Martin Lewis has explained what it means when your credit score has dropped. The finance guru reassured card holders that it may not be as damaging as they might think, in a video posted on the MoneySavingExpert's YouTube channel.
Explaining what a credit score is, Martin said: "In the UK, you do not have a credit score. There is no one all encompassing number that dictates to a lender whether it should lend to you or not. It doesn't really exist... Many of you can log into a credit agency [such as Equifax] and you can see a number out of 600 or 1000 that shows you your credit score. The number is different with different reference agencies - that shows to you this isn't a standardised thing. So what's it all about?
"Every lender will do its own credit score of you. It will plug all the data in about you and work out its own system to decide if you're a profitable customer or not...each lender is trying to assess you based on its own wish list. [Credit reference agencies] are a roughly average indication of what a lender would assess you put in a numerical form."
