What is a credit score?
A credit score is a number given to you by a credit reference agency. There are three credit reference agencies in the UK: TransUnion, Experian, and Equifax. They each provide a different credit score.
This number shows your creditworthiness — that is, how willing banks and other lenders are to let you borrow money.
As a rule, the higher your credit score, the more likely you are to be accepted for credit.
In the UK, there’s no such thing as a universal credit score. Lenders use different criteria to decide whether to give you credit, but they can use your credit score as a basis for this assessment.
How can I check what my credit score is?
Sign up for your Free Credit Report with TotallyMoney and find out what your credit score is. It’s totally free, and you don’t have to provide any card details.
TotallyMoney calculates your credit score based on the information TransUnion hold on you.
The two other credit reference agencies — Experian and Equifax — may have different information about you, and so your credit scores from them will probably be different.
Not all lenders, for example, pass your details on to all three credit reference agencies.
It’s worth checking your credit score with all three credit reference agencies to paint a more accurate picture of your creditworthiness.
However, keep in mind that although some let you check your credit score on a free-trial basis, you may be charged once the free trial ends. Remember to cancel your subscription if you don’t want to be charged.
A good place to start, though, is with your TotallyMoney Free Credit Report.
How is my credit score calculated?
Your credit score is calculated using the information in your credit file. Your score will vary depending on which credit reference agency calculates it.
TransUnion — the credit reference agency that provide the data we use to compile your Free Credit Report — gives you a credit score from 0 to 710.
Experian gives you a credit score from 0 to 999.
Equifax gives you a credit score from 0 to 700.
Using the information they hold on you, credit reference agencies apply a mathematical formula to calculate your credit score.
Your credit score gives an idea of your credit history in number form. The better the score, the better your credit history.
It’s worth noting that these three scores have different scales. A score of 666, for example, won’t be the same across all three credit reference agencies.
What affects my credit score?
Lenders see those with higher credit scores as being more responsible with their money, and are much more likely to accept them for credit.
It’s therefore worth knowing what kinds of things affect your credit score.
Your available credit
If you’re close to using all the credit that’s available to you, lenders might see this as a sign of financial difficulty.
They might think you’re managing your money poorly, which can adversely affect your credit score.
Your credit history
If you’ve missed payments on accounts where you’ve taken out credit, it could have a negative impact on your credit score. It’s best to set up direct debits to make sure you always pay on time.
Your address history
A record of where you live can help improve your credit score. If you’re on the electoral register, for example, it helps lenders verify you are who you say you are.
This can help keep your credit score healthy.
Why might I want to check my credit score?
Checking your credit score gives you an idea of your borrowing potential.
You might want to check your credit score if:
- You’re thinking of getting a credit card or a loan
- You’re applying for a mortgage
- You’re thinking of using credit for a costly purchase, such as a new car or boiler.
- If you do apply for credit, it’s best to use an eligibility checker beforehand. You’ll see how likely you are to be accepted first.
Checking your credit score regularly also helps you monitor any changes. You can easily see if it goes up or down, which may help you identify what you to need to do to get your financial health in order.
Credit scores summarised
- Your credit score is a number that shows your creditworthiness
- Is calculated based on your credit report using a mathematical formula
- You can check it for free with TotallyMoney
- Can be affected by things like your available credit, your address history, and whether you’re up to date with payments
- Useful for checking how likely you are to be accepted for a credit card, loan, or mortgage.