UK credit rating threat if Scotland breaks off

Posted by Richard Catlin in Credit Score on 15 January 2014 - Richard is Marketing Director at checkmyfile.

The UK could face a threat to its credit rating, should Scotland vote for independence later this year following the announcement that the Treasury will guarantee all Government issued bonds in the event of devolution.

This means that if Alex Salmond, Scotland’s First Minister, is successful in leading the breakaway from the rest of the UK, then any existing debts would still be guaranteed. Scotland will be expected to pay its “fair and proportionate share” of the debt, but would not be directly responsible.

Although it is generally seen as a good thing in terms of encouraging market stability in the run-up to the September vote, and was widely expected, the announcement does technically increase the debt burden on the UK should Scots vote ‘yes’.

This is because although the level of UK debt will remain the same, the removal of Scotland’s contribution to GDP would see it fall by around 10% - which would in turn increase the debt to GDP ratio until it was repaid.

Though calculated in a very different way, a country’s credit rating is essentially a very similar measure to an individual’s – a measure of their creditworthiness and the likelihood that they will default on a credit agreement.

As unlikely as it is that the UK would have to default on its debts, the increase in perceived risk could see agencies Moody’s and Standard & Poor adjust their rating. This could in turn affect the UK’s ability to borrow and increase the cost of doing so.

Hypothetically, in the event of a ‘yes’ vote and Scotland later struggling to meet its share of existing debts, the UK government is unlikely to head north of the border to strip assets and auction off Scottish landmarks.

What this news does serve to do, is add yet more uncertainty to what is already a massive leap into the unknown. September 18th is definitely a date for the diary.

Experian Help Rent Payments Contribute to Credit Score

Tenants have often felt hard done by, receiving no recognition or reward for keeping up with their single biggest monthly outgoing: rent. For that reason, many across the UK will welcome the news that it’s now been made easier for landlords and letting agents to report rent payments to credit reference agencies, finally contributing to their credit file.

Published on 8 Feb 2018 by Katherine Cornell

Full Article

How Late Payments Affect Your Credit Score

There are plenty of reasons why you might have missed a payment on your loan or credit card, and chances are your most immediate thoughts are about making the payment to the lender and making sure everything is square.

Published on 23 May 2017 by Kelly Luff

Full Article

Is there a one true credit score

When applying for credit, lenders will calculate your credit score using elements of your application as well as your credit files to determine if the risk of providing the credit is within acceptable levels. Lenders will all calculate your credit score differently as the criteria for lending will differ from lender to lender. This is because each element of your credit file is valued differently by each lender – where one lender may decline your application based on the presence of some negative historical information, other lenders may deem it old enough to be irrelevant to your current ability to maintain credit agreements.

Published on 8 Sep 2016 by Tom Blandford

Full Article

Bad credit on an address myths

When moving into a new house, the thoughts that may go through many people’s minds could be along the lines of “what colour am I going to paint this room?”, or “where am I going to put my wardrobe?”. The thought that may not go through your mind is “wonder how much debt the previous occupant was in?”

Published on 15 Feb 2016 by Kirstie Brown

Full Article

The importance of credit scores

If you have ever applied for credit and been turned down you may have checked your credit score. However, most people do not realise that you are often credit checked for all types of borrowing and not just the likes of credit cards, loans and mortgages.

Published on 20 May 2015 by Kelly Luff

Full Article

Technological advances in finance revealed

The racing advances in technology are set to throw current banking procedures up in the air over the next decade, by creating unique techniques in order to eradicate fraudulent advances.

Published on 8 Oct 2014 by Jasmin Stopford

Full Article

Facebook affecting your credit score

Start-up lenders worldwide are now beginning to use Facebook as a way of checking an applicants' creditworthiness.

Published on 2 Sep 2013 by Simon Hadley

Full Article

Could genetic research predict defaults and bankruptcy

David Cameron has announced that up to 100,000 people are to have their genetic make-up mapped, and in so doing, the NHS will lead the global race for better healthcare.

Published on 11 Dec 2012 by Barry Stamp

Full Article

Want an iPhone 5 - better make sure your credit rating stacks up first

The long-awaited iPhone 5 was finally revealed in a blaze of publicity last week, and is already predicted to become the biggest selling smartphone of all time.

Published on 21 Sep 2012 by Richard Catlin

Full Article

A new type of scorecard

We have reported many times on the ‘postcode lottery’ and in particular how your postcode affects all kinds of things including your credit score, and annuity rates on pensions.

Published on 3 Sep 2012 by Barry Stamp

Full Article


We have loads of great customer reviews