Understanding your credit score is important when you’re applying for any sort of credit, because it’s good to know what the lenders will see. To access your credit score, you’ll need to get a credit report. Here’s how to make sense of yours.
Your credit report is put together by independent companies known as credit reference agencies. In the UK, there are three main ones:
These agencies have access to your financial and credit history, and that’s how they put together your report. You can use any of these to get a copy of your credit report. But they differ in what they show you.
For a detailed and thorough overview of everything in your credit record, go to checkmyfile*. checkmyfile takes the information from all three credit checkers and compiles it into on easy report. You can get your copy for free with a 30 day trial (usually £14.99 a month).
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Your credit report is your financial history from the last six years. Let’s make sense of the components of it:
Electoral Roll - your credit report will include whether you’re on the electoral register. This is often the first thing a lender will check because it’s a quick and easy way for them to check your details like your name and address.
Credit accounts - any accounts for loans, credit cards, mortgages, or other financial agreements be in your file. The information will show whether you make repayments in full and on time, whether you have missed any payments, defaulted, and how much of your credit allowance you’re using (known as credit utilisation).
Current account - who provides your current account and details of your overdraft amount.
Personal details - your date of birth, name, current address and any previous addresses.
Financial links - details of anyone you share a financial link with, like a joint account or joint credit agreements.
Public records & fraud information - any outstanding County Court Judgements (CCJs), bankruptcies, individual voluntary arrangements (IVAs) and repossessions. It’ll contain any information around fraud – whether you’ve been involved in any fraudulent activity or if someone has committed fraud in your name.
The credit reference agencies create your credit report from each of these things. They use this information to calculate your overall ‘credit score’.
A credit score is a three-digit number given to you by a credit reference agency. A credit reference agency are companies like Experian, Equifax or TransUnion. A credit score is used to judge someone’s creditworthiness. The higher your score, the better you look to potential lenders.
A credit score is based on your credit history. Your credit history contains the number of open accounts you have, your total number of debt, repayment history. Lenders and banks use credit scores to judge how likely it is that you can repay loans on time.
Find out how to find your credit score in our Guide: How to find out your credit score.
There are two main reasons you should check your credit report and credit score:
When you’re applying for new credit agreements, like a mortgage.
If you’re considering applying for a mortgage, loan or credit card, knowing what your current credit score is will help you work out how likely you are to be accepted by the lender.
Having a good idea about whether or not you’ll be accepted by a lender is always a good idea. This is because being refused for a new credit agreement could damage your credit score.
If you haven’t checked your credit report or score for a while.
It’s worth checking your credit report and credit score from time to time. It’s good to check so you stay on top of whether it’s going up or down and you can take action. It’s also good to check so you can spot any mistakes or fraud.
Checking your own credit score won’t have any negative impact on your overall credit history. But if you’re applying for multiple credit agreements this will come up on your report. With this in mind, it can be worth asking a potential lender to perform a ‘quotation search’ or ‘soft credit check’ when you’re after a quote, particularly if you’re shopping around. This stops multiple hard checks being carried out and logged on your credit file.
Your credit score is updated every month. Each lender (your bank, your mortgage lender, credit accounts) reports data about their borrowers to the credit reference agencies on a monthly basis according to their own schedules. That means your individual score can change month-to-month based on your recent activity.
Updated information from one of your creditors or lenders can affect your credit score. Lenders have their own schedules for reporting. They might report to Experian one week, and TransUnion the following week. So exactly when your credit file will be updated depends on their reporting schedules, and when you last updated your checkmyfile report.
With checkmyfile, you can see the most up-to-date information from the four major credit agencies on the day your checkmyfile report is updated.
It’s always worth taking steps to improve your credit score when you’re considering entering a credit agreement.
There’s lots of ways you can improve your credit score if you need to. Some are super simple, like making sure you’re on the electoral roll. Others are longer term, like managing your credit in general.
Our Mortgage Experts are fully-qualified with experience in bad credit, self-employed and complex mortgages. They have a proven track record of getting mortgages for people who’ve been rejected elsewhere.