Why should I understand my credit score?

Why is this important:  

Lenders use your credit score to decide how reliable you are at borrowing and repaying money.  

What is a credit score?  

A credit score is 3-digit number lenders use to work out how reliable you might be at repaying any money you borrow. It applies to mortgages, credit cards, and loans, and helps lenders decide: 

• whether to offer you credit  
• the credit amount they should offer  
• the interest rate that should be applied 

How do I learn what my credit score is?  

You can find your credit score from Credit Reference Agencies (CRA) and lenders. The below three agencies offer a free credit report:  

• Experian, Money Saving Expert Credit Club  
• Equifax, ClearScore  
• TransUnion, Karma 

What does my credit score mean?  

The scoring ranges from poor to excellent. A 'poor' credit score may mean lenders think you could be unreliable in repaying the credit and they may refuse to lend to you. Or you may only qualify for offers with a higher interest rate, which will mean borrowing will cost you more.  

An ‘excellent’ score means you're more likely to have your application accepted and could be offered better interest rates or a higher credit amount. 

How do I improve my credit score? 

Why is this important: 

Improving your score could make lenders more willing to offer you credit. It could also help you qualify for deals with a lower interest rate. 

What do I need to do? 

After finding out your credit score you may want to look at ways you can improve it, before applying to lenders. There are some things you can do that will help improve your score, including: 

• pay your bills on time  
• check your credit report for errors and typing mistakes before submitting 
• register to vote when you change your address  
• do not apply for many loans in a short period 

What affects your credit score? 

It is also important to understand what factors could affect your credit score. Some considerations are: 

• little or no experience with credit 
• missing payments on borrowing, including ‘buy now and pay later’ 
• too many applications in a short space of time 
• already owing a lot of debt 
• moving home without updating the electoral roll 
• using all your credit each month 
• not closing unused credit accounts