Credit Scores: A Complete Guide
Credit scores explained
As soon as you head into adult life, your credit score becomes relevant to you. Whether you want to take out a personal loan, credit card, mobile phone contract or a mortgage, you’ll need a good credit profile.
Consistently checking your credit score and report enables you to keep track of your finances and make smarter financial decisions to improve your credit score, increasing your likelihood of being accepted for the best credit cards, loans and mortgages in the UK.
What is a credit score?
Your credit score is a figure found within your credit report that represents your creditworthiness and repayment tendencies, using information available from credit reference agencies (CRAs) to determine the financial risk you pose to lenders if you were to borrow from them. The higher your credit score, the more likely you are of being accepted for credit.
Your credit score can be retrieved from a variety of UK credit reference agencies (CRAs) available online, but you may notice that your score varies from company to company. This is because each CRA has different scoring systems and factors they consider when calculating your credit score. When it comes to checking your credit history, a financial lender may use a few different CRAs to get an overall view of your rating.
CRAs – in the simplest of terms – act as data sources for lenders, but if you want to know more about them, we explain everything you need to know in our complete guide here.
What is a Credit Report?
Your credit report is essentially a file including information regarding your credit history, using information from a variety of sources – from credit card companies and banks, to government organisations and the electoral register.
Credit reports vary with each CRA, but they generally include the following:
- Personal details (name, date of birth, home address)
- Financial associates
- Any loans you’re currently paying off
- Accounts and providers
- Public record and electoral roll information
- Possible cases of fraud
What is a credit score out of?
As we mentioned previously, each CRA has different scoring systems, meaning that the maximum score can vary with each credit checking website. The main CRAs in the UK are Experian, Equifax and TransUnion, and each has a slightly different maximum credit score. There are many more reputable CRAs to get your credit score from – some are mentioned further below or you can read our reviews on all CRAs available here. They all present your credit score on some sort of colour-coded scale, meaning that you get a general idea of where you stand in comparison to the rest of the UK and the maximum score, but here’s a list of those CRAs’ top credit scores:
- Experian’s maximum credit score: 999
- TransUnion’s maximum credit score: 710
- Equifax’s maximum credit score: 700
As they have varied maximum scores, what they deem a ‘good’ credit score is also inconsistent as their score brackets are different.
A 'good' credit score
There’s no such thing as a ‘universally’ good credit score, as all the CRAs use different credit scoring systems and determining factors, but we can tell you what a good credit score is with each agency.
What is a good credit score with Equifax?
Equifax is one of the largest CRAs in the UK, and it’s likely that if your credit score is rated out of 700, its data has been provided by them.
Here’s how their scoring brackets range:
- Very poor – 0-279
- Poor – 280-379
- Fair – 380-419
- Good – 420-465
- Excellent – 466-700
As you can see, Equifax credit scores rated 420 and over are considered to be ‘good’, anything from 0-379 is classified as poor or very poor, and the average credit score in the UK is listed as 380.
Having a ‘very poor’ (0-279) credit score with Equifax means that your chances of being accepted for credit are very low, whereas an ‘excellent’ (466-700) score suggests that you are likely to be eligible for the best credit cards, loans and mortgages.
What is a good TransUnion (Noddle) credit score?
TransUnion’s (formerly known as CallCredit) maximum credit score of 710 is somewhat similar to Equifax’s, but their scoring bands are very different. While Equifax have a ‘good’ credit score bracket of 420-465, TransUnion note that scores from 604-627 are ‘good’. Who knows how they came to such different conclusions, despite having such similar maximum scores!
TransUnion’s credit score range is as follows:
- Very poor – 0-550
- Poor – 551-565
- Fair – 566-603
- Good – 604-627
- Excellent – 628-710
TransUnion provides data to clients (such as credit reference agencies - Noddle, Checkmyfile and TotallyMoney) so that they can produce credit scores and reports for their customers. For more information about how the company works, read our TransUnion review here.
What is a good Experian credit score?
Experian rate your score from a maximum of 999, higher than other CRAs, but includes a category system identical to that of both Equifax and TransUnion – going from ‘very poor’ to ‘excellent’.
Here’s how Experian’s credit scores range:
- Very poor – 0-560
- Poor – 561-720
- Fair – 721-880
- Good – 881-960
- Excellent – 961-999
Interestingly, Experian’s ‘very poor’ score range is similar to TransUnion’s, but that’s essentially where the comparisons end.
Why is Checkmyfile useful?
Due to the score ranges of each CRA varying so much, and what’s considered a ‘good’ credit score being so inconsistent between them, it’s worth checking your credit with Checkmyfile. Checkmyfile gathers your credit history and scores from all the main CRAs (including Crediva) and presents them in one place; saving you a significant amount of time, allowing you to organise your credit in a far easier, more straightforward manner and ultimately, giving you access to a much more detailed credit report.
Checkmyfile does the job of comparing your different scores for you, all in one place. For more detail, read our Checkmyfile review here.
Getting mortgages, loans and credit cards with bad credit
If you have a bad credit score, you are still able to get credit from some lenders, but you should expect low initial credit balance, as well as high-interest rates and higher fees. You’ll also be chased immediately if you miss any payments, as people with bad credits usually get shorter grace periods.
Basically, you’ll be able to borrow less, but you will be required to pay a far higher interest rate than those with a better credit history.
How to get a credit report in the UK
In the UK, you’re able to retrieve a credit report from a variety of online sources and credit checking websites, which obtain information from CRAs such as Equifax, TransUnion and Experian. These credit checking websites include the likes of TotallyMoney, Credit.com, CreditWise, Credit Karma (Noddle), and MoneySuperMarket’s Credit Monitor.
Typically, all you need to sign up to these websites is your name, date of birth, home address and a valid email address. It usually takes no more than 5-10 minutes to sign-up and receive your credit score and report, although some credit checking websites require credit card details and may take longer.
The majority of the credit checking websites listed above provide a free credit report, but there are some that are subscription-based and cost around £5-10 a month, such as Equifax and Experian CreditExpert.
Can I check my credit score for free?
Checking your credit score has never been easier, and the amount of free credit reports available online means that even the paid services are under pressure to reduce their prices.
You usually get more detail with paid credit report products, but if you simply want a free credit score and some general information, the following websites will be of use to you:
- Checkmyfile (free 30-day, no-obligation trial)
- ClearScore (free credit score)
- Credit.com (free credit score)
- CreditWise (free credit score)
- TotallyMoney (free credit score)
If you’d like a more in-depth insight into what information is held on you, you can learn more about the paid services available in our Experian, Equifax and Checkmyfile reviews.
What is my credit score based on?
Your credit score is based on the financial information held within your credit report; which includes all the data regarding your borrowing and repayment behaviour.
This includes any mortgages or credit cards you have opened, whether you’ve missed any payments, any debts you have, your current accounts, and much more. Each CRA bases their credit score on slightly different factors, but they should all provide you with a general idea of how much of a borrowing risk you pose in the eyes of lenders.
How to improve your credit score
If you receive a bad credit score from one credit checking website, be sure to compare it with at least one other company, as one below-average score doesn’t necessarily mean that your credit is poor. If you check your credit score with a range of CRAs, most easily done by using Checkmyfile, and have a consistently bad credit score, then you should start thinking about why that is and how you can start improving your score.
If you want to improve your credit score in the UK, there are many ways to do so. To start, you should ensure that you make all your payments on time – whether it’s paying utility bills or making monthly credit card payments. It’s important that you avoid making payments late, as it will decrease your creditworthiness and increase your likelihood of being rejected when you apply for credit with other companies.
If you’re not yet paying monthly bills, you should consider doing so as long as you can afford it, because utility bills are an authentic form of credit and give solid proof that you are able to make regular repayments.
You should ensure that you are signed up to the electoral register (electoral roll), and check your credit report regularly for any mistakes or inaccurate information, as this incorrect data could be having a negative impact on your credit.
In terms of your finances, you should close any unused accounts, cut ties with any financial associates that may be dragging your credit down, and deactivate any inactive joint accounts.
Does a credit check affect my credit score?
More often than not, checking your credit score will not have any impact on your overall report, as the majority of online services entail ‘soft checks’.
Most credit reference agencies online use soft checks, which are performed as searches to determine your eligibility for credit, without undertaking a full and thorough analysis of your credit history. Companies aren’t able to see soft checks on your credit report, and they do not impact your credit score in any way.
Contrastingly, ‘hard checks’ occur when a company conducts a full examination of your credit history. Companies do hard checks when you apply for credit, and each check can have a negative impact on your credit score, which explains why too many credit applications can damage your long-term creditworthiness.
Before you sign up to any credit checking website, it’s worth ensuring that they only conduct a soft search, rather than a potentially-damaging hard check.