What is a credit score?

Find out what a credit score is and how it affects how lenders see you

A credit score is a tool used by lenders to help determine whether you qualify for a particular credit card, loan, mortgage or service.

Using the information on your credit report and any additional information you supplied as part of your application, lenders use a mathematical model to calculate a numerical score that represents your credit history. This helps to indicate what kind of borrower you are, and how likely it is that you will manage your repayments.

Is a high credit score better than a low one?

Throughout your life, credit scores can play a key role in the financial products you take out. For example, when applying for a credit card or mortgage, your credit score could be used to help determine whether your application is accepted and what you end up paying.

People with a higher score are often seen as lower risk, which means lenders are more likely to give them credit.

It’s worth remembering that every lender follows a different policy for credit scoring. So, if you don’t meet the criteria of one lender, you may still be able to get credit from someone else. However, it’s important to find out why you were turned down before making another application. You should also be aware that too many credit searches in a short time period may be viewed negatively by lenders.

What factors affect your credit score?

Your credit score is based on your credit report. Various different factors on your credit report can cause your credit score to change, including:

  • How much of your available credit you’re using and your total debts
  • Your repayment history
  • The number of hard credit searches on your credit report, which occur when you actively make an application for credit. These leave a footprint on your credit file and lenders may use this information when deciding to grant you credit. On occasion, you may see ‘soft credit searches’ recorded on your credit report, which aren’t visible to lenders. Soft searches may be performed on you to run a background check on you or to confirm your identity and won’t be seen by lenders. 
  • Public records (electoral roll and county court judgments (CCJs))

Simple steps to help manage your credit score

  • Review your credit report and score regularly to ensure the information is correct
  • Ensure you don’t miss any payments
  • Close any unused credit accounts, as having a large overall credit limit may be viewed negatively by lenders
  • Register on the electoral roll

This article was updated in July 2021; all information was correct at the time of writing.

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