Does gambling affect your credit score?

If you’re among the 48% of Brits who gamble at least once every four weeks, and plan to apply for some form of credit in the near future, it’s important to understand how it could affect your credit score and your chances of being accepted. While the act of placing a bet won’t directly impact your score, there are indirect ways it could. 

Let’s look at the ways taking a chance with your cash could dent your numbers in more ways than one.

The connection between gambling and credit scores

Gambling won't have a direct impact on your credit score, as the act of gambling itself won't show up on your credit report. This is because, regardless of how you choose to place a bet, the record of you doing so isn’t directly reported to any of the three UK credit reference agencies (Experian, Equifax, and TransUnion). 

It’s the same as when you spend money at the supermarket or DIY store; details of these purchases aren’t recorded on your credit report. Incomes and bank statements also aren't reported, so neither your gains nor your losses show up.

How gambling can affect your credit score indirectly

The impact of gambling on your finances can show up indirectly in a number of ways. For example, if you use a cash advance or other loan – rather than a debit card or cash – to fund your gambling, or if a company looks at your finances in more detail. Gambling websites may also show in the searches section of your report.

Taking out loans and credit card cash advances for gambling

Since April 2020, both in-person and online gambling using a credit card has been banned in most circumstances in the UK. But it’s still possible to take out a cash advance on your credit card and use it to place a bet physically or electronically.

But, generally speaking, cash advances can be a more expensive way to borrow money, because of:

• Interest. Whether they’re used for betting or other purposes, cash advances accrue interest from the point of borrowing.

• A higher annual percentage rate (APR). An APR is the cost of borrowing for a year, including associated fees. Cash advances often attract a higher APR than your standard interest rate, and usually have high fees. 

Also, paying the credit card provider back can become more challenging if the borrowed money is lost in gambling. This can lead to more interest accruing over time. 

And the added cost of a credit card transaction isn’t the only potential issue. In some cases, lenders won’t only see your balance, credit limit, and any payment history of credit card accounts on your credit report, but also the number of cash advances and the cash advance amount. Much like payday loans, lenders may interpret repeated cash advances as a sign of financial distress, which could negatively impact applications and your ability to get credit.

However, single instances of a cash advance are unlikely to be an issue. So if you’ve ever accidentally used the wrong card at a cashpoint, it’s generally not something to worry about.

The risk of late or missed payments

The above assumes that you're able to pay off your loan or cash advance from your credit card company as scheduled. If you miss payments on any loan or default altogether, it’s likely to negatively affect your credit score, and the missed payment or default is recorded on your credit report.

Another important consideration is your credit utilisation rate, which is the usage of a credit account relative to the credit limit, expressed as a percentage. It’s generally considered ideal to keep this rate around 30%, as high utilisation rates can potentially make lenders more wary of lending to you. So if using credit to pay for gambling takes this rate above the 30% mark, it may affect your chances of being approved for future credit.

Gambling and bankruptcy: the possible consequences

Gambling debts are a significant problem in the UK – and gambling addiction in particular is an increasingly common issue. 

Any debt can impact your credit score, but the addictive nature of gambling means that debts for that purpose could potentially spiral into unpaid debts, and even lead to bankruptcy. Fortunately, you can take preventative action to avoid reaching this point, such as:

• Using a bank gambling block. Many banks in the UK offer these blocking services to limit your spending on gambling, by stopping your account from being used for gambling transactions. These blocks won’t show on your credit report.

• Getting a Notice of Correction (NoC). A Notice of Correction is a small note of up to 200 words that you can put on your credit report to explain something that lenders may call into question. In the Notice you write, you can ask lenders not to lend you more money. Lenders will read the statement when checking your credit report and take it into account for your application. You’ll need to file one with each of the three UK credit reference agencies (Experian, Equifax, and TransUnion) separately.

There is more advice and help available from organisations such as Gamble Aware and The National Gambling Helpline (run by GamCare).

Will gambling affect a mortgage application?

Your credit report and the information it contains significantly influence your ability to get credit – especially for bigger financial commitments such as a mortgage – but they aren’t the only consideration.

Affordability is also a critical factor. It allows prospective mortgage lenders to assess whether you’re likely to be able to comfortably afford to make repayments alongside your existing financial commitments.

For most products with smaller monthly payments, lenders will usually be happy to rely on the information and record of your credit history contained in your credit report to reveal your current borrowings. Sometimes, they might also ask questions relating to your regular outgoings.

Given the size of most mortgages or personal loans, though, potential lenders may be more wary of how much risk they take on and likely want to be confident about your personal finances. This is why they’ll:

• Ask for between three-to-six months of bank statements, to check your bank accounts (such as your savings and current accounts) alongside payslips and other paperwork.

• Perform a forensic analysis. Using your bank statements, payslips, and paperwork, a forensic analysis will let lenders see where your money goes (and comes from) and verify the information you provide.

• Factor in regular outgoings, such as childcare, pensions, existing borrowing and other commitments like child maintenance. Gambling transactions (or unusual patterns of cash withdrawals) are likely to be subject to further questioning.

It’s important to remember that underwriters aren’t there to make a moral judgement. For example, the odd small bet by a casual gambler shouldn’t cause a serious issue. But if there are several large deposits to online casinos or gambling accounts, it’s anticipated that it will be checked carefully.

Ultimately, the level of spending, how it compares to your income, and whether you’ve encountered any financial difficulties will be looked at.

To be on the safe side, it can be helpful to avoid having gambling transactions on your bank statement in the months immediately before you apply for a mortgage. 

What does show in my credit report?

While the impact of betting online or elsewhere on your ability to get credit is largely indirect, several elements within your credit report can directly affect whether or not an application is accepted.

These include your payment history – and in particular any negative markers – as well as your presence on the Electoral Roll, any court information, the number of applications for credit, and people you are financially connected to, to name a few.

You can find out exactly where you stand with Checkmyfile – the most detailed credit report you can get. Try it free for 30 days, then it’s a monthly subscription – cancel online anytime.

Recap: does gambling affect your credit score?

Gambling has no direct impact on your credit score. The potential impact on your ability to get credit is largely due to important indirect factors, whether this is through taking out credit to fund gambling, or from mortgage lenders wanting to take a closer look at your financial circumstances.