Will a PPI Claim Affect My Credit Score?

Posted on August 20, 2018 by Canary Claims How will PPI affect your credit score

Many are holding back out of fear that making a PPI claim might affect their credit score. But is there any truth in this? In this blog post, we look at the relationship between PPI and your credit score.

Many people have made successful Payment Protection Insurance (PPI) claims since the investigation by the Financial Service Authority (FSA) brought the mis-selling scandal to light in 2006. Since then, UK banks and lenders have paid over £30 billion to customers for mis-sold PPI. Billions more has been set aside to cover the anticipated influx of new claims before the August 2019 deadline and there are thousands of customers still yet to make a claim for mis-sold PPI.

If you’ve been advised against claiming PPI because of the potential effect it might have on your credit score, the good news is that there is nothing to worry about. Find out why.

PPI and Credit Scores: How It Works

Claiming for mis-sold PPI will have no effect on your credit score. While it was offered on financial products that typically require a credit check, such as credit cards, mortgages and cash loans, PPI itself is in no way related to your credit rating. In fact, PPI isn’t even listed on your credit file.

How Credit Scoring Works

A credit score is important to many people, as it’s a deciding factor when they decide to apply for a financial loan or mortgage. It’s important to understand the difference between PPI and credit scores — your credit score determines how worthy you are of getting credit, while a PPI claim is all about getting back what was wrongly taken — and is rightfully owed to you — by the bank.

If you are worried about your credit score, it is important to know how credit scoring works and which factors affect it. Here are some of them:

Your debt: The higher your debt, the lower your credit score. To maintain a healthy credit score, you need to keep your debt from getting close to your credit limit.

Payment history: How quickly do you pay off your debt? This is crucial in terms of maintaining a healthy credit rating and is probably the most important factor that affects your credit score.

Bankruptcy: A history of bankruptcy has a huge negative effect on your credit rating. People who have gone bankrupt will have lower credit scores.

Type of loans: The type of loan you get will affect your credit rating in different ways. Bank loans, for instance, are healthier for your credit rating than high-risk catalogue loans or payday loans.

Court records: A county court judgement is not good for your credit score, so it’s important you pay what you owe on time to ensure a healthy credit rating.

As you can see, whether or not you’ve made a PPI claim has no bearing on your credit score.

How to Make a PPI Claim

Now that you know PPI does not affect your credit rating, you may want to know how you can make a claim. You might choose to claim PPI yourself — in this case, you need to gather the necessary paperwork that contains evidence of your mis-sold PPI and present it to your bank or lender.

However, making a PPI claim independently can be time-consuming and tedious. The alternative is to use the services of a claims management company. At Canary Claims, we can find out if you’re eligible for PPI, chase up the bank or lender and handle the entire claims process — even if you no longer have any financial paperwork.

Are you entitled to a PPI refund? Canary Claims has helped thousands of consumers successfully claim back their mis-sold PPI. We operate on a no-win, no-fee PPI policy, meaning you’ll only pay if your claim is successful. Find out if you’re eligible today.