Martin Lewis has set the record straight on a widespread misconception about credit scores, delivering valuable insights as the festive season approaches.
Speaking on The Martin Lewis Money Show on ITV, the financial expert tackled one of the biggest myths about credit ratings.
“There’s a lot of nonsense out there about credit scores, the biggest one being that you actually have one. You don’t,” he began.
“The first thing to understand is, you don’t have a credit score. This is just as much art as it is science.”
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What Does Martin Lewis Mean by ‘No Credit Score’?
Lewis clarified that, unlike common belief, UK residents do not possess a single definitive credit score used universally by lenders. Each lender uses its system to evaluate applicants, based on what it considers a “profitable customer.”
“You do not have a credit rating; you do not have a credit score in the UK. There is no single number that dictates if a lender will accept you,” he emphasised. “Each lender scores you differently based on its own wishlist about what it wants in a customer—not just about risk.”
He further explained the role of credit reference agencies like Experian, Equifax, and TransUnion. These agencies offer credit scores as indicators, but Lewis cautioned viewers not to rely on them exclusively.
“It isn’t rock solid, it isn’t official.
“Sometimes, they’re the ones building the credit scoring systems for firms, so it’s a good indicator, but people are too overly trapped in their credit score,” he said.
Big vs Small Moves in Your Credit File
Martin offered practical advice for those monitoring their credit scores. He highlighted the importance of observing significant changes, as minor fluctuations often have little long-term impact.
“Big moves in your credit score matter. Small moves don’t matter that much and are often transitory,” he explained.
Key Tips for Building a Strong Credit File
During the segment, Martin shared actionable steps for improving your creditworthiness:
Consistency is Key
Ensure you’re registered on the electoral roll, as this confirms your address and is a simple way to boost credit appeal.
Use a Credit Card Responsibly
Regular, manageable use of a credit card—ensuring payments are made on time—can demonstrate reliability to lenders.
Keep Credit Utilisation Low
Avoid maxing out your credit limit, as high utilisation ratios can signal financial strain.
Avoid Multiple Applications
Applying for credit multiple times in a short period can raise red flags for lenders.
Monitor Your Credit File
Regularly checking your credit report ensures accuracy and helps you catch any potential fraudulent activity.
Why This Matters Now
The advice comes at a crucial time, as households prepare for Christmas amid ongoing financial challenges. With the cost of living crisis persisting, many are turning to credit to manage festive spending. Understanding how creditworthiness is assessed can prevent unnecessary financial stress and help households make smarter choices.
Revisiting the Show
For those who missed the broadcast, the full episode, including the credit file and score segment, is available to stream on ITVX.
More Information
For additional insights and tools, visit Martin Lewis’s dedicated page on Money Saving Expert: Martin’s Latest Tips.
Who is Martin Lewis?
Martin Lewis is one of the UK’s most trusted financial experts, known for his dedication to helping individuals and families save money and manage their finances more effectively. Born on May 9, 1972, in Manchester, Lewis graduated from the London School of Economics before earning a postgraduate diploma in broadcast journalism at Cardiff University.
He first gained prominence as a financial journalist and later became a household name through his appearances on television and radio, offering accessible advice on budgeting, saving, and navigating complex financial systems. Lewis founded MoneySavingExpert.com in 2003, a platform that revolutionised personal finance in the UK. His television show, The Martin Lewis Money Show on ITV, provides millions of viewers with actionable tips to improve their financial well-being.
Lewis is also an advocate for consumer rights, often lobbying the UK government for fairer financial policies. He was appointed a CBE (Commander of the Order of the British Empire) in 2022 for his services to broadcasting and consumer rights.
What is MoneySavingExpert (MSE)?
MoneySavingExpert.com (MSE) is the UK’s leading personal finance website, founded by Martin Lewis in 2003. Initially created with a £100 investment, the platform has grown into a vital resource for millions of users seeking practical advice on saving money, managing debt, and making informed financial decisions.
MSE provides comprehensive guides, tools, and tips on a wide range of topics, including energy bills, insurance, credit cards, and travel deals. Its forums allow users to share experiences and advice, creating a collaborative community of savers.
The website’s success is rooted in its independence and transparency. In 2012, Lewis sold MSE to the MoneySuperMarket Group for £87 million, ensuring the platform’s continued growth while maintaining editorial independence.
Today, MSE remains a go-to resource for anyone looking to improve their financial literacy and cut unnecessary costs.
