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With around 44% of Brits gambling online every month, you may be wondering if gambling can affect your credit score. Although you are no longer able to use your credit card to gamble in the UK, gambling could still have an effect on your profile when you apply for a loan.
In summary, gambling can affect your credit score, but not in the way you might think. Let's look at how gambling may affect your credit score.
Gambling doesn't immediately affect your credit history or appear on your credit report.
However, some gambling-related financial habits can place gamblers in difficult financial situations that make it more difficult for them to pay their expenses and fulfil their debt commitments.
To safely engage in gambling, it's crucial to understand the impact it might have on your credit score and your financial picture.
Gambling is unlikely to show up on your credit report. Information about your purchases, including where you made them, is not included in your credit report.
You can see what lenders see by reviewing your own credit report regularly. Gambling by itself won't harm your credit score or report. After all, your credit profile shows your ability to handle credit and repay personal loans, it's not there to keep track of or pass judgement on your financial decisions.
Gambling-related transactions won't appear on your credit report, but they will appear on your bank statements. Keep in mind that mortgage lenders like to review your bank statements when evaluating an application. Also, many lenders or credit card companies will now ask to view your current account activity through open banking before approving an application you've submitted.
Again, potential lenders might not mind if they see the occasional negative mark in your transaction history, but if you frequently or disproportionately make large transactions to betting sites, they might be put off.
Even though gambling itself does not directly damage your credit rating, the behaviours connected to recreational gambling can lead to debt that does. These consist of:
Using your credit card for cash advances is a surefire method to accrue interest. Cash advance fees typically range from 3-5% of the advance, and interest starts to mount right away. Cash advance expenses can quickly snowball due to fees and interest.
Players may receive lines of credit from casinos directly. Most likely, submitting an application for a casino line of credit will result in a hard inquiry, which could temporarily lower your credit score by a few points.
These credit lines do not record balances or past-due payments to consumer credit reporting agencies.
If money becomes involved in gambling debts or payments, you risk skipping payments on other obligations. Missed payments are reported to the credit bureaus and lower your credit score.
Your credit report may also contain information about accounts that you have not paid and that have been turned over to collections, which could affect your credit score.
Credit utilisation measures how much of your available revolving credit you are currently using. It affects your credit score significantly, and a high credit utilisation rate can quickly lower your scores. Although it's best to maintain your utilisation as low as possible, keeping it below 30% can help you avoid significant damage to your credit score. Your credit usage may increase if you use lines of credit to fund gambling and do not pay off the bills on time.
As of 14th April 2020, you cannot directly use a credit card for gambling. Using a credit card as a cash advance is not advised. The APR will typically be higher than your standard interest rate, and in some cases, a handling fee will be added to this. So, even before you know the outcome of any bet, it can be an expensive activity.
Card issuers may classify certain transactions as cash advances, not simply those related to online gambling. In some situations, even purchasing food or beverages in a casino will be considered part of the same "category" and charged the same fees.
There are other possible problems besides just the extra expense of using a credit card. This is so that any lender looking at your credit report will have access to more information than just the balance, credit limit, and payment history of your credit card accounts.
Some reports additionally include the number of cash advances and the total amount of cash advances. Similar to payday loans, lenders may view a pattern of cash advances as evidence of a borrower's financial difficulties, which could negatively affect any application and your ability to obtain credit. Fortunately, a single cash advance shouldn't be a problem, so if you've ever made the mistake of using the wrong card at a cash machine, it shouldn't be a problem now.
Mortgage lenders thoroughly examine an applicant's spending patterns. When you apply for a mortgage, it's typical for the lender to ask for three to six months' worth of bank statements so they can evaluate your creditworthiness based on your repayment history. Additionally, the lender will question you about your spending patterns.
If a lender notices that you are making payments to gambling organisations, they may decide not to approve you as someone who is trustworthy enough to make mortgage payments. If it is discovered that you borrowed money to pay for your gaming expenses, that is likely to raise even more suspicion.
This sends the message that you're a person who prefers gambling to making responsible loan repayments and that you're likely to waste a lender's money in the future. Even if it turns out that you frequently deposit profits into your bank account, this may not be enough to convince them.
Although gambling doesn't immediately impact or appear on your credit report, certain prospective lenders may ask for an open banking link to your current account in order to view your bank account activity history.
These lenders could decline to grant a personal loan unless you consent. They can be turned off if they observe frequent or sizable payments to gambling establishments or casinos. Gambling recklessly has a lot of negative repercussions as well, some of which may affect your ability to get a loan.
Your chances of getting accepted could be impacted if gambling pushes you into an overdraft, especially if it's an unauthorised overdraft. Before granting your new loan, lenders will also take into account what credit limits you have access to, as well as how much of that you are using.
In reality, compulsive gamblers will typically open numerous credit card accounts so they can subtly fund their addiction, and this would hinder their capacity to obtain additional credit.
If you can't settle your balance by month's end, the situation gets worse. At this point, it becomes difficult to escape the debt cycle, and if your gambling habit persists, your credit score will continue to decline.
If you have a gambling addiction, you might find yourself applying for credit to finance your gambling habits. This can, unfortunately, lead to financial hardship, unpaid bills, and grave legal and personal repercussions.
In this case, you might want to let potential lenders know that you don't want any credit from them.
If you have fallen behind on payments, then on your Notice of Correction (NOC) you can mention your gambling problem. Credit reference agencies like Experian can add this to your credit report on your behalf.
Gambling doesn't appear on your credit report and has no effect on your credit score. However, the activities around gambling are likely to be noticed.
When determining your creditworthiness, mortgage lenders take into account more than just your credit record. Using a different account is also unlikely to keep your gambling discreet – more and more credit card and loan companies are now using open banking to algorithmically analyse your regular banking activities and this may pick up your gambling transactions.
Online gambling can let you lose track of time – and money. So if you or someone you know is struggling with a gambling addiction, you can reach out to these organisations for free advice and support:
GamCare - www.gamcare.org.uk
BeGambleAware - www.begambleaware.org
Gamblers Anonymous - www.gamblersanonymous.org.uk
Samaritans - www.samaritans.org
