How to check my credit score: What is it, how does UK system work? Experian, Equifax and ClearScore explained

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With the cost of living crisis hitting household budgets, boosting your credit score could help ease your finances - especially if you’re trying to secure a good mortgage rate

While inflation is beginning to return to more manageable levels, the cost of living crisis is still very much with us.

Households across the UK have been hit by soaring energy bills and food prices. Meanwhile, interest rates have rocketed as the Bank of England has attempted to regain control of the situation, leading to a record hike in mortgage costs.

At best, these twin economic forces have dented people’s buying power. But at their worst, they have decimated personal finances, forcing many people to seek out loans to keep them afloat. Regardless of which camp you fall into, now is the time to check your credit score.

According to a Money and Pensions Service survey of 2,236 UK adults, that was conducted by Ipsos earlier this August, a fifth of people have been declined credit at some point over the past year. With loan products, including mortgages, at their least affordable levels in recent memory, it has arguably never been more important to work towards improving your credit score.

But how do these credit metrics work - and what can you do to boost your score? Here’s a quick guide.

What is a credit score?

A credit score is basically a way of quantifying how reliable you are with borrowing money and paying it back. It’s a three-digit number calculated via a points system that’s based around what appears in your credit report, otherwise known as a credit file. This report looks at how you’ve managed your debts and bills, and includes information like:

  • your registration on the electoral register
  • how much you owe lenders, e.g. mortgages or overdrafts
  • unscheduled missed or late payments
  • any county court judgements (CCJs) you’ve had
  • whether your home has ever been repossessed
  • if you’ve ever been declared bankrupt.

Your credit report won’t include information about your income, savings or student loans. Likewise, you will not be penalised for having a criminal record, ill health or too many TV subscriptions. Indeed, TV subscriptions are set to boost some people’s credit scores with some lenders.

The higher your credit score, the more likely you are to get loans (image: Adobe)The higher your credit score, the more likely you are to get loans (image: Adobe)
The higher your credit score, the more likely you are to get loans (image: Adobe) | Adobe

If your credit report shows you have always paid your debts on time, it will reflect well on your credit score. Likewise, if you’ve failed to pay back loans or bills, it will lower your rating. Your credit score may also be held back if you’ve never borrowed money before (for example, by using a credit card). The reason is that it makes it hard for lenders to assess how risky it would be to lend money to you.

Why are credit scores important?

Credit scores are vital if you need to borrow money, for example in the form of a mortgage on a house. When arms-length government organisation the Money and Pensions Service commissioned a survey into credit in August 2023, 38% of those who’d been denied a loan said a ‘poor credit history’ had been a key reason for their rejection.

All lenders will look at your score before deciding whether to agree to give you money. A poor credit score may mean you’re rejected for a loan, or that you have to pay a higher interest rate - meaning you’re paying back more on top of what you borrow. It could even see you struggle to rent a property or get a mobile phone deal.

And given potential employers can look at your credit score, it could even affect your chances of landing a job - especially if you’re trying to work at a finance-orientated business.

How do you check your credit score?

There are four principal credit reference agencies (CRAs) in the UK who securely hold your credit history data and compile credit reports on it. These are:

  • Experian
  • Equifax
  • TransUnion
  • ClearScore

They all score credit slightly differently, but you’ll tend to fall into the same category across all of them - so there’s no magic number for what a good score is, you just want to fall into the ‘excellent’ category if at all possible.

You can check your credit report for free across all of them (a legal requirement) - and checking it will not affect your credit score. Your score may only be affected if you’ve been the subject of a ‘hard credit check’ - i.e. an in-depth look at your credit history by a lender.

It’s worth checking your credit score at least once a year to ensure you’re not being defrauded (image: Adobe)It’s worth checking your credit score at least once a year to ensure you’re not being defrauded (image: Adobe)
It’s worth checking your credit score at least once a year to ensure you’re not being defrauded (image: Adobe) | Adobe

Taking a look at it is a good idea as not only will it give you an idea of how you can improve your credit rating, but it will also allow you to dispute any information you feel is inaccurate. Common errors often found on reports include:

  • not having the right surname on your report after getting married
  • having the wrong address
  • outstanding bills that have already been paid

If you see a loan or a credit card on your credit report that you don’t recognise, it could also be a sign that you’ve been a victim of a scam. Should you find something that isn’t quite right, you should contact the credit rater you got your report from to find out what next steps you should take. For example, they may suggest locking your credit score to stop any fraudulent applications for loans in your name.

How can you improve your credit score?

Fortunately, if you’ve got a bad or lower than expected credit score, there are quick ways of improving it. Even if your credit score is generally ok, these quick wins could lower the interest rate you’re offered on a loan or boost your chances of getting a big mortgage. As recommended by Experian, here are some easy ways to improve your credit rating:

  • Register on the electoral roll at your current address - it makes it easier for companies to confirm your identity.
  • Build up credit history - you can do this by: opening a bank account (and keeping the overdraft well below the limit), getting a free or cheap-to-use credit card that you pay off on time every month (you can instruct your bank to set up a direct debit to help you do this), and taking out a small form of credit, e.g. a mobile phone contract.
  • Pay your bills on time and in full every month.
  • Keep your credit utilisation low - this is the percentage of your credit limit you use. So, if you have a limit of £2,000 and you’ve used up £1,000, your credit utilisation will be 50%. A lower percentage should help your score go up.

There are also several ways to maintain your credit score once you’ve improved it:

  • If you need a loan, don’t apply to different providers at the same time - as we’ve already mentioned, every hard credit check appears on your credit report. Multiple hard credit checks from lenders could suggest you’re overly reliant on credit and may lead the lender to think you’re in financial difficulty (even if that’s not the case).
  • Close unused accounts - it may make it appear as if you have too much credit to handle.
  • Keep up with payments - several missed payments could suggest your relationship with a company has broken down, putting prospective lenders off letting you borrowing money from them.
  • Only borrow what you know you can afford - debt, CCJs, or bankruptcy stay on your credit report for up to six years and will severely damage your score.
  • Keep an eye out for fraud - fraudsters could negatively impact your credit score by, for example, taking our credit cards in your name and not paying them back. Keep an eye out for this type of activity on your credit report.

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