I Will Teach You To Be Rich: No guilt, no excuses - just a 6-week programme that works

by Ramit Sethi

There are two main components to your credit (also known as your credit history): your credit report and your credit score. These boring terms can actually save you tens of thousands of pounds over your lifetime, so listen up. This is an example of a Big Win – worth paying attention to. Your credit report gives potential lenders basic information about you, your accounts and your payment history. It tracks all credit-related activities (e.g. credit cards and loans), although recent activities are given higher weight. Your credit score is a single, easy-to-read number between 0 and 1,000 that represents your credit risk to lenders. It’s like CliffsNotes for the credit industry. The lenders take this number (higher is better) and, with a few other pieces of information, such as your salary and age, decide if they’ll lend you money for credit like a credit card, mortgage or car loan. They’ll charge you more or less for the loan depending on your score, which signifies how risky you are. But each lender also has its own scoring system, so different lenders might give you a higher score.