Managing my money for young adults
Managing my money for young adults

Start this free course now. Just create an account and sign in. Enrol and complete the course for a free statement of participation or digital badge if available.

2  Credit rating agencies and you

Your credit rating, which is allocated to you by credit rating agencies, is a key factor in your ability to borrow money.

As soon as you open a bank account or take on a credit card from the age of 18 your credit history is recorded and a profile of you starts to build. The main UK credit rating agencies are:

These agencies will score your creditworthiness and keep a credit file on you.

Where do they get the information about you?

This is provided by your bank or credit card provider and other organisations that have extended credit to you. They include your phone provider if you have a contract with them.

The information covers the amount of credit granted to you, whether you make repayments on time and the proportion of your bill that you repay each month.

Increasingly financial companies are using what are called ‘geo-demographic models’ to help them assess customers. For example, postcode profiling of the location where you live can help draw up a picture of your likely financial lifestyle based on census and other survey data. One insurance company recently tried, unsuccessfully, to access information from Facebook to analyse motorists’ profiles for clues about how sensible they are. Facebook blocked this move but it highlights the need to be careful about what you post on social media given who could be watching!

Your credit score will be accessed by financial and other institutions when you’re seeking to borrow money from them. A poor credit score means you will be turned down for a mortgage when you’re seeking to buy your own property.

Have you taken a look at your own credit rating? It’s recommended that in future years, and particularly when you become active borrowers, you should keep an eye on your credit files at least once a year.

Watch this video where Martin Lewis uses a storyline based around exchanges in a non-alcoholic bar to illustrate the key principles that will affect a person’s credit rating.

Download this video clip.Video player: mmmft_1_video_week7_lewis_creditratings.mp4
Copy this transcript to the clipboard
Print this transcript
Show transcript|Hide transcript
Interactive feature not available in single page view (see it in standard view).

Take your learning further

Making the decision to study can be a big step, which is why you'll want a trusted University. The Open University has 50 years’ experience delivering flexible learning and 170,000 students are studying with us right now. Take a look at all Open University courses.

If you are new to University-level study, we offer two introductory routes to our qualifications. You could either choose to start with an Access module, or a module which allows you to count your previous learning towards an Open University qualification. Read our guide on Where to take your learning next for more information.

Not ready for formal University study? Then browse over 1000 free courses on OpenLearn and sign up to our newsletter to hear about new free courses as they are released.

Every year, thousands of students decide to study with The Open University. With over 120 qualifications, we’ve got the right course for you.

Request an Open University prospectus371