Credit scores often come up on our money skills courses. What do they mean? Why do they change? And how much should we worry about them? With so much information out there, it’s easy to feel confused. Here’s a straightforward guide to what matters, along with practical steps you can take.
What is a credit score?
Your credit report is a record of your borrowing and payment history. A credit score summarises information in that report as a number, giving you an indication of how lenders might view you. A stronger credit history can improve your chances of being accepted for credit and getting a lower interest rate, but it doesn’t guarantee either.
Even if you’re not planning to take out a loan or mortgage, your credit history can still matter. It may also be checked when you apply for things like a mobile phone contract or pay monthly for car insurance.
There’s no single credit score
There isn’t one universal credit score in the UK. Credit reference agencies use different scoring systems, so the number you see can vary between services. Lenders make their own decisions using information from your credit report, your application and any previous dealings with them. They also consider whether you can afford the repayments. The score you see isn’t necessarily the score a lender uses.
What if your score goes down?
A change in your score doesn’t automatically mean you’ll be refused credit. Rather than focusing only on the number, look at the information behind it. Check your report for mistakes, missed payments or accounts you don’t recognise, and raise anything that looks wrong with the credit reference agency and the company involved. Checking your own report won’t harm your score.
Practical ways to improve your credit history
Make payments on time. Keeping up with agreed repayments helps build a positive history. If you’re struggling, contact your lender early rather than ignoring the problem.
Check your credit reports for free. Different agencies can hold different information, so it’s worth checking more than one. Look for incorrect addresses, payment records and unfamiliar accounts. You can request a free statutory credit report from Experian, TransUnion and Equifax - you don’t need a paid subscription.
Check your eligibility before applying. A free eligibility checker, such as those available through MoneySavingExpert’s Credit Club, can show how likely you are to be accepted. Look for one that uses a ‘soft search’, which won’t affect your credit score. A formal application usually involves a ‘hard search’, which other lenders can see. Several applications close together can reduce your chances of acceptance. An eligibility result isn’t a guarantee.
Register to vote, if you’re eligible. Being on the electoral register at your current address helps lenders check your identity and address. You can register to vote on GOV.UK.
Consider making your rent payments count. Some services let you add rent payments to your credit history. Check any costs, which agencies receive the information and how missed payments are treated before signing up. It won’t guarantee better offers from lenders. See MoneySavingExpert’s guidance on rent reporting for more information.
Check old financial links. A joint account or joint borrowing can create a financial link with another person. Simply sharing an address doesn’t. If you no longer share financial commitments, ask the credit reference agencies whether an outdated link can be removed. This is called a ‘financial disassociation’. Read more about removing old financial links.
Avoid withdrawing cash on a credit card where possible. Cash withdrawals usually attract fees and interest from the day you take the money out, even if you clear your statement balance. They can also be viewed negatively by lenders.
Focus on your finances, not just your score
Building a stronger credit history takes time. The aim isn’t to chase a perfect number, but to keep your information accurate and manage existing commitments in a way you can afford. Don’t take on borrowing you don’t need just to improve your score. If you’re considering credit, check the total cost and whether the repayments fit your budget.
For more details, visit MoneySavingExpert’s guide to credit scores and creditworthiness.