The Truth About Credit Scores


“I’ve got to get my credit score higher” runs the mantra of many. But just what exactly is a credit score? Who decides it? And what affects it? Darren Beach from Experian CreditExpert* is on hand to explain all.

What is your credit score? When you make a credit application, most lenders want to make sure you’re able to pay it back before they commit to giving you credit. Your credit score is the number that lenders calculate, so they can work out whether or not you’ll be a responsible borrower and likely to repay what you owe them.

How do they work it out? They weigh up the relevant information they have at their disposal – largely based on your actual credit application, any info they already have on you (for example if you are already their customer) and, last but not least, your credit report* from a credit reference agency like Experian. Usually, a higher score means you’re seen as lower risk – meaning you’re more likely to get credit, and at better rates.

What affects it? Your credit score is not set in stone. Firstly, different lenders can score differently, using their own formulae depending on their own factors and what they consider to be important – there really is no ‘magic number’. Secondly, your own credit rating changes along with your own financial behaviour – so you can take steps to improve it yourself.

So how can I improve my score? Well, you can make sure your credit report is up to date and that the info on it is accurate. If you do find anything that needs correcting, contact the relevant lender and ask for an amendment. Even small details like the way your name and address is recorded could have a significant impact. Also check that you’re listed on the electoral roll.

In terms of good habits, try to stay within your credit limits and do try to pay your credit bills on time – every time – as missed or late payments can make you look unreliable, stay on your credit report for at least six years, and this can have a big impact on your score. When you do apply for credit, try not to make applications too close together, as it can make it look to lenders as though you’re under the kind of financial stress that can make repayments tough. Conversely, some credit is better than none at all – without a track record of managing credit, lenders can’t assess you properly.

10 Responses to The Truth About Credit Scores

  1. I’m one of those people who orders his credit report every year just to review it. I feel it is important and is part of my duty to look after my financial health. I have found errors which were corrected but without me knowing they would have stayed.

  2. I had the problem of not being assessed properly at first since I moved from abroad and lenders were asking all the time why I had no credit history at 27, but then I got on the roll and had bills to my name so it was easier.

  3. Moneywise says:

    I would also consider including old loans and credit card history. From personal experience I can tell that lenders like to see how you’ve handled previous loans 😉

  4. Good questions and good answers. It’s so important to make sure you never miss a payment. I think I accidentally missed one in the past 8 years, but besides that I try to pay it off in full every month. My credit score has definitely benefited from being diligent.

  5. I I do check my credit report to ensure that there aren’t any errors…but I don’t worry about my score. I don’t envision needing to use credit for any reason so I don’t really care what my score is anymore.

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