Credit rating confusion is proving to be a financial headache for many Britons

BRITONS are harbouring “worrying” misconceptions about what credit reports are used for while one in five adults admit they know nothing about them, according to research from a Government-backed body.

By The Newsroom

Published 15th Mar 2014, 00:00 BST

While 97 per cent of more than 2,000 people surveyed across the UK have heard of credit ratings, 22 per cent said they had no understanding of what they are for, the Money Advice Service (MAS) found. One in six (15 per cent) people surveyed thought a credit report is used to check whether or not someone has a criminal record.

While more than half (59 per cent) of people surveyed said they know what factors affect their credit score, nearly two-thirds (62 per cent) said they do not know how to improve it.

Credit ratings give a snapshot of your past and current borrowing habits and how good or bad they are will affect how willing financial firms will be to offer you products such as credit cards, loans and mortgages.

Caroline Rookes, of the MAS, said: “It’s worrying to find such widespread misunderstanding of credit ratings.

“Our research shows that many people are facing financial difficulties due to their credit ratings.”