What Impact Can Gambling Have On Your Credit Score?

If you’re among the 32% of Brits that gamble on a weekly basis and are thinking of applying for some form of credit in the near future, you might be wondering whether your activity could affect your Credit Rating and your chances of being accepted. 

As general practice worldwide, gambling activity does not appear on your credit report and does not have any direct influence on your credit history. However, there may be some consequences brought on by irresponsible gambling which can eventually affect your credit report. 

We've taken the time to sum up some information in this article that we think might be helpful.

What is a Credit Rating?

Before looking at the potential impact of gambling on your credit score, it's important to understand what credit scoring is all about. To put it simply, your credit score affects various different situations in your life, such as getting a mobile phone contract, obtaining a mortgage for a property, or even applying for personal lending facilities. In general, maintaining a healthy credit score is extremely important.

To go into further detail, your credit report includes details about your personal information and your lending history. It enables creditors such as banks, to evaluate your financial responsibility, including situations in your past where you had resorted to excessive debt and if you were making your payments on time or incurring any late charges. 

The data compiled in your credit report results in a number known as your credit score. Consequently, if your credit score does not meet their lenders' benchmark, they can choose not to risk it when considering the possibility of lending money to you! 

On the other hand, having a good credit score means that you are deemed to be a low-risk borrower by creditors and lenders, typically because you have demonstrated responsible financial behaviour. 

A good credit score can lead to benefits such as access to more favourable interest rates, higher credit limits, and greater financial flexibility. Overall, maintaining a good credit score is crucial for achieving financial stability and success.

What is a Healthy Credit Score?

In the United Kingdom, a healthy credit score typically falls within the range of 881 to 960 on the Experian credit scoring system. However, it's important to note that credit score ranges and definitions may differ depending on the credit reference agency being used. 

Therefore, it is advisable to regularly monitor your credit report and score to ensure accuracy and to identify any areas that may require improvement.

Is Gambling a Factor Considered for Your Credit Score?

Your credit reports do not include information on your earnings, daily transactions, or bank account balances. Credit ratings are based on the information presented in your credit report. 

The assessment of your credit score comprises a variety of factors, which include outstanding debts and credit utilization, and the duration of your credit history. It is important to mention that gains and losses from gambling do not impact your credit ratings directly, since these are not reported to the significant consumer credit bureaus such as Experian in the UK. 

Recreational gambling can serve as a source of entertainment, but if your gambling starts to exceed what you can financially handle, it can start to reflect negatively on your statements, especially if you resort to lending to sustain your gambling needs, which would be considered as problem gambling. 

So, while gambling does not directly impact your credit score, it can lead to consequences which will be reflected in your credit score.

Will Gambling Affect My Chances of Getting a Personal Loan?

While gambling does not have a direct impact on your credit scoring, some lenders may request access to your bank statements as a requirement during your application, to assess their risks when lending you your required amount. 

This is not only when your lender is your own bank and can access accounts internally, but even by third-party lenders who would request the bank statement for the account where your salary credits, and any additional statement if necessary. In some instances, lenders may decline to offer a loan unless you authorise such access. Underwriters will examine these for signs that your income and regular expenses match what you have stated. 

This is all part of the process for ensuring that your debt is affordable. If they notice any recurring or significant payments to betting sites or online casinos in your transaction history, it could negatively affect their decision.

Can I Apply for a Mortgage if I am a Professional Gambler?

It is possible to apply and get approved for a mortgage based on earnings from gambling. However, this is considered a high-risk application by the majority of lenders. Therefore, you would require the help of a broker. Due to the volatile nature of gambling income, lenders are apprehensive about this type of income.

Generally, some criteria used to evaluate professional gambling for mortgages are as follows:

• Income stability & betting habits - Essentially, a consistent and steady profit from gambling is preferred by most lenders if it constitutes the primary source of income.
• Proven Track Record - If one has a long-term record of earning a full-time wage from gambling, it will boost their chances of getting a mortgage based on gambling winnings.
• Types of gambling - Games of chance are viewed less favourably, as opposed to skill-based games the likes of Blackjack or Baccarat.
• Gambling income ratio - This refers to the proportion of an individual's typical betting stake in relation to the amount of money they have. For example, if one regularly places £500 bets but has over £80,000 in their bank account, this is unlikely to raise concern.

It’s important to remember that a borrower will also need to meet the lender's general eligibility criteria for creditworthiness. A stronger mortgage application, with a large deposit and a clean credit history, will increase the likelihood of approval.

How Can Gambling Debt Threaten Your Credit?

Like anything else, gambling needs to be done responsibly. When people who frequently play at online casinos start falling into patterns where they chase their losses or start gambling more than what is affordable to them, this may potentially lead to you going into debt to cover your gambling costs, which could adversely affect your credit score. These behaviours may include:

Missing Your Payments

In the event that your gambling expenses start to pile up, you could find yourself struggling to meet your other financial obligations such as your phone bill or credit card repayments, which could result in missed payments. These are recorded on your credit file and remain visible for up to six years, affecting your credit score. Hence, they could have a negative impact on your creditworthiness.

Using Your Credit too Much

Your credit utilisation rate, which is the amount of revolving credit that you use, is recorded and plays a significant role in determining your credit score. It informs lenders how much of your available credit you are using. 

A low credit utilisation rate, typically under 30%, indicates responsible use of credit, as it demonstrates that you use only a small portion of your available credit.

However, if you use your credit limits to fund your gambling activities, it is highly likely that your credit utilisation rate will be higher. This could be viewed negatively by lenders, as it implies that you are less responsible for your credit. As such, your credit utilisation rate is an important factor in determining your credit score.

Gambling on Credit 

In some countries such as the US, players can obtain credit lines from casinos, and it’s common that requesting such a line of credit would result in strict credit checks, which could lower your credit rating by a small margin for a short period of time. However, such credit lines do not maintain any record of outstanding debts or delayed payments with credit reporting agencies.

In the United Kingdom, it is illegal to use credit facilities such as credit cards to fund your gambling payments. For this reason, the UK Gambling Commission placed a ban in April 2020 on gambling operators such as online casinos when accepting credit cards as a payment method to fund your account.

How do I Build my Credit Score When I Have Gambling Debt?

If you are grappling with gambling debt and seeking to improve your credit score, there are a few steps you can take. 

• Pay your bills on time - This demonstrates your financial responsibility to your potential lenders and is one of the main factors that improves your credit score.
• Create a budget - Keep track of your expenses and avoid accumulating any further debt. 
• Contact your existing lenders - You can discuss a payment plan or settlement arrangement for your existing debts that is realistic to your current financial situation.
• Opening a secured credit card - If unsecured lending is off the table this option can help you rebuild your credit if you use this facility responsibly by making regular payments and keeping your statement balance low. 
• Seeking professional help - Get in touch with a credit counsellor or financial advisor who can provide valuable guidance and support as you work towards improving your credit score and managing any gambling debt.

Example of Maintaining Healthy Credit Before a Loan Application

Here is a made-up example of a realistic situation of dealing with your gambling history before applying for any lending facilities:

Harry really enjoyed playing slots on the best online casinos, but he didn't see himself as a compulsive gambler. Nonetheless, he had used up one of his two credit cards to finance this pastime in the past three months. As a result, he was currently carrying a balance on both cards and paying interest on them.

Before submitting a joint mortgage application with his fiance, they jointly resolved to settle Harry's debts. They collaborated to pay off his credit card debts and proceeded to close both accounts. In the months leading up to their mortgage application, Harry ceased online gambling, which eliminated any indication of it on his recent bank statements.

The couple was hopeful that this move would enhance their chances of receiving a favourable mortgage deal, which it ultimately did.

Please Gamble Responsibly

While we note that problem gambling can cause issues that not only affect your finances but also your emotional well-being, quite commonly it does lead to dire financial consequences. Should you find yourself struggling to maintain control over your gambling, seeking guidance from organizations such as BeGamblingAware or Gamblers Anonymous can prove beneficial.

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