jeanette. Just before you move on,
08:01we've got a success story on this one and it's a big one. Have a look at this.
08:07Daniela lives in Loughborough with her husband and two kids.
08:10Being a maths teacher was the career that I always wanted. I needed to take the student loan to pay
08:15for it. After my initial £16,000 I borrowed, I also had to borrow another £9,000 to pay for my
08:22teacher training. I've watched the Martin Lewis show for almost seven years now. There was one show
08:28back in November. Martin mentioned there's over a million students that have overpaid their student
08:33loan. Is that me? Have I overpaid? He gave numerous reasons. The one that stood out to me was gaps in
08:38employment. In the last few years, I have had to give up my job when I had my eldest child. He was
08:43born with a brain condition and requires a lot of care. Once Martin shared that you could possibly
08:49have overpaid your student loan, I acted instantly. It was as simple as log on to your student finance,
08:55click manage your statements and click request refund. Within 48 hours of my application,
09:01I was told I got a refund of £2,213. It was a pinch-free moment. I was seven months pregnant.
09:08I'm not working. I don't get an income. Having that money was really helpful. I'm so glad I went
09:14through the process. Thank you so much for doing that film. So look, she said a million people have
09:21overpaid. That was the previous tax year. This is an annual figure and it's still a million people
09:25overpaying each year, which is why it's a clarion call for me that if you are a graduate or university
09:30leaver who's paying your student loan to cheque you haven't overpaid. Now, just before I move on,
09:35because we came in, there is one thing. This is a technicality and people ask me about this. It's a bit
09:39complex. If you overpaid in some months, but earned over the annual threshold, you cannot reclaim. So
09:46this is, this is a negative. Let me explain that to you. So here's a scenario. Someone who earns
09:51£24,000 a year, normally standard salary. So £2,000 a month below the threshold. We'll stick
09:56with plan two again as an example here, but obviously from different plans, the numbers are different,
10:00but then got a £5,000 bonus in December. So they've got a £5,000 bonus. Let's have a look. First of all,
10:06their total tax year earnings are £29,000 above the threshold, therefore. So they repaid
10:159% in this month of everything above £2,372. They repaid 400, just over £400. Now, what you
10:24would might think is, hold on, they're only £500 above the annual threshold. They should be paying
10:299% of that, about £45. But no, it's done by the month. They've repaid £400 of their student loan,
10:35even though they're only just above the threshold. And this is complicated,
10:39but effectively the rule is this. You repay your student loan by the month through PAYE,
10:46and that is correct, unless your total annual earnings are below the threshold,
10:51and then you don't have to repay. If you think it seems unfair, that's because it's unfair,
10:55but that's the way the system works. Jeanette? Absolutely. I mean, I understood it,
11:00but you can move on. They're small. OK, good. You got it. Right. I've got more for you. Yes,
11:05you're right. Other reasons. Let's scroll up. There we go. I'll do these ones quickly. Reason to all
11:09much smaller, all in the tens of thousands, not over a million here. Wrong student loan repayment plan.
11:14If your employer doesn't know which plan you're on, it has to default to plan one,
11:17which is repayments above 26,000. But the biggest plan, plan two, and all the Scottish plans, plan four,
11:22the repayment threshold is higher. So you shouldn't be repaying as much. You should only be repaying above
11:26this amount, but you're repaying above that amount. If that's you, call the student loan company here
11:30for a refund. You can't do it online. Also, go and talk to your employer's payroll department and say,
11:35actually, this is my plan. Please change my setup so I'm paying on the right plan.
11:39Reason three, you started repaying the loan too early. Nearly 40,000 here. This is the rule. You only,
11:46regardless of what you earn, you only have to start qualifying to repay the student loan in the April
11:50after you leave university. For most graduates, that's nine months after they graduate. So you'd leave in the
11:55July, the following April. But if your employer has the wrong details, it can take the money too
12:00soon. If that happens, you can get the money back by calling SLC for a refund. Good to have your pay
12:05slips if you're doing that one. And the final reason, often get asked about this, is money is deducted
12:11after you've fully cleared the loan. So once you've paid off everything that you owe. Nearly 60,000 people
12:16last year. The loan's normally wiped after 30 years. It depends on the plan. Every plan is different,
12:21so you can look that up online. But the student loan company takes time to notify PAYE, so they
12:27don't always stop it on time. If that happens, you don't need to reclaim. You will be paid back
12:31automatically. My top tip though, within the last two years of repaying your student loan,
12:37you can go online at student loan company and ask to set up a direct debit. So you pay it by direct
12:42debit, not through the payroll. And then you only pay the exact amount that you owed. And that is where
12:47we're finishing, I think, on student loans. One more. I know. I'm so sorry. There's one more
12:54question. It's coming from, I'm sorry, it's coming from Amy. Amy says, I recently received a student
12:58loan refund of £1,601 overpaid. A proportion of that will have paid off interest. When I claim
13:04the refund, won't the amount just be added to my student loan? Absolutely. Very important question.
13:09Yes, 100%. If you've overpaid and you get the money back, then your student loan account,
13:15you will owe more. Now, what you may be thinking is, hold on, doesn't he normally say it's best to
13:20overpay loans because then you pay less interest? The quicker you pay a loan, the better. You are
13:24right on normal loans. Student loans are not normal loans. For example, those on those Plan 2 loans,
13:31the biggest one being repaid off at the moment, the stats show only around one in three people will
13:38clear what they borrowed plus interest in the 30 years before it wipes. Most people will just pay
13:449% of what they earn above the threshold for 30 years. So if you've overpaid and you take the
13:49money and you're one of those two thirds of people lower to middle earners, well, you're still going
13:56to repay 9% of everything you earn over the threshold for the next 30 years. So taking that
13:59money back is not going to cost you any more in future. The money in your pocket is better in your
14:03pocket. Now, with other plans, you are more likely to clear earlier because the loan amount's lower and
14:08the interest rate is lower. But what I would still say then is if you need the money, say,
14:13to clear expensive debts or to reduce your mortgage borrowing, on the other plans, the interest rate's
14:18only 3.2% and student loans have better terms than any other form of borrowing. You only repair it if
14:23you're earning enough and it's going to wipe at some point. So in that case, you may still be better
14:28to take the money, have it in your pocket so you can use it so you don't have other more expensive debts.
14:33But especially those on the Plan 2 loans, the majority of people are better to take the money
14:38rather than just to reduce a loan that won't necessarily mean they pay any less in the future
14:41anyway. Okay, now... Do you understand that? Because it's really complex. Yeah.
14:45Okay, I promise you're done now with that, I promise. Well, you can get in touch. Let us know
14:49about your student loan situation. Does this affect you? Always use that hashtag,
14:53Martin Lewis. But coming next, credit scoring. How does it work?
14:57And what is Experian about to do? We'll see you in four.
15:11Welcome back. We're live. We're going to be talking about credit scoring in a moment,
15:14but just before that, we're getting lots of reports that the student loan company website
15:18and app is struggling a bit, likely because of lots of demand. It's always what we do on this show. So
15:22be a bit patient, maybe check it in half an hour or an hour or so and it should be easier.
15:26It should be. There's lots coming in over the break. I'm going to sort it all out
15:29and come back to it. But let's go to Jo in the studio. Jo, you've got a question for Martin.
15:33Hi, Martin. Hi. Hi. Yeah, I've heard that the credit agencies are changing the rules,
15:39but I don't understand how they actually work in the first place. Could you explain?
15:43I can. And they're not changing the rules, they're changing the score. Ah.
15:47And the first thing you all need to understand is the difference between your credit score
15:52and the credit scoring process. Don't worry, I'm going to explain in my big briefing. Thank you.
15:59OK. The truth about credit scoring. The most important thing you all need to understand.
16:04You do not have a credit rating. You do not have a credit score in the UK. There is no single number
16:12that dictates acceptability. Each lender, when you apply, scores you differently based on its own
16:21individual profitability wish list. Profitability, not risk. Why do I say profitability? Well,
16:27in many cases, it is. Are you a good or bad risk? But it may be a company that's trying to target
16:32people who are a poor risk so it can charge them more. And for them, poor risk are profitable
16:36customers. So it's a profitability wish list, not a risk wish list. That's the proof.
16:42No. Yeah. I was expecting that, because this is what everyone says to me. But that's nonsense,
16:48Martin, because I have paid for my credit score. I know what my credit score is. I monitor my credit
16:52score very carefully. And I do have a credit score. Is that what you're thinking? OK, let me explain.
16:59Here you go. The big credit reference agencies, there are three of them, they will show you a
17:05credit score capitalised because that is your credit score, not the credit scoring process. But they
17:11are just their illustration of how a typical lender may view you. They are not used by lenders.
17:20Now, just to prove my point, TransUnion is out of 710. Equifax is out of 1000. Experian
17:27is out of 999. But that's about to change. So it's out of 1250. The fact they're all different
17:33tells you something. Just before I go on, let's explore that Experian change for a moment.
17:38Here's what's happening. It's rolling out new scores from mid-November till the end of the year. Some
17:42of you will have had notifications today on this particular one. 44% of you will see your band drop.
17:48It might drop from excellent to very good. 42% will get a higher score. Some may be in a higher band.
17:54But crucially, this shouldn't change anything. Why? Because this is just their illustration
18:01of how a typical lender views you. The underlying data is what the lenders use. Your underlying data
18:08hasn't changed. Therefore, your acceptance by lenders won't change. We are too hung up on this. Now,
18:17we have a man from Experian here, John Webb. Thank you for joining us. John, why are you doing 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. Things like overpaying a mortgage, reducing your
18:34overdraft, taking cash from a credit card. These are the things that lenders are now looking at. We've
18:39included them into credit scores so we can give people the most accurate view of how a lender will
18:44view their credit report information when they apply. A typical lender, but every lender does it
18:48differently. Why 1250, though? Why have you increased the number? I don't get that. I've heard your
18:53explanations. I still don't get it. So, we did consider staying at the same score, but actually,
18:58the number one thing people tell us is that they want more information about how their credit score
19:03is calculated. By moving to the new range of up to 1250, it allows us to give people more detail
19:09than they've ever seen before about how their score is calculated, and more importantly, how to improve
19:14it, because typically, higher credit scores mean access to more affordable credit, better rates, better
19:19limits. You're obviously a cleverer man than me, because I can't see how doing it out of 999
19:23creating it to an arbitrary figure of 1250 when you could just proportion it makes any difference.
19:26But hey, we'll move on.
19:27So, let me move on a little bit. Here we go. The biggest single thing you need to understand
19:33about credit scoring is the biggest piece of information they miss. The biggest thing that
19:36lenders look at is on your application form. It's your income. Lenders also do affordability
19:43scoring. That isn't in your credit score. Think about it. You've got the best credit score in the
19:46world. It's been brilliant. You've just lost your job. You've got no income. You can't afford to repay
19:51what you want to borrow. They are not going to lend to you. Credit scoring is not the end of the story
19:57at all. So, my big message to you, you know, people get in touch with me and say, my credit score's just
20:00me by seven points. What should I do? Don't sweat small moves in your credit score. It's just their
20:06illustration. But do sweat big ones that last longer, because that's likely an indication there's
20:13something more systemic going wrong in your file. Kevin has emailed you just on this. Have a look at this.
20:19My energy supply did a hard search on my credit report, but I decided to switch instead of after
20:24getting a better deal within the cooling off period. Does this affect my credit score? It seems to have
20:30dropped a little. And what can I do? Well, yeah, it does affect your credit score, but who cares?
20:34Would be my honest answer. I've got more detail on that though, because this is what you need to consider.
20:39So, we'll just break it down. What you've got there is a new credit account or an application,
20:44or maybe a cash withdrawal on a credit card. What happens then? You'll get a small score dip,
20:49but it'll only last for up to about three months. And then it'll go back to normal. It bounced back.
20:53Don't worry. I mean, listen, it always depends on circumstance, but this is sort of guidance.
20:58Scale of magnitude. If you've been applying for lots of accounts in a short space of time,
21:02that is a more significant problem. You'll see a bigger drop in your score. It'll probably start
21:07reducing 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. It'll often go on for six months after it has been fixed. So you have
21:22to make sure you make the payment, and it's only improved if you're paying on time afterwards,
21:26or it could be even worse. Now, if you have an arrear where you are owing money to a lender,
21:32that is significantly damaging. It can take two years to recover from, and only if you manage to make it
21:37up to then. And then the really bad stuff, the stuff that is going to cause you problems with
21:41all lenders, if you have a default, a county court judgment and insolvency. Bankruptcy, IVA equivalent.
21:49It is very significantly damaging. It can impact your score for up to six years or possibly longer.
21:55Now, I'm talking here about the credit score that the credit reference agencies give you,
21:59but that is roughly symbolic of the way that most lenders would think too. So it's both the impact and
22:04the time span of the impact that matters. In the case of that question, they've gone in a few months.
22:09OK. How about this one from Sandra? She's asking, my son has a phone contract in my name. He recently
22:15had a late payment on the account, which is showing on my credit report. Do you have any advice?
22:20Well, just being... I need to make this blunt, and I don't mean to be rude, Sandra. You have a phone contract
22:25you're letting your son use. Therefore, the debt is yours. It's on your credit file of yours. Whatever
22:31your relationship between the son. When you give somebody else money in your name, it's you that owe
22:36it. The first thing you need to do is make sure you're paid and pay on time in future. There's very
22:43little you're going to be able to do about it. The truth is, it's representing a real thing that's
22:47happened. It hasn't been paid. That's gone onto your credit file. It will have a negative effect.
22:51That's what credit scoring is all about. So, you need to just protect yourself in future. We can't
22:56tidy up things that are real. We 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. It's her account, her contract. So, actually, she's responsible for
23:07paying it or showing up on her file. Bring it up to date as soon as possible, and keep paying on time.
23:12And like you said, it will improve. It will improve. Within six months, it will start to get better,
23:15and in two years, it should mostly be gone. But let me get on to the most important thing you need to do
23:21when it comes to credit. It's not your credit score. It's your credit file, also called your credit
23:27report. You should check your file at least annually and definitely before any major application you're
23:33going to make, because if there's an error that stops you getting one, you've got too many applications
23:36on your file, and you can start to go into a vicious circle. So, your credit file will list key
23:41information, the products you have, whether you've paid on time, any county court judgments against you,
23:45the electoral roll information. I want you to go through this line by line. Be a pedant. Be pedantic,
23:52and I will give you a tick, because even a small address error on an open account could block you
24:00in fraud scoring. Line by line. Now, for a general check, I would just do one agency. But if you're
24:07about to do a big application by that, I really mean a mortgage. I would check all three agencies,
24:11because you don't know which one they're using. And one, if there is an error, they will pass it on to
24:14the others. It's safer to do it that way. You can see your files for free. You can use the statutory
24:18credit reports, which tend to be a bit slower, or these ways are a bit quicker. For Equifax, Equifax
24:22Basic or ClearScore will give you a free report. For Experian, go to the free Experian app, relatively
24:28new that. For TransUnion, loads of bank websites and many credit help apps will also give you a TransUnion
24:34report. Big warning though, loads of them will try and sign you up to this. £15 a month credit
24:39monitoring service, everything you need. You don't need that to see your credit report,
24:43and it's your credit report that really matters. So don't accidentally sign up for that if you don't
24:46need to. Final thought, we've been talking about student loans already. Student loan company loans
24:51do not go on your credit file. That isn't to say they can't affect your applications, but they don't
24:58affect it as debt. What they effectively do is they reduce your disposable income if you're paying off,
25:04if you're above that threshold and you're paying off the 9%. So 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
25:12on your credit file. It's just because you have lower disposable income, if that makes sense.
25:16Absolutely. We've got a virtual wall this evening. Jane is here. Jane, you've got a question for
25:21Martin. Good evening, Jane. Hi, Martin. Right, my question is, he used to have a good credit rating of about
25:29750. After we manually underpaid by 55p, one bank loan instalment, the bank then incorrectly reported
25:42to the credit reference agency that we had missed six hold payments. I didn't find this out until
25:49earlier on this year when I had to check his credit file for something. We contacted the bank. The bank
25:55admitted they've made an error. They've corrected the file now, but it's not really improved his credit
26:01score. It's gone from 277, which is what it dropped to now to 377. And you are absolutely sure
26:08that they have corrected it on the credit file, that that information is right. And it's the same
26:13credit file that is of the report that you're looking at. Yeah. Well, that's a tough one. Luckily,
26:18I've got John here. John. Thank you. That is a tough one. So yeah, my first instinct would be to say,
26:24check all credit reports with the three credit reference agencies, make 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
26:40credit score. So go through your credit report, have a look, see if there's something else. How
26:44recently was this? How recent was it? Right. So we found out in September,
26:51contacted the bank. The bank admitted their mistake. I think this could literally... Sorry,
26:55they're telling me to go to break. I think this could literally be that they've just not updated it in
27:00time. Keep monitoring over the next month to six weeks. If it hasn't worked,
27:03you apply to have a notification on your file, a notice of correction put on your file where you
27:09write that this was a mistake and hasn't really happened. You write back to the bank and you put
27:13in 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. But I suspect some just don't update that quickly
27:22and it's probably just an updating issue and it will fix itself. It should fix itself, shouldn't it?
27:25Yeah, they update every month. Go to break, go to break, go to break. Thank you very much.
27:31OK. Well, coming up, we're going to be talking about what actually happens
27:35when you apply for Credit Plus. Martin, you're taking us to your credit pub.
27:39My credit pub indeed. You will find out more. I'll have some water. OK, we'll see you after this.
27:43Welcome back to our credit scoring special. We've got this question that's coming from Eleni,
27:59just for you, Martin. I have a clear credit score of 1,000, but I can't get a 0% balance transfer card
28:06to help me clear my credit card debts. I keep getting refused. Why could this be?
28:10Well, I'm hoping you've started to work out why. Let's go straight back into the big briefing now.
28:16Well, there you go. I've written it there. What happens when you apply? You can still be rejected,
28:20Lainey, with a perfect credit score. Firms use information from your credit file,
28:24but they also use information from your application form, including that all-important income
28:29and any past dealings they've had with you. So if it's a bank that maybe you've had good dealings with,
28:34it might be more helpful. If it's a bank you've not had good dealings with,
28:37it might be more likely to reject than others. But remember, lender's affordability score 2,
28:44which is just as important. Let me delve into that into a little bit more detail with you now.
28:50Here we go. So this is just to give you an example of the type of things that's going on. I'm not
28:55going to labour it too much because every lender will work slightly differently. Here's some of the
28:58type of things they will look at. Remember, it involves your income. You'll see how much of this
29:01does. First, your debt ratio. How much unsecured debt, loans, credit cards, overdrafts, not mortgages,
29:07not student loans, do you have as a percentage of your annual income? You've got £20,000 on credit
29:13cards, you earn £40,000. That's 50% and it uses this scale. There you go. That's OK. It's not good.
29:20It's a bit of a problem. What do you do? Well, try and reduce your debt or, of course, try and improve
29:24your income, which may be a bit more difficult. The next one, credit utilisation. This is the
29:30amount of the available credit you have that you are using. It works on the same scale as the other.
29:35So £100 debt on a credit card with £1,000 credit limit is 10% credit utilisation, but it's looking
29:40across all of your debts. Now, the really important thing here is when this is used, it only really
29:47matters if you have a high debt ratio. If you've got a lot of debt, this matters. If you've only got a
29:51tiny bit of debt, the fact you're using all of it isn't that relevant if it's only a small proportion
29:54of your income. Again, you try and reduce your card or overdraft jet, or mathematically,
29:59you try and get more credit. But that causes you problems in other forms of credit scoring,
30:03so I probably wouldn't bother with that. That's the second thing they look at. And the third is
30:07your disposable income. The spare cash each month after bills and essentials. Now, with cards, loans and
30:14mortgages, actually, they're mostly doing a statistical estimate. They look at what your main
30:18outgoings are, but for your spending, they're not really looking at your spending. They're looking
30:22at 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. So you're
30:31starting to see how much more complicated than the pure credit score this is. And we get more.
30:36For credit card acceptance, because your acceptance tends to be on your credit score. Will I get accepted
30:42or not? The affordability score dictates your credit limit. How much will you be able to borrow on the card?
30:47Because it's a variable credit limit. Acceptance is binary. This is variable.
30:51With a loan, it's more weighted to affordability score. This is why. Think about this. This really
30:57explains everything. You are one person. You apply to one lender. They accept you for a £3,000 loan.
31:03They reject you for a £10,000 loan. You've got the same credit score. Everything else is the same.
31:08It's not about your credit score. It's about your affordability score. Mortgage acceptance,
31:13again, more weighted towards affordability scoring. Now, one of the things going on there is probably
31:19over-application. You've applied too many times, and that can be dangerous. Applying can mark your
31:25credit file, even if you don't get accepted. So if possible, don't apply. Go onto an eligibility
31:31comparison on a comparison site. That avoids heart searches, and it shows you your likely odds of
31:37acceptance for different cards. Then you can home in on the best card. Crucially, these use soft
31:42searches, so you see these searches on your file. Lenders can't factor them in, so they're safe to
31:48do. I suspect you've been over-applying. Go 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, and then things may have softened.
31:58Anything else? Are we good? Exactly right. Take a break from applying for about three months,
32:02and then use the eligibility check. Perfect. Okay, there we go. We both agree. Cool. Okay,
32:05there's this that's coming as well from Stephen. He's asking, I've got an excellent credit score,
32:11but I want to change to an interest-free balance transfer card. Will my credit score go down?
32:16Who cares? Stephen, I genuinely don't care, for a very simple reason. First of all, it's only your
32:22credit score. It's only an illustration, but more importantly, I tend to think of managing your
32:27credit worthiness like saving. I'm saving up for a rainy day in case I need it. What is the most
32:31important use of your credit score? To cut the cost of existing debt, which is what a balance
32:36transfer is. So use it. It is far better to have a lower credit score and better finances and cheaper
32:42debt than a good credit score, and you're paying over the odds. That's what you're building your
32:46credit score for. If your credit score goes down, it goes down. You've got a card that cuts the cost
32:50of your debts. Hurrah! Thanks, Stephen. Sorry, Mayim. Right, this is coming from Ahmed. I think
32:58quite an important question. What's the safest checklist to build a strong credit history from 18?
33:03Can I have me pub? Bring me pub. Now, it's the borrower's return, everybody.
33:12And is it Anne? Anne volunteered in the break that she's going to come and sit in my pub. Come up the
33:17stairs, my love. There we go. Just wait until we don't need to get hurt. If you go and sit over there.
33:21This is a prop. Do not drink it. It might poison you.
33:28Okay, so this, I just want so people understand how this works. We're going to play a game.
33:32You're in a pub. This is what happens. You're sitting there. Oh, Anne, how are you? Oh,
33:39it's lovely to see you. I forgot my wallet. Oh, I'm so sorry. Could you lend me 20 quid,
33:46and I'll give it you back tomorrow, and I'll buy you a pint as well. Now, I have done this about 40
33:53times before, and every single time I have done it, I have always paid back the next day, and I have
33:59always bought a pint on top. Would you lend me 20 quid? Because it's you, Martin, I would.
34:05No, but even if it wasn't me. No, probably not. Oh, well. I'm a fan. As always. Yes, I would.
34:16Well, I'm very glad you said that. Next example, here we go. Anne, how are you? Oh, great, thank you.
34:25Oh, no, I forgot my wallet. Tell you what, could you lend me 20 quid, and I'll give it you back tomorrow,
34:29and I'll buy you a pint as well. Now, this person has done this 30 times before, always forgets to pay
34:36back 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? If their name was Martin Lewis, yes, but no otherwise. No one else,
34:47so you're not giving it. Good. No. Final one. She's hard work. Simple example.
34:55Hi. Hi. Nice to meet you. Oh, no, I forgot my wallet. Would you lend me 20 quid,
35:05and I'll buy you a pint tomorrow? You have never met this person before in your life. You do not know
35:11who they are. It's not Martin Lewis. Would you lend to them? No. No. Okay. This is credit scoring. First
35:20example has a good credit history. We know that they're repaid. We can predict their future behavior
35:23based on their past. They're a pretty safe bet. Second person, we predict their future behavior
35:27based on their past. They're not a safe bet. Third person may be lovely, but you don't know them.
35:32You have no data. No data gets rejection. That's how credit scoring works. And if you'd like to go back
35:37there before they move the put away. Thank you very much for that, everybody. I know we're on the wrong channel.
35:43Get my pub out of here. Okay. Thanks, chaps. Well, they do that. Two biggest reasons people are rejected.
35:52Your past behavior and they don't have enough data. How do you build data? You need to get a credit. You need
35:57credit to get credit, but how do you get credit when you don't have it? You get what's called a build or a
36:04rebuild credit card. Easy to get. They have high interest. Go onto an eligibility calculator for
36:09a rebuild card. If you can get them, there are a couple that give spending rewards. Tesco Foundation
36:13card, Asda money, terrible interest rates. Here's how you use them at no cost. Spend 50 to 100 quid a
36:19month on them. Just your normal spending. Don't spend anything that you wouldn't spend. Pay it off.
36:22In full. In full. Preferably provide direct debit. Never miss repayments. Never withdraw cash. That's
36:28always bad. Never bust your credit limit. After a year or so with no other issues,
36:33your credit worthiness should improve. My problem with an 18 year old, only do it with an 18 year
36:37old who's trusted and trusted and will do this sensibly and not realize it's just free money.
36:42Just know it's a way to build their credit score. You could even do it with two cards and don't use
36:46credit rebuild the schemes. Can you tell again they're going, go to break, go to break. But hopefully
36:51that makes sense. Get yourself a credit, but use it carefully. Never overspend. Pay it off in full.
36:57Absolutely. Thank you very much, Martin. Now, coming up next, 10 ways to be financially fit
37:01and the rest of news you can use, including half-priced Christmas trees.
37:05Well, welcome back to the show. They are loving this credit score special. But Martin, what I want to
37:23know, how do you actually boost your credit worthiness? That'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
37:31called it when I was growing up. It's a bit like going on the pool, financially. You all right, Anne?
37:38So, the truth about going on the pool is there's lots you can do to make yourself look better,
37:42but different people are attracted to different things. So there's no perfect solution.
37:46But what I've got here is 10 tips to make you financially fitter and more fanciable.
37:54Here we are. So the first one, use consistent answers on every application. Now, what do I mean
38:02by that? First of all, they like stability, but more importantly, if you get it wrong,
38:05you can be triggered out of fraud scoring. So if you could be a marketing assistant or a
38:10promotions assistant, don't vary the term. Use the same term every time. If you've got more than
38:15one mobile, use the same mobile on every application. Of course, if your job changes,
38:19then you change what you put in. But stability is important. Next, get on the electoral roll.
38:23If you want, it's a big problem for credit scoring. If you're not, you can still opt out of the open
38:27register. That's the thing that stops you getting junk mail. Opt out of the open register to not get
38:31junk mail. For a national, then you can ask for a notice of correction and that can prove your
38:36residency and help. Yes? Yes. Yes. Right. Finally, you can snog or marry who you like. You have my
38:43permission. Financially. That will not affect your credit. What will a joint products? Mortgage, loan,
38:51bank accounts. No such thing as a joint credit card. It's a second card holder. If you even apply,
38:56not have, but you apply for a joint product, that can financially link you. That means they can look
39:02at the other person's file when you're applying for credit. So if they've got a bad credit history,
39:07this could kibosh your applications. Be very, very careful before getting joint products. By the way,
39:13if you were jointly, had joint products with someone and you're no longer financially linked to them,
39:17then you apply for a notice of disassociation to all the credit reference agencies. But you have
39:23to be generally financially separate. Next one, fascinating this one. The first time I've said this,
39:27overpaying your mortgage may start to boost your credit worthiness. Check you shouldn't be saving.
39:32Go to a mortgage overpayment calculator to check. This is because Experian, the biggest reference
39:37for Reddits Agency, is adding it in its credit score and they advise companies on how they should do
39:41their own credit scoring. So we're likely to see more of it coming in the future, overpaying your
39:46mortgage. Carrying on, let's get to more. Never miss or be late on repayments. That is so important.
39:52If you're not good, but you want to pay variable amounts, well, at least set up a direct debit to pay
39:57the minimum each month and you can manually overpay on top. But at least that way, you will never miss
40:02a repayment. Buy now, pay later is increasingly appearing on credit reports. Klarna and Zilch
40:07already report. The rest are likely to start doing so once regulation starts in the middle of next
40:13year. It might not feel like a debt, but buy now, pay later is a debt. So if you pay it off on time,
40:21it can be positive. If 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
40:30lenders can see it negatively. An 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. It's expensive. And if you do it a
40:39lot, it can be seen as poor money management. I know some of you are saying, but I do it abroad.
40:43If you're doing it one off abroad because you've got a specialist overseas card, that's not so bad.
40:46It'll disappear off your file in a few months, the score lower. But be careful with that one.
40:51Time application is right. I talked earlier about the impact on your credit score,
40:55but actually some things only last on your credit file for a set time. The bad stuff,
41:00CCJs, defaults, finish bankruptcy, stay for six years. Applications only for one year. So if
41:05something's just about to lapse, wait a week till it's gone before you do your application.
41:09Makes sense, doesn't it? Now, one I'm asked about all the time. Logically, if I pay £1,500 a month in rent,
41:18that should be a good indication that I can afford to pay £1,500 of mortgage, shouldn't it?
41:23It should. It doesn't work like that. It should. But it's starting to be changed. There are ways you
41:29can apply to have paying rent on time factored into your credit score, which could, of course,
41:35improve your mortgage acceptability in future. So if you're a tenant, you can sign up to Canopy,
41:43which reports to the Experian credit file for free. You could sign up to Credit Ladder, which will
41:48report to one agency for free. So 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, and you'll get it
41:59to report to all three of the credit reference agencies. Clearly great if you pay your rent on
42:04time. Clearly not good for you if you miss or are late paying rents. Makes sense. Also worth noting,
42:10some big landlords, social housing landlords with over 500 properties, have the Experian Rental
42:18Exchange Initiative. They should have told you about it. That means they're reporting to credit
42:21files, but you could choose to opt out, for example, if you wanted. If you're paying rent on time,
42:25I wouldn't. And my final one, don't do little applications before a big one. If you want a
42:31credit reward card, but you're about to apply for a mortgage, do it after the mortgage application.
42:37The mortgage application is what matters. Applications do impact your credit worthiness,
42:42so put things in the right order when you're applying. And those together is how to be
42:47financially fitter and more fanciable. How are you doing?
42:54OK, you have got time for some quick news you can use.
42:57Right, time for some quickies. First of all, state owned bank or financial institution,
43:07NSNI has boosted its British savings bond rates. You can see them there. They're all over 4%. Now,
43:11these are just fixed rate savings by another name. Let's not get over complicated. The rate is good.
43:17It's not top. It's about 0.2 percentage points or 0.3 percentage points behind the very top
43:22open market fixed rate payer. But many people want a big name with their savings. NSNI is as big as it
43:29gets. And crucially, most savings are protected up to £85,000 per person per financial institution
43:35by the state. This is owned by the state. So every penny in there, even if it's more than that,
43:40is protected. So it's a good option for those with very large amounts. Maybe you sold your house
43:45seven months ago and you want to know what to do with the money. Next, a heads up. You can get £10 to £60
43:50West End Theatre tickets if you've got a MasterCard. Starts next Tuesday, 10am. I'm doing it now
43:55because sun shows sell out quickly. So you want to be on at the exact moment. It's the official London
44:00Theatre New Year sale. First dibs for those people who got a MasterCard on 2026 performances,
44:05including Wicked, The Devil's Wears Prada, Back to the Future, The Producers, and six.
44:11That was just for my daughter, by the way. If you're watching, I love you. From tomorrow,
44:17Ryanair won't accept home-printed boarding passes. You must check in online or Varexat first. If not,
44:21you'll be charged up to £55. But if you have checked in online and your phone ran out of battery,
44:27they're no longer going to charge the £20 for printing a boarding pass at the airport. You can
44:30now do that for free. So in some ways, it's a win for some people. And then from Thursday,
44:35you can get 50% off three Christmas trees at Tesco. The club card holds us only in-store. There's a six-foot
44:42Nordman fur. These are all real trees. 20 quid. So half 40 down to 20. Three and a half foot potty
44:47tree for 15 quid. Or a four-foot tree with lights for 20 quid. And while we're speaking about Christmas,
44:53next Tuesday is the big one. We do it every year. Big audience, festive forecast, the Black Friday
45:00special, Christmas deals. It's all coming in. I'm even going to have to sing at the start of the show
45:05because that has suddenly become a tradition too. It's all going on. So do not miss it. Set your diary,
45:11eight o'clock next Tuesday, and have a pen and pencil or some note taking with you,
45:14because at the end, I'm running through all those deals and I'm going to be running through them
45:17at serious speed, Jeanette. Well, there you go. I've got one question for you. How is your voice
45:25doing? My voice is all right now, but you know I can't speak out when I've done the festive
45:28forecast that we'll go through next week. Ladies and gentlemen, thank you so much. You've got
45:31questions about Christmas deals or free cash from bank switching or children's savings. I'll be
45:35covering them all next week. Use the hashtag Martin Lewis. Any questions on what we've done
45:38today? Get in touch with that as well. Jeanette, you've been wonderful. The audience here has
45:41been wonderful. A round of applause for John Webb and Anne. And you know what? If I drank,
45:51I'd say I'd be off to my pub now, but I don't really, so I'll just go and pretend afterwards anyway.
45:54That's it. Take care, everybody. Good night.
46:09The brand new series came to an explosive end last night as the truth came out. Don't miss Vicky
46:22McClure in Trigger Point streaming now on ITVX. Next tonight, it's documentary TikTok murder gone viral.
46:39What's up here?
46:48Once I'm going, I'll be going in the next minute.
46:52I'm going over there.
46:59Please take care, everybody up the next step.
47:05One day...
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