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How is your credit score calculated?

Kim Staples
Written by  Kim Staples
Vanessa Tsai
Reviewed by  Vanessa Tsai
8 min read
Updated: 13 Mar 2024

To take out a loan, a mortgage, a credit card, or other financial product, you’ll need a good enough credit score – so how are they calculated? It’s a little arcane, but the good news is that you can get a good grasp on how yours has been determined – and how you can boost it.

There are three main credit agencies in the UK – TransUnion, Experian, and Equifax – who all use similar methods with the same data to determine your credit score.

The exact nature of the algorithm each one uses to come up with your score is kept under wraps, however. It’s hard to say exactly how many points any single action will affect your score by. Especially as each agency makes its own calculations and has different maximum and minimum values.

But in the absolute simplest terms, things that suggest you’re low-risk to lend to make it go up; and things that suggest you’re high-risk make it go down. Someone who has a reasonable level of debt and pays it off diligently is considered more likely to repay a debt, for instance, compared to someone with a history of missed payments, bankruptcy, or CCJs. So their score will be higher.

Credit agencies are quite forthcoming about what factors influence your credit score – meaning you can get a good idea of what might be affecting yours.

What factors determine my credit score?

Payment history

How much you pay on your debts, and whether you’ve missed payments or been sent to collections, will affect your score. If you’re shown to make regular payments on what you owe, your score will increase.

Amount of debt you owe

Credit agencies can see how much debt you owe, and what you owe it on.

This is considered against other factors though, such as the type of debt and your payment history, and whether you stay within your credit limit.

Types of credit and credit mix

Different types of debt such as mortgages, loans, credit cards, mobile phone contracts, and so on, can all affect your score in different ways.

The credit mix may also have an effect – if you’re paying off a wider variety of credit types in a responsible way, that can increase your score, as it implies you’re in control of your finances.

Length of credit history

Your score is affected by how long your file has been active for, and how long you’ve been developing a credit history. If you’re a younger adult or recent immigrant, for instance, you may have a lower score because you don’t yet have enough of a credit history for the credit agencies to judge.

Credit files cover the past six years, so the more data you have from that time frame, the better.

Who you’re financially linked to

The credit score of anyone you have financial ties to – such as a spouse, or someone you’ve shared a mortgage or joint account with – can affect yours, and vice versa.

Recent credit inquiries

When you apply for credit, the lender will make an inquiry on your file. ‘Soft’ credit checks don’t affect your score, but ‘hard’ checks can, especially if there are a lot of them within a short amount of time.

These usually stay on your file for around three months.

How do credit agencies collect information for my credit score?

Credit agencies collect publicly available information, along with data on your credit history as reported by lenders. They may use:

  • The electoral register

  • Court judgements

  • Bankruptcies and insolvencies

  • Data from lenders, banks, and other financial bodies that you have accounts with

  • Information you’ve supplied – either directly to the credit agency, or via a product you’re applying for

  • Enquiries into your data file (e.g. from other lenders)

How often is my credit score updated?

Credit scores are typically updated at least once a month, though it can be more often than that.

Any changes to your credit – such as new loans or credit cards you’ve taken out, or payments you’ve missed – will usually take around four to six weeks to show up on your file and affect your score.

How to improve your credit score

Read our complete guide to improving your credit score for everything you need to know about giving it a boost. Some of our best tips include:

  • Register on the electoral roll: This helps provide proof of address and confirms your identity

  • Pay all your bills on time: Set up direct debits for your council tax, energy bill, phone bill, and so on, and make sure you never miss a payment

  • Check your credit report: Make sure everything is accurate, correct any errors, and investigate info that doesn’t look right

  • Don’t use all your available credit: If you have a credit card, for instance, use a lower amount of credit than you have available

You can also register with Credit Monitor – a free service from MoneySuperMarket that lets you check your score and your full report whenever you like.

Other useful guides

Nurture your credit score with Credit Monitor

You can check your score and credit report for free as often as you like with Credit Monitor.

Watch your credit score grow and get alerts if there is any suspicious looking activity on your file – so you can avoid being the victim of fraud.

You’ll also receive regular updates and free tips and advice on how to keep improving your score.

 

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