Martin Lewis surprised his audience by revealing that credit scores don’t actually exist – while revealing the “holy trinity” of measures that lenders actually use to assess your eligibility.

The British money-saving expert, 52, dedicated Tuesday’s episode of his live ITV show to talking all things credit.

At the start of the hour-long program, audience member Suzanne asked Martin: What is the most important factor in determining your credit score? »

But before answering the question, Martin issued an unexpected warning that shocked viewers.

“You don’t have a credit score,” he said. “You don’t have one.”

“There is no single number that determines whether a lender will accept you. Each lender scores you differently based on their own wish list of what a profitable customer is.

“Credit reference agencies market a credit scoring tool, but it’s just their idea, a rough example, of how a typical lender might view you. It’s not solid, it’s not official.

Martin added that people have become “too stuck” in the confines of their credit score when in reality, only one “factor” determines an acceptance decision.

Martin Lewis dedicated Tuesday’s episode of his ITV show to credit

His advice? “Don’t worry about small changes in your credit score: it’s just an indicator, it’s not real. »

That said, Martin said your credit report, also known as your credit report, “really matters” and insisted that people go through it “line by line” every year.

He said: “Even small mistakes can lead to rejection.

“I’m talking about an old mobile phone contract that’s canceled but is linked to the wrong address – it could cost you a mortgage.”

Before making any major inquiries, Martin recommends obtaining your credit report from the three credit reference agencies: Equifax, Experian and Transunion.

The 52-year-old presenter then outlined the three metrics lenders look for in their clients – or what he calls “the holy trinity”.

The first is debt ratio, which is the percentage of unsecured debt you have compared to annual income.

Giving an example, Martin said: “Say you only have a £10,000 credit card, you earn £40,000, which is a debt ratio of 25%. Lower is better.

The British money-saving expert told the live audience that credit score “isn’t real.”

During his hour-long ITV show, Martin reveals the “holy trinity” of metrics lenders actually use to assess your eligibility: debt ratio, credit utilization and disposable income.

But how to improve it?

“Well, you can reduce your debt – pay off some of it if you can – or improve your income,” he explained.

Martin revealed that a debt ratio below 20 percent is considered “excellent”, 20 to 40 percent is “good”, 40 to 60 percent is “fair” and over 60 percent is “poor “.

But, he continued, “lenders like to take on debt.” They like to see that you are using it and they like to have data on you.

“So if you have a debt ratio of less than 1%, that can actually be negative, especially if you have very few debt products.”

“One solution is to get a cash back credit card that you spend every month but pay off in full. »

The second metric that lenders rely on is credit utilization, or the percentage of available credit used.

“Imagine you have £100 of debt and a credit limit of £1,000 – that’s 10% credit utilization.

“How can you increase that?” Well, you reduce your card overdraft or ironically you could get more credit without using it and that way you would have lower credit utilization.

Martin Lewis is a financial journalist who gives advice on his ITV show as well as his website Money Saving Expert.

Much like debt ratio, a credit utilization score below 20 percent is considered “excellent,” 20 to 40 percent is “good,” 40 to 60 percent is “fair,” and above 60 percent is “good.” percent is “bad”.

However, Martin added: “High credit utilization and low debt ratio is not a problem.

“But high credit utilization, using 90 percent of your available credit, and you have a high debt ratio, that’s where it really poses a problem.”

The final measure is disposable income or money available each month after bills and essentials, according to the savings expert.

Unlike debt ratio and credit utilization, when it comes to disposable income, Martin said, “The higher the better.”

Returning to Suzanne, Martin concluded that debt ratio, credit utilization and disposable income are the “big three” factors in determining your credit score.