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Money saving expert Martin Lewis reveals how lenders really assess your credit rating – and what counts the most when you’re looking to borrow money

Martin Lewis has explained to people that they shouldn’t get too hung up on their credit rating – and revealed what is really important when they are looking to get a loan.

The money saving expert, 51, from Manchester, appeared on This Morning today to answer viewer’s financial questions.

One caller phoned the programme to ask how to improve her credit score, revealing that while she has a high score, she keeps getting refused credit after getting an increase in her overdraft.

She also noted that she was ‘refused a mortgage when [she] was renewing it this year due to being made redundant whilst on maternity leave’.

She then asked: ‘I’ve never had a bad credit rating before I always pay off everything in full. What can I do to improve it?’ 

Money saving expert Martin Lewis (pictured) explained why people shouldn't worry so much about their credit ratings - and what else they should focus their attention on Money saving expert Martin Lewis (pictured) explained why people shouldn't worry so much about their credit ratings - and what else they should focus their attention on

Money saving expert Martin Lewis (pictured) explained why people shouldn’t worry so much about their credit ratings – and what else they should focus their attention on

Martin’s answer may come as a surprise to some, as he responded to the question initially by saying: ‘We just have to get away from being hung up too much about credit scores.’  

He explained: ‘You do not have a credit score in the UK. The one that you’re given by the credit reference agencies is just their indication of a loose guide to what a typical company might look at, if it was only looking at your credit history.’ 

Martin continued to explain what the ‘single most important factor’ is when you are being looked at for any form of credit – your income.

He continued: ‘If you had no income and a perfect credit score, and you wanted a loan, you’re almost certainly not going to get it because you can’t pay it back. 

‘So when you tell me you’ve been rejected, what you haven’t told me, is the crucial factor. You talked about being made redundant. 

‘Well, if you’ve been made redundant and you don’t have a job, and you don’t have income even with a great credit score, it is going to make getting credit much more difficult.’

This, he explained, could be why she is being rejected.

There are three different agencies which have your credit reference files. Martin told the caller to get her files from all three of the agencies.

He added: ‘Download them, go through line-by-line just to check there are no errors –  such as you’ve moved house and you’ve got accounts that are still listed at your old address’.

These include things like that could ‘get you knocked down due to fraud scoring’ for example. He said go through all of that. 

Martin concluded: ‘But remember, credit scoring is only one half of this. The other half is affordability scoring, which is far more about your income.’ 

ManchesterMartin LewisThis Morning

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