Your credit score can feel like a mystery number that decides whether you get a phone contract, a mortgage or a loan. The good news is that it is not random. A handful of things make most of the difference, and you can influence nearly all of them.
Here are the five biggest factors, in plain English, plus how to check your own file and what to do if your score is not where you would like it to be.
Who works out your credit score?
In the UK there are three main credit reference agencies: Experian, Equifax and TransUnion. Each one keeps its own file on you and uses its own scale, so your score will look different with each. Lenders do not actually see these scores. They look at the information in your report and run it through their own checks. Still, the same habits that improve your score with the agencies tend to make you look better to lenders.
The five factors that matter most
1. Paying on time
This is the big one. Every loan, credit card, mobile contract and many utility accounts report whether you paid on time. A single late payment can knock your score, and missed payments, defaults and County Court Judgments stay on your file for six years. Setting up Direct Debits for at least the minimum payment is one simple way to avoid missing a date.
2. How much of your credit you use
Lenders look at how much you owe compared with your credit limits. If you have a £1,000 limit and a £900 balance, it can look like you are stretched, even if you pay on time. Keeping balances low against your limits, and paying down cards where you can, usually helps your score.
3. How long you have had credit
A longer track record gives lenders more to go on. That is why closing your oldest credit card can shorten your record, even if you rarely use it. An account that stays open and is paid off in full can show years of steady management.
4. Being on the electoral roll
Registering to vote at your current address helps lenders confirm who you are and where you live. It is quick and free to register to vote on GOV.UK. If you have moved recently, make sure you update it.
5. How often you apply for credit
Every full application leaves a hard search on your file that other lenders can see. Several in a short space of time can make it look like you are desperate for money. Eligibility checkers and quote tools that rely on soft searches do not affect your score. Our guide to why no credit check loans are a warning sign explains the difference between soft and hard searches.
Check your credit report for free
You have the right to a free statutory copy of your credit report from each agency, and all three also offer free online access. Look for accounts you do not recognise, addresses where you have never lived, and payments wrongly marked as late. If something is wrong, ask the agency to correct it. If something is accurate but there is a reason behind it, such as a period of illness, you can add a short notice of correction to explain.
Also check who you are financially linked to. If you once had a joint account with an ex-partner, their credit history can affect yours. Once you no longer share any finances, you can ask to be disconnected from them.
Borrowing when your score is not perfect
A low score does not automatically mean every door is closed. Some lenders look at your whole situation, not just your credit history. At Logbook Money, we base our decision on the value of your vehicle and whether the repayments are affordable, and bad credit is considered. You can get a personalised quote with a soft search that will not affect your score. Find out more on our bad credit loans page.
Secured borrowing costs more than many mainstream options and puts your car at risk, so compare carefully first. Our guide to comparing borrowing costs can help. This article is general information, not financial advice. If debts are already causing problems, free advice is available from StepChange and MoneyHelper.
Your car may be repossessed if you do not keep up repayments on a loan secured against it.
