Building a good credit score, also known as a credit rating, can affect your ability to borrow money or get products such as credit cards. You can check your score for free – and if it’s not great, you can improve it.
Your credit score is created from information held in your credit report, also known as your credit file.
Your credit score can differ between lenders or even between different products from the same lender. It depends on the criteria used in assessing you as a potential customer.
The information held on your credit file and your credit application form might be used to decide:
The most recent information on your file will have the most impact. This is because lenders will be most interested in your current financial situation. That said, your financial decisions - good or bad - from the last six years will still be on record.
If your credit report shows a few missed payments, you might be charged higher interest by lenders, or you might not be eligible for some loans.
This is because lenders believe they might be taking a higher risk when lending to you.
Your credit history can affect your ability to get things like insurance or begin mobile phone contracts.
It’s a good idea to check your report often – as it can help you spot any fraudulent activity or mistakes on it.
There are three main credit scoring agencies in the UK - Equifax, Experian and TransUnion.
They all hold information on you, which lenders use. Even small errors can cause problems, so it’s important you check through your credit report. It’s best to check each of them at least once a year.
The credit scoring agencies offer free access to your full credit report and score. These are available through their partner websites:
If you’d prefer a paper copy of your credit report, you can contact the credit scoring agencies direct:
For more information, see our How to check your credit report guide.
If you sign up to a subscription membership with one of the main credit agencies you might be able to get more up-to-date information on your credit history.
Some of the memberships might also give you access to companies that can look into your file.
But remember to set up a reminder to cancel your membership if you’re on a free trial – as you don’t want to pay the monthly subscription when it ends.
Different lenders have their own standards for rating credit scores.
However, if you have a good score with one of the main credit reporting agencies, it’s more than likely you’ll have a good credit score with your lender.
A good credit score with:
But be aware that your credit score doesn’t guarantee that you’ll be approved for credit or offered the lowest interest rates.
This is because a lender’s decision is not made solely on the score.
So, if you’re looking for a card or loan and are worried you might be rejected, it’s a good place to start your search.
In general, credit history is built up slowly over time as you increase the number of on-time payments you make.
The longer the bill goes unpaid, the more likely it is to affect your credit score. Keep a close eye on your credit score to help you spot issues.
Most negative marks will remain on your file for at least six years. After that, everything is deleted from your file. This includes missed payments, defaults, bankruptcy and CCJs.
However, there are some quick improvements that you can make to begin improving your credit score.
If you have a low credit rating, there are several things you can do to improve it:
If you’re struggling to improve your score, it might be worth signing up to a one-month free trial membership offered by the main credit agencies.
Each agency holds slightly different information about you. So it’s worth checking all three for a more accurate picture.
In general, your file will include:
It won’t include:
However, you might be asked for this information when applying for a loan or contract.
They might then choose to use this information alongside your credit report to assess you.
If you have a poor credit history, you might want to consider a credit-builder credit card.
These are designed for people with little, or a bad, credit history. The credit limits are often low and the interest rates high. This reflects the level of trust your credit file gives lenders.
By using these cards and paying off the bills each month, you can prove you’re creditworthy. This will increase your credit score. When your credit rating improves, you can apply for other cards and loans.
Be aware that the interest rates charged are much higher than standard credit cards though.
Typically, you’ll be paying over 30% in interest a year. This is another reason to try to pay off any balance in full each month.
Otherwise, you might end up in debt that you struggle to get out of. And this could harm your credit rating more.
You might see adverts from firms that claim to repair your credit rating.
Most simply advise you on how to see your credit file and improve your credit rating. But you don’t need to pay for that – you can do it yourself.
Some might claim that they can do things that – legally – they can’t. Or they encourage you to lie to the credit reference agencies.
It’s best not to even consider using these firms.
If you do spot any mistakes, report them to the credit reference agency.
The agency has 28 days to remove the information or tell you why they don’t agree with you.
During that time, the ‘mistake’ will be marked as ‘disputed’. And lenders aren’t allowed to rely on it when assessing your credit rating.
It’s also best to speak to the credit provider you believe is responsible for the incorrect entry.
Credit reference agencies rely on information provided by lenders. And often the lender is in the best position to resolve this.
If there’s information on your file that’s accurate but doesn’t reflect your current situation, for example you got into debt problems when you lost your job but you’re back in work now, you can add a ‘notice of correction’ to your credit report.
This is a statement of up to 200 words about what happened.
Find out more about correcting personal information on your file on the Information Commissioner’s Office website.
If you’ve been a victim of identity impersonation or credit fraud, your credit score might have taken a hit.
To improve your credit score after you’ve been a victim means, follow our steps in ‘How can I improve my credit rating and credit score?’ described above.
When you check your credit file, keep an eye out for a Cifas marker called a ‘Victim of impersonation’ notice. Having this on your file warns future lenders that you’ve been a victim, or are vulnerable to becoming a victim, of fraud.
A Cifas marker is put on your file by a lender who felt there had been an attempt at fraud using your identity. They are legally obliged to report this.
The marker will stay on your file for 13 months.
Having this marker doesn’t affect your credit score and doesn’t stop you from taking out credit. It may, however, cause you to have some issues if you’re applying for credit that is processed automatically, like store finance
This is because your file would need to be reviewed and checked manually.
Find out more about these markers on the Cifas websiteopens in new window.
This article is provided by the Money Advice Service.