What exactly is a Credit Score?

A credit score is a number that lenders will use to assess the risk of lending money to a borrower, it shows how financially responsible you are. There are three credit agencies, Experian, Equifax and TransUnion who compile credit scores based on the information in your credit file. Each agency will report a slightly different score but all will paint a similar picture of your credit history. The score can range from 300 to 850, but the higher the score the better.

Things Which Affect Your Credit Score

More than ever before Lenders are gathering more and more personal data to help them decide whether to lend money to you for things such as purchases on HP and Personal Loans, so whilst you might think that keeping up with your loan repayments and clearing your credit card will automatically keep your credit score high, you might want to consider some of the following surprising things which may affect your score.

     Applying for Credit

Any new application you make for credit such as a new credit card or loan, it is most likely that a credit check will be made. This credit check will go on your file. What’s called a ‘hard enquiry’ is the standard check made by credit lenders and this will affect your credit score. It also tells a story of exactly how much credit you are applying for.

The Electoral Roll

Lenders these days are more likely to look beyond payment histories when deciding if you can be trusted to pay back a loan, so even if you are the perfect borrower and meet all your repayments this may not be enough. One of the most important factors they can look at is whether or not you are on the electoral roll. If you are not registered to vote then your credit score will suffer, it allows lenders to verify you at your address.

Mobile Phone Payments

Your mobile phone bill payments can seriously affect your ability to successfully apply for credit. If you miss your mobile phone payments then your credit score can take a serious hit. It is vital that you keep on top of your payments, especially when you get to the end of the contract. Make absolutely sure that there is no outstanding balance, because if it is not cleared there will be trouble for your credit score.

Paying in cash

You may think that paying for everything in cash and not having anything on credit is a good way to maintain a good credit score. However, in doing this it doesn’t tell lenders anything about your payment history or about whether they can trust you to make repayments and on time. The only way to prove this is to show it. You should never put something on credit that you can’t afford, but if you can’t prove that you can manage credit you are going to find it hard to get credit.

Unused Cards and Accounts

Having several bank accounts and credit cards may seem harmless, especially if you no longer use them. However, lenders will look at how much credit you currently have available to you and this will include credit cards and overdraft limits. Therefore, make sure that you cancel any cards and accounts that you no longer use or need.


If you are in any way struggling to manage your money, contact StepChange for advice and help.

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