How Universal Credit claimants can protect their credit report if they fall into debt during the five-week wait_1

UNIVERSAL Credit claimants who've fallen into debt during the five-week wait for their first payment might be able to protect their credit score.

Around 2.3million people currently receive Universal Credit in the UK but we’ve seen how families risk being plunged into financial trouble during the initial transition period.

How Universal Credit claimants can protect their credit report if they fall into debt during the five-week wait_2
Getting caught up in debt can have a negative impact on your credit score

It can take up to five weeks before you are enrolled on the system, and in the meantime any existing benefits you receive will stop altogether.

This is why The Sun has launched its Make Universal Credit Work campaign last year to demand urgent action from the Government to help working people let down by the long wait time.

Racking up debts can push down your credit score, lowering your chances of being accepted for a loan or mortgage.

But if you have a genuine reason for missing a payment, you can explain why on your credit file.


Everything you need to know about your credit score

CREDIT scores can be confusing if you don’t know how they work.


Here’s everything you need to know:

What is a credit score?

A credit score is essentially your financial history expressed as a number to indicate how creditworthy you are to lenders and creditors.

The higher the number, the better your chances of being accepted for a loan, credit card or mortgage.

As well as a number, your figure is ranked either bad, fair, good or excellent.

This information is then used by lenders – so mortgage and loan providers and credit card companies – to decide whether to lend to you or not and what rate you get too.

How can I check my credit score?

There are three different websites where you can check your score for free:

Experian
Equifax
ClearScore


These agencies also off a premium, paid-for service where you can check how your score fluctuates on a daily basis.

Otherwise, you'll be able to see how it changes once a month.

All three companies have different scoring systems and there is no universal rating or score.

How can I improve my credit score?

Don't make too many credit applications – Making lots of requests in a short period of time can be seen as a sign of financial distress – and each application will be recorded on your file. Use a "soft-search" eligibility calculator to show how likely you are to be accepted.
Always pay your bills – Late payments are also recorded in your file so make sure you pay your monthly bills on time including utility and credit cards.
Pay down your debt – Try and cut down your existing debt before applying for new credit as lenders may be reluctant to lend to you if you already a large amount of debt.

All three of the major credit agencies – Experian, Equifax and ClearScore – allow people checking their score to apply a Notice of Correction to their account.

This is a short statement of no more than 200 words which explains why a debt is showing up on your record.

When The Sun spoke to Experian, they explained this could be used by Universal Credit applicants if they fall into arrears before their first payment.

Under current rules, lenders must read a Notice of Correction when looking at a potential borrowers’ credit report.

If a Notice of Correction is flagged up on your account, your credit report will be manually assessed instead of scanned by a computer.

While it won't stop your credit score from dropping, it'll give lenders the chance to look at why a payment has been missed.

However, this isn’t a sure fire way to improve your chances of being accepted for a loan, credit card or mortgage, as there’s no obligation for lenders to take the notice into account.

Some applications are also automatically rejected if they require someone to manually check them.


The Sun wants to Make Universal Credit Work

UNIVERSAL Credit replaces six benefits with a single monthly payment.


One million people are already receiving it and by the time the system is fully rolled out in 2023, nearly 7 million will be on it.

But there are big problems with the flagship new system – it takes 5 weeks to get the first payment and it could leave some families worse off by thousands of pounds a year.

And while working families can claim back up to 85 per cent of their childcare costs, they must find the money to pay for childcare upfront – we’ve heard of families waiting up to 6 months for the money.

Working parents across the country told us they’ve been unable to take on more hours – or have even turned down better paid jobs or more hours because of the amount they get their benefits cut.

It’s time to Make Universal Credit work. We want the government to:

Get paid faster: The Government must slash the time Brits wait for their first Universal Credit payments from five to two weeks, helping stop 7 million from being pushed into debt.
Keep more of what you earn: The work allowance should be increased and the taper rate should be slashed from from 63p to 50p, helping at least 4 million families.
Don’t get punished for having a family: Parents should get the 85 per cent of the money they can claim for childcare upfront instead of being paid in arrears.


Together, these changes will help Make Universal Credit Work.

Join our Universal Credit Facebook group or email UniversalCredit@the-sun.co.uk to share your story.


Experian told us the best way to protect your credit rating is to notify a lender or creditor of a late payment as soon as possible.

They will then be able to take your circumstances into consideration, which may help keep your score in tact.

James Jones, head of consumer affairs at Experian, told The Sun: “They will really appreciate you keeping them informed.

“If you wish, you can also add a Notice of Correction to your report, which could help you if your income reduction does lead to missed payments appearing on your credit report.

“Any lender checking your report will see your note and should factor it into their decision making.”

ClearScore told us the same thing and said debtors can ask for their payment to not be reported as late on their credit score, should they have a valid reason.

Justin Basini, co-founder and CEO at ClearScore, said: “There are only two ways to do it – get the lender to agree to remove a late reporting or get the lender to agree to have no payment due that month.

“This can be achieved by contacting the bank or lender ahead of time to request a holiday, per above.”

We contacted Equifax to find how they help customers in debt protect their credit score but we've yet to hear back.


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You might be wondering what Universal Credit changes took place this month and how they affect you – we have all the information.

We've also revealed if Universal Credit will change after Brexit.

Then there's how to appeal unfair benefit and Universal Credit sanctions.


What are the Universal Credit changes October 2019 and how they will affect you?