Martin Lewis issues warning over common credit score myth and says 'it isn't real'

Martin Lewis explained how no one in the UK actually has a universal credit score - instead, what you see is a general idea of how lenders could view you and your creditworthiness

Martin Lewis has explained how your credit score doesn't actually exist - and revealed how lenders really assess you for credit cards and mortgages.

The MoneySavingExpert.com explained how no one in the UK actually has a universal credit score. Each credit reference agency uses a different scoring system to give you a general idea of how lenders could view you - but these lenders never actually see any score when you apply for credit.

You should still be checking your credit score regularly though, as it could help you spot any inaccurate or incomplete information that could impact a future credit application, as well as whether you're likely to be accepted for credit. It could also help highlight and prevent fraud. The three main credit reference agencies in the UK are Experian, Equifax and TransUnion.

Speaking during his Martin Lewis Money Show Live broadcast on ITV tonight, he said: “You do not have a credit score in the UK. There is no single number that dictates if a lender will accept you. Each individual lender scores you differently based on its own wish list - not just about risk, but what is a profitable customer?

“The credit reference agencies, the three of them out there, they market a credit scoring tool. Now that is a really useful indicator, but it is just their idea, a rough example, of how a typical lender may look at you. It isn't rock solid. It isn't official.”

The MoneySavingExpert.com founder was also quizzed on whether you should be worried by small changes in your credit score. He received a message from one viewer called Nigel, who asked: "My credit score with my bank has dropped by 11 points. The reason given is that I'm not using my available credit. Surely, that's a good thing?"

However, Martin advised that small changes like this should not matter - as again, your credit score should only be used as "an indicator" to suggest how lenders will view your financial background. He explained: "Do not sweat small changes in your credit score. It is just an indicator. It isn't real.

"Now, if it's dropped by 150 to 200 points, you sweat the big issues. Look, the best example I can give you is you may cancel your credit card, which means you have less available credit, that could increase your credit score, or it could decrease your credit score.

"Some lenders may like it, and some lender may say, no, we like evidence of longevity, and that's what we're looking for in our customers. Big moves in your credit score matter. Small moves in your credit score don't matter that much, and often they're transitory anyway."

However, Martin explained that what really does matter for everyone is your credit file, also called your credit report. The MSE founder said you should be checking this annually and definitely before any big application, such as a mortgage.

He added: "Now, on your credit file, you have details of all the financial products that you've got, all the credit products, whether you've paid them on time, whether you've missed any payments, county court judgments that have been put in against you, your electoral roll information, all the data that lenders are using to assess you when you apply.

"I want you to go through these reports, line by line, even small errors can mean rejection. I mean, I'm talking about you've got an old mobile phone contract that's closed, but it's linked to the wrong address, that could kibosh a mortgage deal."