Credit Ratings, Scores and Bandings Explained
Your credit rating can affect your chances of borrowing money, but what does your score actually mean? Our guide explains how credit works, how scores are calculated and what the different credit rating bands mean.
Key takeaways
Your credit score reflects how you've managed credit, but lenders also consider your income, spending and affordability
Experian, Equifax and TransUnion use different scoring systems, so your credit rating can vary between agencies
Paying on time, managing borrowing and checking your credit report can help you maintain or improve your score
What is a credit rating?
A credit rating, also called a credit score, is a number that indicates how you've managed credit in the past - it's calculated using information from your credit report, including your borrowing and repayment history. Your credit score is different from your credit report, which contains details of your credit accounts, payments and financial history.
A higher score generally suggests you're a lower-risk borrower, but lenders use their own checks when deciding whether to offer you credit, so a good rating doesn't guarantee approval.
What is credit?
Credit lets you borrow money or buy something now and pay for it later - it can help you spread the cost of larger purchases or cover expenses when you don't have enough money available upfront. You'll usually agree to repay what you borrow over a set period or through regular payments, and depending on the type of credit, you may also pay:
Interest: The amount a lender charges you for borrowing money
Fees: Additional costs, such as late payment or transaction charges
The annual percentage rate (APR) helps you compare the annual cost of borrowing, including interest and certain charges, making it easier to compare credit products.
What types of credit are available?
Credit comes in several forms, including credit cards, mortgages, personal loans and overdrafts.
Type of credit | How it works | What to consider |
|---|---|---|
Credit cards | Borrow up to an agreed limit and repay what you spend | Interest and monthly repayments |
Mortgages | Borrow money to buy a property, with the property used as security | Long-term repayments and repossession risk |
Personal loans | Borrow a lump sum and repay it over an agreed period | Interest and total repayment costs |
Overdrafts | Borrow through your current account, usually up to an agreed limit | Interest charges, fees and borrowing limits |
Other types include car finance and buy now, pay later (BNPL) agreements - each works differently, so check the repayment terms and total cost before borrowing.
How does a credit card work?
A credit card lets you borrow money from a card provider to make purchases, up to an agreed credit limit. When you buy something, the card provider pays the retailer and adds the amount to your card balance - you'll then receive a monthly statement showing what you owe, your minimum payment and when it's due.
For example, if you spend £200 using a credit card with a £1,000 limit, you'll have £800 of available credit remaining, assuming there are no other transactions or charges.
How is credit card interest charged?
Credit card interest is usually charged when you don't repay your full statement balance by the payment deadline. Paying the full statement balance on time will usually mean you avoid interest on purchases, depending on your specific credit agreement, although some transactions work differently:
Cash withdrawals: These often come with a fee, with interest charged immediately
Balance transfers: Moving debt between cards may involve a transfer fee
Late payments: Missing a payment can result in charges and may affect promotional interest rates
You can learn more in our guide to how credit card interest works.
What happens if I only make the minimum payment?
Paying the minimum payment keeps your account up to date, but it usually means paying more interest and taking longer to clear your debt. You must make at least the minimum payment by the due date, as missing it could lead to a late fee, loss of a promotional offer and damage to your credit history.
Setting up a Direct Debit for at least the minimum payment can help you avoid missing the deadline, provided you have enough money in your account. You can usually choose to pay the minimum, a fixed amount or your full statement balance automatically.
If you can afford it, paying your full statement balance on time will usually help you avoid purchase interest.
What's the difference between secured and unsecured credit?
Secured credit is borrowing backed by an asset, such as your home, while unsecured credit isn't tied to a specific asset.
Secured credit | Unsecured credit |
|---|---|
Uses an asset as security for the lender | Doesn't require a specific asset as security |
Examples include mortgages and secured loans | Examples include credit cards and most personal loans |
You risk losing the secured asset if you don't keep up repayments | Missed repayments can still lead to debt recovery and legal action |
Secured borrowing can sometimes offer more favourable interest rates or repayment terms, but the consequences of failing to repay can be serious.
Why do lenders use credit ratings?
Lenders use information from your credit report to assess how you've managed borrowing and how likely you are to repay what you owe. They also consider other factors, such as your income, existing debts and regular expenses, when deciding whether you can afford repayments.
A higher credit score may help you access a wider choice of borrowing products and more favourable terms, but lenders use their own assessment criteria, so approval and interest rates aren't guaranteed. If your score is low, you might still qualify for credit, although your options could be more limited.
How are credit ratings calculated?
Credit reference agencies calculate your rating using information from your credit report, and each agency uses its own scoring system, so the same financial history can produce different scores. Some of the main factors affecting your credit rating include:
Payment history
Making credit repayments on time can help your rating, while missed or late payments can lower your score - and missed payments can remain on your credit report for six years.
Credit utilisation
Your credit utilisation is how much of your available credit you're using - for example, if you have a £1,000 credit card limit and owe £250, your utilisation is 25%. Using a lower proportion of your available credit may help your score, although there isn't a specific percentage to aim for that guarantees a better rating.
Credit applications
Applying for credit often involves a hard credit check, which leaves a record on your credit report, and several hard checks in a short period can affect your rating. You can use MoneySuperMarket's credit card eligibility checker to see your chances of approval using a soft search, which won't affect your score.
Credit history
Lenders and credit reference agencies can consider how long you've held credit accounts and how you've managed them. Having little or no borrowing history may make it harder for lenders to assess your reliability.
Public records
Information about insolvency and certain court judgments can affect your credit rating. However, being registered on the electoral roll can also help credit reference agencies and lenders verify your identity and address.
Joint finances
If you have a joint financial account with someone, such as a mortgage, you may be financially linked on your credit reports, and lenders may consider the other person's credit history when assessing your application.
What is a good credit rating?
A good credit rating means your score falls within one of the higher bands used by your credit reference agency, but what counts as good depends on the agency. Experian, Equifax and TransUnion all use different scoring scales and bandings.
A good score may improve your borrowing prospects, but it doesn't guarantee approval or the lowest interest rate.
Who are the UK's main credit reference agencies?
The UK's three main credit reference agencies are Experian, Equifax and TransUnion - they collect information about your credit history and use it to calculate your credit score. Here's how their current scoring systems compare:
Agency and scoring range | Good | Excellent |
|---|---|---|
Experian: 0–1,250 | 861–1,000 | 1,121–1,250 |
Equifax: 0–1,000 | 531–670 | 811–1,000 |
TransUnion (MoneySuperMarket): 0–710 | 604–627 | 628–710 |
TransUnion (new scale): 0–999 | 653–785 | 786–999 |
Experian introduced its new 1,250-point scoring system in 2025, although some services may still display its previous 999-point score. TransUnion began introducing its new 999-point system in September 2026, while MoneySuperMarket's Credit Score service currently uses the previous 710-point system, so you may see different numbers across providers.
Why are my credit scores different?
Your scores can differ because each agency uses its own calculations, while they might also hold different information about your borrowing history.
Different scoring scales also mean you can't directly compare numbers between agencies - for example, a score of 650 could fall into a different rating band depending on which agency produced it.
How can I check my own credit rating?
You can check your credit rating through Experian, Equifax or TransUnion, or use MoneySuperMarket's free Credit Score service. MoneySuperMarket uses information from TransUnion to show your score and credit report, along with personalised tips that could help you improve your rating.
Checking your own score uses a soft credit search, so it won't damage your credit rating - while you can also request a free statutory credit report directly from each credit reference agency.
📣 Did you know? According to the Financial Conduct Authority's 2024 Financial Lives survey, 10%[1] of people who checked their credit report or score in the previous 12 months reported finding an error or issue. Checking your report regularly can help you spot information that needs correcting.
How can I improve my credit rating?
You can improve your credit rating over time by managing borrowing responsibly and keeping your credit information accurate. Some steps you can take include:
Make payments on time: Keep up with loans, credit cards and other reported credit commitments
Register on the electoral roll: Make sure your details are up to date at your current address
Keep credit utilisation low: Avoid regularly using most of your available credit limit
Space out credit applications: Avoid making several applications that trigger hard searches close together
Check your credit report: Look for incorrect information and contact the relevant agency if something needs correcting
Borrow responsibly: Only take out credit you need and can comfortably afford to repay
You don't need to take out extra credit products simply to improve your score - our guide to improving your credit rating explains more.
Get clued up on credit scores with our guides
Learn more about managing your credit rating:
Find out your score with Credit Score
You can check your credit score and report for free with MoneySuperMarket's Credit Score service.
See where you stand, keep track of changes and get personalised tips on how you could improve your rating. Checking your score won't affect it.
Frequently asked questions
Does checking my credit score affect it?
No, checking your own credit score uses a soft search, which doesn't affect your rating or your chances of being approved for credit.However, formal applications for products such as loans and credit cards usually involve hard searches, and several hard searches in a short period may affect your score.
Can I be refused credit with a good score?
Yes. as lenders consider more than your credit score when assessing applications. For example, you could have a good score but be refused a loan if the lender decides you can't comfortably afford the repayments.
Should I set up a Direct Debit for my credit card?
A Direct Debit can help you avoid missing your credit card payment deadline, which could result in fees and damage to your credit history. You can usually arrange to pay the minimum, a fixed amount or your full statement balance automatically.
If you can afford it, paying your full statement balance is generally the best way to avoid purchase interest - but make sure there's enough money in your bank account to cover the payment.
What should I do if there's a mistake on my credit report?
You should contact the credit reference agency holding the incorrect information and ask for it to be investigated, while you may also need to contact the lender or organisation that supplied it.
You should check your reports with all three main agencies, as they may hold different information.
Why has my credit score changed after an agency update?
Credit reference agencies occasionally change their scoring systems, which can affect the number or band you see. For example, Experian expanded its scoring range to 1,250 and TransUnion is introducing a new 999-point system.
A change in scoring doesn't necessarily mean your borrowing habits or underlying credit report have changed.
Author
Mehdi Punjwani
Insurance specialist
Mehdi is a financial writer and editor with over six years of experience in personal finance. He has written for organisations and publications including Equifax, The AA, and USAToday, covering a...
Reviewer
Victoria Russell
General Manager - Commercial
Vikki has worked across financial services for over 20 years, and for the last 15 years, created and nurtured a career within MoneySuperMarket Group, leading to her current role as General Manager...
