top of page

Why check your credit score?

What is a credit score?

Your credit score indicates how reliable you are at borrowing and repaying money.

When you apply for credit (loan, credit card, or mortgage) the lender tries to predict your future behaviour based on the past. They look at lots of data; your payment history to credit card, loan, and mortgage firms, your past applications for credit, and whether you are on the electoral roll. Some of this comes from their own information, but often they consult credit reference agencies.

There are 3 main credit reference agencies in the UK: Experian, Equifax, and TransUnion. They hold a credit report on your financial history and use it to generate a credit score. Each agency has its own scoring system, so your credit score may vary slightly depending on which one you choose.

What ‘fair’, ‘good’, and ‘excellent’ credit scores look like for each agency:

Your credit score is calculated using a points system, based on what is in your credit report which reflects how you have managed your debts and bills in the past. For example, if you always pay your bills on time, this would have a positive impact on your score; but a history of missed or late payments would have a negative impact. If you have never borrowed money, it is difficult for lenders to assess the risk of lending to you and your credit score will reflect that.

What is a credit report?

A credit report details your personal credit history for the last six years, including mortgages, credit cards, overdrafts, loans, mobile phone contracts, and even some utilities. If you are over 18 and have taken out credit, a credit reference agency is likely to hold a credit report on you.

Your credit report includes:

name, address and date of birth

registration on the electoral register

how much you owe lenders, including any joint loans, mortgages, or overdrafts

missed or late payments

County Court Judgements (CCJs)

whether your home has been repossessed

if you have ever been declared bankrupt

Your credit report does not include:


the amount of money you have, including savings

any student loans

criminal record

medical history

parking or driving fines

late or missed council tax payments

Checking your credit report is free and does not affect your credit score. You can check your credit report as often as you like, and it will not affect your credit score. This is called a soft credit check: it does not leave a visible footprint on your credit file, but it is recorded. No other lenders can see it, but you will be able to see if anyone has checked your credit history.

If you make an application for finance, the lender will do an in-depth check of your credit report. This is called a hard credit check and could affect your credit score.

Why you should check your credit score

Your credit report can affect your ability to get a mortgage, credit card, or a loan. It can also affect mobile phone contracts, monthly car insurance, bank accounts, and more. Today, the cost of living crisis is pushing the importance of a good credit report even further; as costs rise faster than incomes and you have less disposable income, that makes you less attractive to lenders. Acceptance especially for cheap rates is tougher, particularly for mortgages, which adds to your costs.

There are two main checks for mortgages - affordability and credit. The affordability check is most impacted by the cost of living crisis and it is tough to improve, especially if you have already cut back. Therefore, your credit score is important as it may tip the balance for acceptance of a better rate.

Checking your credit report regularly at least once a year, or before any credit application can help you make sure the information included is accurate. If it is not, you can make that known. A simple error, such as an unused but still open credit card account listed at the wrong address, can kibosh applications. Even if the file is correct, checking helps you spot problems. To raise a dispute, you’ll need to contact the credit reference agency directly, they will be able to let you know the next steps you need to take.

You can check your credit report for free:

- EXPERIAN (the biggest): Use free Credit Club

- EQUIFAX: Use Clearscore

- TRANSUNION: Use Credit Karma

Lenders assess you based on your credit report, any past dealings you have had with them, and your application form; this has crucial information on it, including your salary (which credit reference reports do not have). Don't get hung up on your credit score number because it is not used by lenders, it is just a loose indication of how a typical lender may see things, based only on your credit file. Every lender is different with its own, usually unpublished, scoring system based on its preferences, your application form, and their relationship with you.

How to improve your credit score

You need to have credit to get credit; those who have a bad history get rejected, as do those who have never had credit. If you get a credit card and use it wisely (Always repay IN FULL each month, so there is NO INTEREST), this will help to improve your credit history. If you are looking to improve a bad credit rating, then a credit builder card can help; they typically have low spending limits and high-interest rates. Do not withdraw cash on credit cards, it is expensive and evidence of poor money management, and never miss or be late on repayments (use a direct debit to be sure).

Evidence of stability is good; showing the same job, bank, or telephone number on applications, and get on the electoral roll. Be consistent, even on different applications, to avoid fraud scoring.

Major problems, such as county court judgments, defaults, or bankruptcy, stay on your file for 6 years, and applications for products stay on for 1 year; try holding off applying until they lapse.

Avoid lots of applications in quick succession. Many debt applications leave a footprint on your credit file, and too many, especially in a short space of time, hurt future applications. Space out and prioritise applications, for example, if you are due to apply for a mortgage, don't apply for minor things such as cashback credit cards for a month or two before.

Avoid payday loans, they can kill mortgage applications. They are dangerous in their own right, but some mortgage underwriters simply will not lend to anyone who has had one.

Be careful if you get joint products with someone. A joint mortgage, loan, or even a joint bill bank account with flatmates will link your credit file with them, which means lenders can see their history when you are assessed.

A high credit score indicates you have a history of managing your credit responsibly, such as making any repayments on time. A higher credit score means companies see you as a lower risk, so you are more likely to be approved for credit, get lower interest rates, and higher credit limits.

Further information:


bottom of page