Financial education: borrowing and debt

[maxwhite]

A new series lifting the lid on life’s most misunderstood money matters.

First up, borrowing and debt

Financial education: borrowing and debt

[Ordog]

Thanks!

The below should help people understand why they still can’t have a loan or overdraft despite their score being high.

Do lenders see the same score as I do?

No, lenders see a different credit score to you. Theirs may be calculated with a specific product (like a loan or credit card) in mind, to help them better predict if you’ll pay them back. Some lenders work out scores themselves and may use information that CRAs don’t have (like details on your credit application, such as your income).

The credit score you get from a CRA is more generic than the one lenders see. It’s designed to give you an idea of your chances of getting credit, but it can’t tell you for certain if you’ll be approved.

So, you may still get turned down for credit even if a CRA says you have a high score. Equally, some lenders may be more willing to lend to you than your score lets on.

[DaveJ (Dave)]

It still won’t stop the but my score is 920 and it’s like better than most people so why can’t Monzo give me one (overdraft before anyone’s filthy mind gets going )

[breville_monkey]

Not a completely invalid question… Monzo is a very conservative lender in my personal experience at least.

I do like the article though. I think it’s good to help people understand that, say, overdrafts are not for long term debt (less sure about credit cards, they can be used for medium term debt but I guess that gets complex).