Exam results and credit reports

Eeek exams

Ever wish you learnt about money at school?

I’m sure I’ve forgotten more than I ever knew about trigonometry, oxidation and oxbow lakes, given they don’t feature much in my day job. Sewing a PE bag and baking a swiss roll have come in slightly more handy. But no-one ever mentioned credit cards or mortgages, student loans or balancing a budget. Yet a teenage spending spree on plastic could blight your financial future before it’s even started.

Luckily, my mother wasn’t afraid to talk about money at home. She held forth on everything from the overdraft (too big) to her retirement savings (too small) and my father’s spending (too much). So I left home with a deep fear of debt, determined to pay into a pension and get on the housing ladder asap. Boy, was I the life and soul of the party.

But what if your parents don’t talk about money? What if they don’t have a clue either?

Why financial literacy is so important

I’m passionate about helping people make the most of their money.

Financial literacy is vital for the necessities in life – stretching money to cover food, fuel and the roof over our heads.

We’re surrounded by companies desperate to persuade us to spend more and to lend us the money for it. It’s shockingly easy to run up debts, with all the associated stress and expense.

Financial education can help avoid debt nightmares. It can help us manage the money we do have, protect against life’s disasters, provide for our families and save towards retirement. Money is too powerful to be left to chance. It can fund dreams – but also destroy lives.

Thankfully, in 2014 financial education became part of the national curriculum in England, so current school kids should get a better grounding.

With this in mind, Noddle – which provides free-for-life credit reports – wondered if today’s ‘Class of 2018’ is actually better at making financial decisions.

As part of its campaign to test the effectiveness of financial education, they asked me to take a mock GCSE Financial Literacy exam. Would I be financially smarter than a 16-year-old?

Sure, I said.

I’ve been writing about money as a personal finance journalist for more than 14 years. I blog about money. I try to practice what I preach when it comes to our own family finances. Hell, I’ve even co-written a money for beginners course myself.

Doh.

Taking my mock GSCE

Taking my mock GCSE Financial Literacy exam

I’ve taken many, many exams, but that was also many, many years ago. (Let’s draw a veil over quite how many).

It was only when I sat down with the exam paper, with strict instructions about using black ink and showing my working, that I remembered quite how much I hate them. I say this as someone who chose jobs after university based on never, ever having to do another exam.

Really should have thought of that before agreeing to do the test.

I had a quick panic over the time limit (20 minutes!) and materials needed (I don’t have a calculator! Hang on, I have a phone, phew).

The first few questions could all be answered with basic maths and percentages. I can add, subtract, multiply and divide. I was on a roll.

The second half was more subjective. I had flashbacks to exam trickery, with multiple choice questions that seemed to have three correct answers, when I’d only normally expect to choose one. The hideous prospect of getting loads wrong loomed embarrassingly large.

What I learnt from the mock GCSE

I was pleasantly surprised by the topics covered by the questions. The financial literacy curriculum does seem to cover practical money issues, such as supermarket offers, car financing, credit reports, mortgage deals and the impact of inflation on savings. It tested things you might actually need to know, not mad economic theories.

If I’d learnt about income tax at school, for example, I’d have been less surprised when my pay packet for my first Saturday job at Boots was lower than expected.

The examiners have points to make – for example, they positioned student loans as ‘good’ debt, asking about the advantages of saving and calculating the extra costs of buying with borrowed money. But overall, the financial literacy exam covered useful topics that would genuinely help pupils manage their money.

I also learnt that I still hate taking exams. I felt smug when I got my 10 out 10 A* result, but also immensely relieved! Apparently the average score was 6 out of 10, so all these years of writing about money do seem to have paid off.

Results of my credit score

Checking your credit report

Studying money at school is all very well. A good understanding of personal finance is important, but it’s how you put it into practice that matters.

Noddle is keen to encourage people to check their credit report regularly – and that’s a campaign I’m keen to support. Despite my hatred of tests, I’m still willing to check my credit score.

Just as good exam results can help you get into uni or get a good job, so a good credit report and a high credit score can help get a good deal on your finances.

Credit reports show how you have dealt with debt in the past. Companies use credit reports, together with info on any application form, to decide whether to lend. Fundamentally, companies don’t want to hand out cash if they reckon you won’t pay it back, or they won’t make a profit. Your credit report gives them an idea of how you might cope with borrowing in future.

If you have a lower credit score, you might only be able to borrow less, at a more expensive interest rate, or your application might get turned down flat.

Credit reports aren’t just important for obvious borrowing: loans, mortgage and credit cards. Banks and building societies will also run a credit check if you apply for a current account with an overdraft. Car financing deals need a credit check. Landlords want to be sure you can pay the rent.

What’s in a credit report?

There are three big credit reference agencies (CRAs) which create credit reports: Experian, Equifax, and TransUnion, formerly known as Callcredit. They receive information from all the main high street banks, building societies and credit card companies – meaning the data they have is really comprehensive.

You may have forgotten how many accounts and cards you’ve got – but your credit report won’t.

It looks back over the last six years to see whether you always pay on time and in full (polish that halo), pay late or miss payments altogether.

Credit reports track how much of your credit limits you use, if you stay within them, how long you’ve had financial products, how many applications you’ve made recently and even whether you’re registered to vote. Joint accounts and joint borrowing? Your credit report includes who you are linked to, financially. Country court judgements (CCJs), individual voluntary arrangements (IVAs) and bankruptcies also appear, and not in a good way.

If you’ve got any queries about credit reports, do check the help hub over at Noddle.co.uk.

Why check your credit report?

Here are my top seven reasons why it’s worth checking your credit report regularly:

1. Avoid rejection Getting rejected for credit will make your credit score even worse, so it’s worth checking your report before applying for a new card/loan/account.
2. Correct any errors With all the info involved, errors can creep in. If you spot any, contact the relevant credit reference agency to ask for a correction.
3. Nail that mortgage Checking your credit report is particularly important if you’re going for the biggie: a mortgage. Don’t get turned down, or offered a rubbish rate, because your report contains minor mistakes.
4. Spot fraud Regular checks might also uncover fraud – if you see unfamiliar names or accounts popping up on your report.
5. Monitor improvements If your credit report is less than sparkling, you can also monitor any improvements, and see when it might be worth applying for better deals on any kind of credit.
6. Discover your credit history Alternatively, if you’re proud to have managed your money without borrowing, it’s still worth checking your report. Your credit score could be low, if there’s no evidence of how you deal with debt. But if you take out a credit card, spend a little each month, and make sure you pay it off in full and on time, you can build a credit history.
7. It’s free! As a frugal blogger, I should also point out that you don’t have to pay mega bucks to see your credit report, or sign up for a monthly subscription. You can check your credit score and credit report for free! Noddle provides your free for life credit report and score using TransUnion (formerly Callcredit) records.

Now over to you – what should schools teach children about money? How would you score on a money exam? And when did you last check your credit report?

This is a collaborative post

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