Less Than Perfect Credit Score When You Are Cash-Rich

Posted by Kelly Luff in Credit Reports on 8 March 2017 - Kelly is a Marketing Executive at checkmyfile

You might tick all the boxes in terms of financial stability – you may have paid off your mortgage, own your own car outright and have a hefty savings and pension pot. So why is your credit score not 1000 out of 1000?

Are You a 'Low' or 'High' Credit Risk?

Credit scores are used by lenders to decide your ‘risk’ to them before they lend you money. So if you’ve got savings coming out of your ears, a good income and don’t owe anyone money, surely they’d deem you a low risk and all want to lend to you, right?

Unfortunately this isn’t always the case. Certainly, if you ask your bank for a loan and you’ve always banked and saved with them, they’ll be more than aware of your financial standing and reliability. The difficulty is when you decide to apply for what might be a more attractive offer and they then request your credit report to decide if you are a ‘good’ or ‘bad’ risk.

At this point, the lender will view your credit history for the last 6 years. This might include your credit card debt, mortgage, loans or mobile phone contract, along with other data such as Electoral Roll or court records.

What it doesn’t show is your bank balance (unless you are using your overdraft), your savings and ISAs or your pension pot. It also won’t show your mortgage if it’s been paid off and closed for more than 6 years.

So, we often hear from customers with a lot of money in the bank and a good salary, but an average credit score and they all ask the same question - why?

Put simply, because your credit score is based on how you manage your debt, you need to have debt on your credit report to show how you repay it. If there is nothing recorded on your credit file, there is nothing for the lender to base their assessment. And if they can’t see whether you are able to repay £15 a month for your mobile phone, how can they decide whether to risk you repaying them £1,200 a month on a mortgage?

You may only buy something if you can afford to pay in cash, and hate the thought of borrowing from banks, but this lack of credit utilisation can impact you when you do need to borrow money for something like a mortgage and that is often reflected in your credit score.

Lenders don't only use your credit report to accept or decline an application, so elements such as employment, homeownership and salary will often be taken into account, but when you check your credit score, these components won't have been used to calculate it.

How to Build & Maintain Your Credit History

Thin credit files tend to be the affliction of those at either the start or the end of the credit-using period of their lives. Whether you simply aren’t old enough to have built up a credit history, or no longer have the need to borrow because you are cash-rich, the same issues surrounding a lack of history can affect you.

For this reason, many consumers keep their toes dipped into the credit-using world. Whether it’s taking advantage of an interest free period offer on your sofa, or keeping a credit card ticking over by putting your petrol on it and paying it off every month, there are ways to keep using credit so that your credit report remains healthy.

These are ways in which credit can be utilised without it ever costing you an additional penny, so it may be worth making the most of these to ensure that there is something being reported each month. What isn’t recommended is taking any old credit out to build your history – borrowing using payday loans for instance can actually harm how lenders might judge you, as they cannot be sure that you are good at managing money if you use short-term credit.

Having some credit accounts reported each month certainly helps to build your credit history (as long as you ensure you repay on time), and making sure that you stay on the Electoral Roll can also help to keep your credit score in good shape.

Check Your Credit Report from 4 Data Sources

30 Day Free Trial

How to Build Your Credit History From Scratch

When it comes to building a credit history we all start from square one, but for some people this challenge can happen more than once, or much later in life than average. That might be because they’ve never borrowed money and have no credit history to speak of, or because they have had a financial setback and are starting again from scratch. No matter the reason, the catch 22 of applying for credit is that without previous proof of having and managing credit well, you’ll find it harder to be accepted.

Published on 21 Oct 2018 by Beth Jennings

Full Article

How Your Phone Contract Affects Your Credit Report

Some people only really consider their Credit Report and the information it contains when they’re about to apply for a traditional form of borrowing, such as a credit card, loan or mortgage. That's why for some it can come as a bit of a surprise to learn that many of the same checks are involved when attempting to take out a mobile phone contract.

Published on 6 Sep 2018 by Tom Magor

Full Article

Can my ex impact on my credit score

One of the most common queries we receive at checkmyfile comes from customers who view their Credit Report and discover that they’re still financially associated with an ex-partner.

Published on 2 Aug 2018 by George Coburn

Full Article

What Do Lenders Look For When You Apply For Credit?

Lenders and their appetite for, well, lending, are as unique as the customers they serve. Each one is looking for specific criteria from their target customers in exactly the same way that most of those customers try to select a lender that best suits their individual requirements. That’s one of the reasons you shouldn’t think your hopes of getting a loan rest with your Credit Score alone: you need to think about the context and reasons behind it as well. Each piece of information on your Credit Report – and the sum of its parts – can be interpreted so differently.

Published on 25 Jul 2018 by Jamie Mackenzie Smith

Full Article

Which accounts will show on your credit file

Credit account information relies on lenders to report those accounts to the UK’s Credit Reference Agencies. Not all types of account will appear on Credit Reports for this reason, so while some regular monthly payments will show up there, many others won’t.

Published on 12 Jul 2018 by Neil Greenhill

Full Article

What are Satisfied and Settled Credit Accounts?

What's the difference between Settled and Satisfied on your Credit Report?

Your Credit Report contains a huge amount of information about you, and how you’ve managed your credit agreements in the past. Different parts of your report will have a different level of influence on how you will be judged by a typical lender, but there are some entries where a small variation can have a big difference.

Published on 2 Jul 2018 by Sam Griffin

Full Article

How my address can influence a credit check

Many people incorrectly assume that their credit score can be plagued by the previous occupants of your address. This, to quote Douglas Adams, is “a load of dingos’ kidneys” and your credit report should entirely reflect your credit and repayment history and has no bearing on your home’s former tenants.

Published on 12 Jun 2018 by George Coburn

Full Article

How To Remove Negative Markers on Your Credit Report

Your credit report is intended to show potential lenders, employers, landlords (and occasionally insurance providers) an accurate representation of what you are like when it comes to borrowing (and repaying) money and managing other credit agreements. Think of it as a CV of your borrowing history that gets updated on your behalf.

Published on 21 Apr 2018 by Jamie Mackenzie Smith

Full Article

Why Does My Credit File Say I'm Dead?

For many people, it comes as a shock when they are informed that they are, regrettably, dead. In fact, it can be a downright inconvenience when you’re trying to apply for credit, but end up getting turned down because you’ve been accidentally listed on the Death Register.

Published on 11 Apr 2018 by Tom Blandford

Full Article

Will checking my credit report affect my credit score

Does checking your credit report affect your credit score? This is a question we are often asked, as more and more consumers regularly access their credit history to check for errors. This seems to be based on the popular misconception that search footprints damage your score, and as checking your credit file leaves a footprint, checking your report must harm your score. However, this is far from the truth.

Published on 5 Apr 2018 by Kelly Luff

Full Article


We are rated number 1 for customer service on