Your credit score, or credit rating, is crucial because it can affect your ability to borrow money or access products such as credit cards or loans. It’s also vital to have a good credit score when applying for mortgages, and having a low score can stop you getting access to the best mortgage offers.
Does it cost money to know my credit score?
You can check your score for free and if it isn’t in the best shape, there are things you can do to improve it. There are some companies that have a monthly cost, but sometimes they can contain more comprehensive information.
What is a credit score?
Your credit score is created from information held in your credit report, also known as your credit file. The exact number of your credit score can differ between lenders or even between different products from the same lender, depending on the criteria used in assessing you as a potential customer.
There are three main credit scoring agencies in the UK: Equifax, Experian, TransUnion. They all use different scoring systems and all of the free credit score sites in the UK use one or more of these three sites as the basis for their information.
What is a good credit score?
Different lenders have their own standards for rating credit scores.
However, if you have a good score with one of the main credit reporting agencies, it’s more than likely you’ll have a good credit score with your lender.
A good credit score with:
- TransUnion is scoring 4 out of 5
- Equifax is scoring over 420 out of 700
- Experian is scoring over 880 out of 999
What is my credit score used for?
The information held on your credit file and your credit application form might be used to decide:
- whether to lend to you
- how much to let you borrow
- how much interest to charge you
Are lenders looking at the most recent information on my credit file?
The most recent information on your file will have the most impact, as lenders will be most interested in your current financial situation. That said, your financial decisions, good or bad, from the last six years, will still be on record.
If your credit report shows a few missed payments, you might be charged higher interest by lenders or might not be eligible for some loans as they will be worried that you’re a higher risk and so will protect themselves by excluding you.