Your credit score is a numerical value that highlights your credit worthiness and is used by creditors when deciding whether to grant you a financial product or not. UK citizens check their credit score regularly because it can go and up down depending on your financial circumstances. So many people monitor the results to maximum their chances of being approved for loans and to get the best interest rates possible. Typically, individuals will try to ensure their bills and repayments are made on time to maintain a healthy credit score.
But surprisingly, there are many everyday transactions and payments that people are conscience of but do not actually affect your credit score, as highlighted below:
Gas, water and electricity bills
Failing to pay your utility bills does not have an impact on your credit score despite common belief. Energy companies don't see the need to report the information back to credit reference agencies because it is timely and expensive. However, failing to pay your bills on time will show on your credit report that can be accessed by potential loan companies.
Sadly, paying these bills on time doesn't better your score like a credit card would. Of course, it is advisable to pay these bills on time to avoid late fees, negative marks on your credit report and to ensure the energy companies don't turn off your supply.
Paying your rent on time or missing your monthly rent will not affect your credit score because landlords won't pass on the information to credit bureaus like Experian or Equifax. But it is common for landlords to check your credit score though beforehand because they want to know if you are likely to be a good tenant.
Mobile phone bills do not affect your credit score
Most people think that not paying your mobile phone bill will negatively impact your credit score but this is not actually the case. Missing your monthly phone payment will show up negatively on your credit report and this information can be accessed by lenders and creditors when deciding whether to provide you with a loan. However, not paying your phone bill on time will not make your credit score go up or down.
If you paid for your mobile phone bill via your credit card but that monthly bill is not paid, this will negatively affect your credit score. Mobile phone vendors may check your credit report and credit score before providing you with a phone contract.
Prepaid Cards are cards that will not alter your credit score
Whilst applying for credit cards and how well you pay them will indeed make your credit score go up and down, this is not the case with a prepaid card. With the latter, it is simply a case of adding money onto the card up front, so how you use it after that will have no impact on your credit score.
Council Tax does not change your credit score
The payment status of your council tax does not make a difference to your credit score because the councils do not report this information to credit agencies. [The Experian website]/https://www.experian.co.uk/consumer/questions/askjames226.html quotes that 'non-payment of tax is treated as a criminal not a civil matter. Fines (for late repayment) do not show on credit reports either.'
Soft searches and inquiries
Soft searches are when lenders check your credit report but the 'footprint' left is not visible. When lenders are underwriting an applicant, they will do a hard search on an individual's credit report and this will be visible for up to 12 months. Having too many hard searches can make you an unattractive person to lend to because it looks like you have made a lot of applications in a short space of time and might seem desperate. So if hard searches are used on the individual, soft searches are sometimes used by lenders to check the spouses or the guarantor of the applicant. This way they can still get a good idea of their overall financial circumstances without leaving any visible tracks.