What Goes Into A Credit Score - Explained

Sep 25th 2018

Embargo 00.01 Wednesday 3rd October 2018 New research by credit experts TotallyMoney reveals exactly what goes into credit scores and how they’re calculated, allowing customers to understand better the reasons for any changes to them. TotallyMoney generates credit scores and reports using data provided by credit reference agency Callcredit. However, what goes into your credit score has largely been kept under wraps until now.

Payment Behaviour (48%)

According to the research, payment behaviour comprises 48% of your credit score and is the biggest contributing factor overall. It considers on-time payments, late and missed payments, and how recently the payments occurred across all credit accounts. Bad behaviour in this segment is therefore likely to have the biggest negative impact on credit scores.

Credit Usage (21%)

Credit usage comprises 21% of your credit score, and considers a person’s total available credit and how close they are to their limits. It’s thought that keeping credit usage below 25% of an individual’s available credit can help keep a credit score healthy.

Credit Experience (21%)

Credit experience comprises 21% of your credit score, and looks at a person’s credit accounts and how long they’ve been using them. Sensibly using credit products over a longer period could increase credit scores, whereas those new to credit or those who have limited experience using it might find their scores are lower.

Desire for Credit(5%)

Desire for credit comprises 5% of your credit score. It looks at credit account openings and closures, and when these openings and closures took place. Closing a credit account suggests there’s less desire for credit and could increase a credit score, whereas opening new accounts suggests more eagerness for credit and could lower a score.

Credit Types(5%)

Lastly, credit types comprise 5% of your credit score. This refers to an individual’s experience of managing different types of credit, such as mortgages, loans, credit cards, and even gym memberships. Sensibly handling a variety of credit products could improve a credit score. The research has also debunked the myth that getting rejected for credit lowers your credit score, which is not true for credit scores provided by credit reference agency Callcredit. However, this only applies to the number. Since lenders can see when you’ve been rejected for credit, it could lower your Borrowing Power, or your ability to get accepted for credit. Based on the research, TotallyMoney has created an interactive infographic to illustrate exactly what goes in a credit score, to allow customers to see quickly what affects it. Andrew Hagger, Personal Finance Expert from moneycomms.co.uk said: “We're constantly nagging customers to check their credit score and telling them how important it is but fail to help them understand how it works. Explaining which behaviours and actions have the biggest impact on your score is vital if we really want people to take credit scores more seriously. There's been too much smoke and mirrors in this industry for years, so it's good that customers are being given a greater insight which will help them manage their score more effectively. I'd highly recommend signing up for a service where your score is emailed to you every month - that way you always know where you stand as it's always at the forefront of your mind.” TotallyMoney CEO Alastair Douglas said: “For a long time, people have had to rely largely on guesswork and anecdotal advice on how their credit score is calculated and what they can do to improve it. “Hopefully, this research will help customers better understand their credit scores, so they can home in on what makes their score rise and fall. “A good place to start is with TotallyMoney’s Free Credit Report. Once you find out what your score is, you’ll be in a better position to improve it from there.”

For more information, please contact James McCaffrey

About TotallyMoney

  • Free credit report providers and credit experts, TotallyMoney, are on a mission to improve the UK’s credit score and help people move on up to a better future.
  • TotallyMoney launched its free credit report in late 2017, and today has 3 million customers.
  • TotallyMoney is the highest rated free credit report provider on Trustpilot. They are also 2018, 2019 and 2020 winners of Best Free Credit Report Provider at Moneynet’s Personal Finance Awards, showing recognition from both its customers, as well as within the wider industry.
  • TotallyMoney is backed by Elliott Advisors (UK) and Scottish Equity Partners (SEP), following a £29 million investment announced in January 2019.
  • TotallyMoney is also a Sunday Times Best Company as well as a UK’s Best Workplace 2019.