What affects your credit score?
Your past financial behavior is a crucial factor in determining your credit score - but other factors affect your credit report too.
Key takeaways
Timely payments boost your credit score, while late or missed payments can lower it significantly.
Using a high percentage of your available credit can negatively impact your score; staying below 30% is recommended.
A longer credit history and a mix of credit types (e.g. credit cards, loans) can positively influence your score.
Checking your score, income changes, and personal information don’t affect your credit score
You can use our credit score service for personalised tips and hints on improving your rating
What affects my credit score?
Several key factors affect your credit score. The most significant is your payment history, which shows whether you’ve paid your bills on time - late or missed payments can lower your score.
Your credit utilisation ratio, or how much of your available credit you’re using, also plays a big role; keeping it below 30% is generally recommended.
The length of your credit history matters too, with longer histories often boosting your score.
Additionally, the types of credit you have (such as credit cards, car loans, or mortgages) and how often you apply for new credit can impact your score. Hard inquiries from too many credit applications in a short period may temporarily lower it.
What is a credit score?
Your credit score is a number that reflects how likely you are to repay money you borrow, based on your past financial behaviour.
It is used by lenders, such as banks and credit card companies, to help them decide whether to offer you credit and on what terms. A high credit score makes it easier to borrow money at affordable interest rates.
There is no universal credit score in the UK. Each credit reference agency - Experian, Equifax, and TransUnion - uses its own scale and scoring system. Scores typically range from “very poor” to “excellent,” with a higher score suggesting you are a lower-risk borrower.
Your credit score is calculated using information from your credit report. This includes details such as:
Your payment history
How much credit you’re using compared to your limits (credit utilisation)
How long you’ve had credit accounts
Whether you’ve had any defaults, County Court Judgments (CCJs), or bankruptcies
Maintaining a strong credit score can help you access better credit deals, lower interest rates, and improve your chances of being approved for loans, mortgages, or mobile phone contracts.
Why is it important to know my credit score?
Knowing your credit score is important because it gives you a clear picture of your financial health and how lenders are likely to view you. Your credit score affects your ability to get approved for credit cards, loans, mortgages, mobile phone contracts and rental agreements.
A higher score can help you access better deals, including lower interest rates and higher credit limits, saving you money in the long run.
Understanding your credit score also allows you to spot issues early, such as errors on your credit report or signs of identity fraud.
By keeping track of your score, you can make informed decisions about your finances and take steps to improve your credit if needed. This can be especially important if you're planning a big purchase - such as taking out a mortgage - or applying for credit in the near future.
If your credit score is low, don't despair. It's important to start understanding why this is the case and begin taking steps to improve it. This knowledge puts you in a stronger position when applying for credit in the future. You can explore why your credit score is low and take steps to improve it.
What are the benefits of a good credit score?
The benefits of having a good credit score include:
Better rates on borrowing: Lenders are more likely to offer you competitive interest rates if you have a good credit score. This can result in significant savings over time.
Easier approval for mortgages: A high credit score can make it easier for you to get approved for a mortgage, and at a better interest rate.
Cheaper car insurance: Some car insurance companies consider credit scores when determining premiums. A good credit score may result in lower insurance costs. Additionally, a good credit score can give you more options for car finance and car loans.
How can I check my credit score?
You can check your credit score directly with any of the three UK credit reference agencies: Equifax, Experian and TransUnion. Each of the credit bureaus has their own scoring system.
Alternatively, you can also check your credit score for free with our Credit Score service that uses information from TransUnion to calculate your credit score. MoneySupermarket’s Credit Score service gives helpful, personalised hints and tips on how to boost your rating.
What factors affect my credit score?
Your credit score is based on several factors including:
Payment history
Payment history is one of the most important factors affecting your credit score. It shows whether you’ve made repayments for bills, loans, and credit cards on time. Lenders see this as a key indicator of how reliable you are at managing debt. If you consistently make payments on time, it builds trust and helps boost your credit score.
However, missed or late payments can have a negative impact. Even a single missed payment can lower your score and stay on your credit report for up to six years. The more recent and severe the missed payments, the more damage they can do.
Being on the electoral roll
Being on the electoral roll (or electoral register) at your current address positively affects your credit score because it helps lenders verify your identity and address. This added level of verification makes you appear more stable and trustworthy to lenders.
If you're not on the electoral roll, it can make it harder for lenders to confirm your identity, which might lead to delays or even rejections when you apply for credit.
Debt management
Debts can have both positive and negative effects on your credit score, depending on how they are managed.
If you borrow responsibly, by making payments on time and keeping balances low relative to your credit limits, debt can help build a strong credit history and improve your score.
However, debt becomes a problem when it's not managed properly. High levels of debt, especially if you're using a large percentage of your available credit (known as high credit utilisation), can lower your score.
Length of credit history
Generally, a longer credit history gives lenders more information to assess your borrowing habits and reliability. If you’ve had credit accounts open for many years and have a consistent record of on-time payments, it can boost your score by demonstrating financial stability.
On the other hand, a short credit history or frequently opening new accounts can make it harder for lenders to judge your creditworthiness.
Credit mix
If you have shown you can handle different types of credit, this can give your credit file a significant boost.
Having different types of credit (like a credit card, loan, overdraft or mortgage) and managing them well also shows lenders that you can handle borrowing responsibly.
New credit applications
When you apply for credit - like a loan, credit card, bank account, or mortgage - the lender will check your credit report to assess your risk. This check leaves a hard inquiry on your report, which can temporarily lower your score by a few points because it suggests you might be taking on new debt.
Having too many credit applications in a short period can make you appear financially unstable or desperate for credit, which may further lower your score and make financial providers more cautious.
What doesn’t affect my credit score?
There are several myths about factors that do and do not affect your credit score.
The following will not impact your score:
Checking your credit score
Your salary or profession
Your savings
Student loans
Your marital status
Your address
How can I improve my credit score?
There are lots of ways to boost your credit score. Here are a few tips:
Register on the electoral roll: If you’re currently not on the electoral roll, or you’re moving house, make sure you register or re-register as soon as possible.
Review your credit report: Regularly check your credit report for errors and dispute any inaccuracies.
Pay bills on time: Timely payments are essential for maintaining a good credit score - setting up direct debits will ensure you don’t miss payments.
Build your credit history: If you’ve not applied for credit before, a credit-builder credit card could help and start you on the path to a stronger credit rating.
Close unused credit card accounts: Keeping unused credit card accounts open can negatively impact your credit score.
Other useful guides
Check your credit score
It’s quick and simple to check your credit score online using our free Credit Score service. We suggest checking your credit score regularly, in the same way you might with your bank statements or utility bills.
Author
Victoria Russell
General Manager - Commercial
Vikki has worked across financial services for over 20years, and for the last 15 years, created and nurtured a career within MoneySuperMarket Group, leading to her current role as General Manager for...
Reviewer
Emma Lunn
Personal finance expert
Emma has written about personal finance for almost 20 years, with a career spanning several recessions and their inevitable consequences. Emma’s main focus is helping people learn to manage their...
