What is credit scoring?
Your credit score is personal to you. It's an indicator of how likely you are to get credit. The higher your score, the more likely an application is to be successful.
Your score changes with your habits and behaviours. A few things that can improve your score are:
- making at least your monthly minimum payment and monthly instalments by the due date
- keeping your credit balance as low as possible. It’s better to have more credit available than you use
- keeping your older accounts, the average age of your accounts forms part of your score
- registering to vote at your current address.
Just as good habits improve your score, poor habits can reduce it. Try not to:
- use all your available credit. The percentage of the credit you use is called 'utilisation'. The lower this is, the better your score
- make lots of credit applications. These are classed as a ‘hard search’ which damages your score. Use eligibility checkers when you can as these don’t affect your credit score
- miss any payments
- go over your credit limit or overdraft.
You can check your score with any of these providers. Each has their own rating and scoring scale. This means your score might be different on each one.
We know that circumstances can sometimes mean you’ll miss a payment, go overdrawn or go over your credit limit. Otherwise known as being in 'arrears’.
Being in arrears can harm your credit score. If you’re in arrears for an extended period a default can be marked against your credit file. This lasts for 6 years.
If you agree an arrangement to pay back arrears, this will be marked on your credit file. This might also reduce your score, but it will show that you’ve agreed to repay your arrears.