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Revealed: what goes into a credit score

With the launch of Credit Awareness Week, credit experts TotallyMoney reveal exactly what goes into credit scores and how they’re calculated, allowing customers to understand better the reasons for any changes to them. A YouGov survey of 2,000 commissioned by TotallyMoney also highlights the lack of understanding around the subject of credit reports.

  • Hold the phone: 57% of people surveyed don’t realise mobile phone contract applications are recorded on a credit report
  • A need for education: 38% incorrectly believe student loans are included on a credit report
  • Money doesn’t talk: one in three incorrectly believe their income is recorded on their credit report
  • Misunderstanding: 28% don’t realise that missed credit payments are included on a credit report
  • All for one and one for all: two in three incorrectly believe there’s a universal credit score

  What goes into a credit score? Your credit score explained TotallyMoney generates credit scores and reports using data provided by credit reference agency TransUnion (formerly Callcredit). However, what goes into your credit score is largely been kept under wraps. 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 comprises 21% of a 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 comprises 21% of a 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 comprises 5% of a 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. Lastly, credit types comprise 5% of a 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.   TotallyMoney CEO Alastair Douglas said: “There’s a lot of confusion around what goes into a credit report, and up until now many have had to rely on anecdotal advice on how credit scores are calculated. “Knowing what goes into a credit score will help people address the behaviour types that might be holding them back. “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.”

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About TotallyMoney

With a focus on the one in three UK adults financially under-served by the financial services industry, TotallyMoney is the credit app on a mission to help everyone move their finances forward.

TotallyMoney believes people’s financial data should work for them, and not against them and with more than four million customers, they provide the UK’s only free, live credit score and report.

Its service helps customers understand their financial position and provides personalised recommendations so they can start creating financial momentum. TotallyMoney also works closely with leading lenders, to ensure eligible customers are matched with the right products, underpinned by its robust data, product and tech capabilities.

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We're on a mission to help everyone move their finances forward and gain financial momentum.

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TotallyMoney is owned and operated by TotallyMoney Limited which is registered in England and Wales (Company Registration Number 06205695). TotallyMoney Limited is an Appointed Representative of TM Connect Limited, which is registered in England and Wales (Company Registration Number 06967012) and authorised and regulated by the Financial Conduct Authority in respect of consumer credit related activities (FCA FRN: 511936). Trading Address and Registered Office: Chapter House, 16 Brunswick Place, London N1 6DZ. Credit is available, subject to status, only to UK residents aged 18 or over.

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