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Last updated on 18th of December 2019

Everything you need to know about the credit score

When it comes to applying for any kind of finance, there is one element in particular that plays on every applicant’s mind – the credit score.

While the score itself isn’t always the sole recognised measurement of your credit-worthiness, the report behind that score certainly has a part to play and for this reason, more and more of us are paying attention in order to determine how likely we are to get the loans or finance that we’re looking for.

From car insurance or utility bills, to short-term and longer-term loans, your credit score can completely alter the likelihood of acceptance depending on its apparent health. Whether you're already looking into how to check credit score UK reports, or you're new to the system, here, we’re taking a deeper look into just what a credit score is and how you can manage, maintain and raise your existing score.

What is a credit score in the UK?

Introduced by the Fair Isaac Corporation (FICO), the credit score model was one of the first and currently most popular in use today. These statistical numbers evaluate how creditworthy a consumer should be considered based upon their existing credit history, and lenders can use this to evaluate whether an applicant is likely to repay the debts on time.

With the VantageScore credit system also widely in use today, and other scoring systems also available, credit scores can range between 300 and 850 in most cases dependant on the Credit Reference Agency (CRA) that you choose (Experian’s scores go up to 999) but regardless of the company, the higher the number, the more trustworthy you are deemed financially.

It acts as your financial CV, taking into account everything from details of your existing bank, credit and savings accounts, as well as whether you’re on the electoral roll, your payment history, your current and previous addresses and details of anyone that may be linked to you financially. If you have any CCJs or have filed for bankruptcy in the past, this will also be recorded in your credit report and, therefore, have an effect on your final credit score.

What is a good credit score in the UK?

While an increasing number of lenders, credit agencies and even utility providers are looking at more than just your UK credit score, having a good score can put you in a strong position for acceptance. For more finance or credit providers, a score over 650 on both the FICO and VantageScore systems is considered to be fair or good, but this can also differ from CRA to CRA.

Take Experian, for example – despite being one of the UK’s most popular reference agencies, their scoring system is a little different. Their scores range between 0 and 999, with ‘good’ scores considered to be anything between 881 and 960, which is much higher than the standard 650. They do also consider anything between 721 and 880 to be ‘fair’, at which level most lenders and finance providers are still likely to accept or consider your application.

On standard FICO scoring systems, the ratings are split as follows:

  • Exceptional – 800 to 850

  • Very Good – 740 to 799

  • Good – 670 to 739

  • Fair – 580 to 669

For VantageScore credit systems, the ratings are split as follows:

  • Excellent – 750 to 850

  • Good – 700 to 749

  • Fair – 650 to 699

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What is a bad credit score in the UK?

As with good credit scores, all lenders and financial institutions, as well as the credit reference agencies you use will all have their own threshold for what is considered to be bad or ‘poor’ credit. Whether you’ve been searching for ‘how bad is my credit score UK?’ or you’re dreading running a credit score UK check, the pressure of a bad credit score can be stressful at the best of times and so understanding what it is and how it can be managed is important to getting back on your feet financially.

Under the FICO scoring system, any credit score under 579 and above 300 is considered to be ‘poor’, with lenders often apprehensive about lending to those in this category. Every creditor will have its own ideal threshold, but a poor credit score can make it difficult to get accepted for loans or get the best rates on utility bills, finance and more.

In most cases, the credit reporting companies won’t tell you outright whether your score is considered good or bad for this reason, however, it’s important to be aware of the health of your credit regardless. Any score below 600 is often considered in need of work, and you should always be working to manage and maintain your credit and finances regardless.

How can I check my credit score in the UK?

If you are unsure of your current credit score and are searching for 'how to check my credit score in the UK', you can find this out using a number of free or paid credit reporting or reference agencies. The UK’s main credit agencies are Experian, Equifax and TransUnion, however, companies such as ClearScore could also be used for a quick, free insight into your credit status.

1. Experian

This household name earned its spot at one of the UK’s main credit reference agencies for a reason – they offer trustworthy information that is considered accurate, and are the agency that many lenders will opt for if requesting your credit report. Experian isn’t free, however – while you can use their free trial to get a brief idea of your current credit state, you will need to pay monthly to gain access to further details and future reports. It’s an intensive service, too, with regular text updates if anything changes on your report so you can keep track of how you’re managing your money.

2. Equifax

Another paid service, Equifax also offer free trials but is a little cheaper than Experian. This service offers full credit monitoring and pride themselves on offering a simple, easy-to-understand report that eliminates the jargon consumers might not always understand. You can enter as much information as you want, too, to get the most accurate reports possible, whether that’s additional banks, cards, email addresses and more.

3. TransUnion

Previously called CallCredit, TransUnion is another of the UK’s main paid CRA platforms, offering insights into your financial state, as well as adverts for credit cards, loans and more. There is also assistance available for consumers, who can request help with their reports, credit in general or for help if they have become victims of fraud.

4. ClearScore

ClearScore provides you with a score using the Equifax platform, but for free. You won’t need to shell out any costs to get an idea of your credit score and while the reports might not appear as in-depth initially, you are still given all of the information you need to manage and maintain your score accordingly. They can offer the service for free through their offering of different deals from providers of credit cards, loans and more.

How to build your credit score in the UK

One common issue, particularly amongst younger people, rests in the fact that a lot of consumers don’t actually have much credit history, if any, for CRAs to use when calculating scores. In these cases, you need to know how to build your credit score. It’s time to move past the searches for ‘what is my credit score UK?’ and onto building one for yourself.

One way to do that is through membership loans. At CreditSpring, our membership loans are designed to help you borrow what you need with no interest. The only additional fees you pay are your membership fees and with two pre-approved loans available every year of £500 for Plus and £250 for Core memberships, you can borrow what you need and repay monthly to not only spread out cost, but help improve your credit report as a whole.

The same can be done with other forms of finance. In some cases, mobile phone providers may be willing to offer you a phone contract if you don’t have an existing credit history, after which you can build a credit score with the help of the monthly contracted repayments.

Credit cards are another way of building up credit but should be applied for with caution. Aim for a 0% credit card and only spend on it what you know you can afford to repay quickly. This way, you can build up a credit score without putting yourself into debt and risking building up a poor one.

How do I improve my credit score in the UK?

If you have an existing credit score and are looking for how to improve your credit score UK credit reference agencies can usually offer advice specific to your situation. However, improving a credit score can be done in a number of ways, some of which may be simpler and faster than others.

The most obvious but time-consuming and arguably most difficult methods in which to improve a credit score is to make repayments regularly and reliably. Every time you take out any form of finance, you should take every care to ensure you can afford repayments before you ever click submit. While lenders do conduct affordability checks in most cases, it’s best to be comfortable and confident in your own budget first.

You should always aim to keep your utilisation of credit low, too. The more loans or credit forms you have, the higher your debt-to-income ratio will be and the higher of a risk you appear to lenders and credit agencies. Generally speaking, you’ll want to utilise as little credit as possible on your cards, pay off the finance you do have as quickly as possible and ensure that you don’t damage your credit score by taking out further loans unnecessarily.

If you are unsure of your current credit utilisation levels, check your report or contact the Money Advice Service for help. Every check made against your report can also leave a mark on your credit report, so it’s important to be aware of which lenders or credit companies will be looking at your report and whether they offer no-impact checks in order to protect your score. Minimising the number of checks on your report at any one time can protect your score in the long term.

How long does it take to improve my credit score in the UK?

Building up a credit score takes time, the length of which will depend on the health of your score, to begin with. If you had a poor credit score from the start, building up a healthier, better credit score can take months of regular repayments and debt management to showcase you and your finances as being trustworthy once again. If you’re looking for faster solutions that might improve your credit score or give it a small boost to start, you could try:

  • Register on the electoral roll to prove your place of residence. Some lenders won’t consider your application if this step hasn’t been taken.

  • Check all of your details on your report for errors. An incorrect address or misspelt email could have an adverse effect on your credit history due to issues with the data the report is using.

  • Consolidate high-interest debts into one, low-interest loan. This will reduce the number of outgoing payments you have and make things more manageable

  • Clear any financial data from over 6 years ago. Credit Reference Agencies can only hold financial details for up to 6 years unless ordered by a court. You can ask any CRA to remove details if they are still being used.

Managing and maintaining a good credit score isn’t always easy, particularly if times are tough financially. With the right loans and financial support, however, you can borrow what you need, make affordable repayments and maintain a good credit score while you’re at it. For further advice, visit moneyadviceservice.co.uk

Interested in learning how Creditspring can help build your credit?

Check your eligibility today and see how Creditspring can help!

Learn More