What affects your credit score

Understand your credit score

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If you want to get the most competitive loan and credit card deals, you'll need a good credit score. Find out why it matters.

There's a lot of misunderstanding around credit scores and how they are calculated. So, to make things easier, here's our guide to the impact they have on any applications you make.

What is a credit score?

Your credit score is a rating based on your financial history. Credit reference agencies, primarily Experian, Equifax and TransUnion, calculate your score based on how well you’ve managed your accounts in the past. The better your financial history, the higher your credit score will be.

Your score can move up or down depending on how you have managed your finances.

Having a good credit score is important as it can help you get accepted for cheaper rates on credit cards and loans, which helps bring down the overall cost of borrowing.

Is there one universal score?

No – each credit reference agency will rate and rank information according to its own criteria and experience so your score may differ across Experian, Equifax and TransUnion.

How can I get my credit score?

You can access your credit report through MoneySuperMarket’s Credit Monitor app for free. TransUnion calculates your score and we provide helpful tips and insights on how you might improve your score, along with a view on which credit cards you are likely to be accepted for.

How do lenders use credit scores?

Lenders will set a formula and a minimum credit score or threshold for applicants to be eligible for the particular kind of credit you are applying for.

If you score under a lender's threshold total, it may decide not to lend you the money, or it may charge you more to do so. Some lenders specialise in loans for riskier customers and may offer credit where another bank might not.

Lenders don't have to tell you what your score is or how they worked it out – but they should give you a basic explanation of how scoring works, and whether your application has been refused because of your credit score or your credit report. They should also tell you which agency was used, so you can correct anything that is wrong in the report.

Who gets advertised rates credit score

What can affect your credit score?

There are a number of factors that can affect your credit score. These include:

  • Your payment history (including whether you’ve missed payments or have CCJs)
  • Whether you are registered on the electoral roll
  • How much you owe and how much of your available credit you are using, often called ‘credit utilisation’ by lenders  
  • The affordability of what you are asking for, given your earnings and the amount you owe
  • Length of credit history
  • How much new credit you have - if you have made a lot of recent applications for credit, you are likely to be a greater credit risk.

What should you do if your credit score is poor?

If your credit score is poor, try not to panic. There are a number of steps you can take to improve it – find out more with our how to improve your credit score guide.

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