Improving your credit score gives you a better chance of being accepted for credit products in the future. It will also give you more choice. A low credit score means your applications for credit can be refused, and if you are approved, you may only be able to borrow small amounts or will be charged higher interest rates.
Your score can be found on your credit report, which is a document you can access through any of the Credit Reference Agencies (CRAs). There are three main Credit Reference Agencies in the UK: Experian, Equifax and TransUnion. They each have different tools and apps to help you access your credit report and understand your score.
Experian’s is called CreditExpert, Equifax data powers ClearScore, and TransUnion give you access to the information they hold on you through Noddle. Each of the CRAs will assign you a credit score based on your credit history and their calculations. Each Credit Reference Agency uses a different scoring system, so you’ll have a different score with each provider. You should find, that if one agency says your score is “good”, the others will say the same, even though their scoring systems are each a little different.
Your credit history, which is summarised by your credit score, features details of what you’ve borrowed, when and how often, and how you’ve managed the repayments. If you’ve ever missed payments, defaulted on an account or taken formal measures to manage your debt such as an Individual Voluntary Arrangement (IVA) or other debt management solution, this is included in your credit report, too.
All of this contributes towards your score. This is why it is so important that when you borrow, it is a decision you’ve considered carefully, and make sure that you can manage the repayments along with your other monthly commitments.
If you miss payments or have had to enter into debt management plans, this will have a negative impact on your score. But if you keep all your accounts and payments up to date and on time, it has a positive impact and gives you a good score.