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“Credit score” is a phrase you might occasionally think about. Maybe worry about. But do you understand it?

I wasn’t really bothered about my credit score until I had to apply for a mortgage. Only then did I realise just how important it can be. Fortunately, it was all ok and I got my mortgage. In the years since I’ve kept track – and that’s something you should do to even if you’re not going to buy a house.

Here’s my Be Clever Basics guide, and three easy ways you can check your score for free.

Want to watch rather than read? Here’s my video guide from a few years ago.

What is a credit score?

A credit score or rating is a number that gives you an idea of your financial health, and how likely it is you’ll be lent money. This is based on your credit report, and combined they help companies decide if they should lend money to you or not.

Why is a credit score important?

Your credit report is checked when you apply to borrow money.

It’s not just “serious” financial products like mortgages, loans and credit cards that look at your credit report when you apply.

You’re essentially asking for credit when you open a new bank account, get a contract mobile phone and switch your energy, TV and Internet bills. Even paying your home or car insurance by Direct Debit requires a credit check (it’s best – and cheaper – to pay these in a lump sum if you can).

So a low score could mean you get rejected for any or all of these.

Who decides your credit score?

You actually have three scores, calculated by three different companies – Experian, Equifax and Call Credit. They all work your score out slightly differently, and you can’t really compare one with another. When you apply for credit, you don’t know which of these companies’ scores will be used.

What’s a good credit score?

Each company you apply to will have different acceptance criteria and use a different credit agency.

This makes it difficult to know if your rating is good enough. But each credit agency will have its own guide to let you know roughly where you stand.

What negatively affects your credit rating?

First, you need some kind of credit history. So if you’ve never had a credit card or had a utility bill in your name, it’s worth trying to build some credit. This especially affects young people.

The main events to hit your rating include:

  • Any time you are late paying a bill or credit card.
  • If you make a lot of applications at the same time – whether you’re accepted or not. This is more likely to affect big applications such as a mortgage or loan.
  • Any county court judgements, bankruptcies and the like in your name, they’ll also be accounted for.
  • Having too much credit available to you.
  • Incorrect information such as different addresses and phone numbers on your accounts.

How can you improve your credit rating?

Well, paying your bills on time is really important. Setting up Direct Debits can help you avoid forgetting.

Being registered to vote is an essential way to prove who you are and where you live.

It’s also good to show consistency and stability. So that means having the same address and contact details on all your bills and banks.

There are also some credit cards specifically to help people with bad ratings.

Can switching bank affect my score?

I’m a big fan of taking advantage of the offers available with current accounts at the moment. However, each time you open a new account it’ll be shown as a credit application on your file.

It shouldn’t affect applications for things like energy bills and mobile phones, but it might for mortgages.

It’s also worth considering if switching away means you’re terminating a long-term relationship on your score. Most people have been with the same bank for a long time, which gives you some positive credit history. Again, this is probably most relevant if you’re applying for something big.

Free ways to check your three credit reports

You can pay £2 to get your credit report from all the agencies, which is probably better than taking out paid monthly subscriptions. However, there are also ways to get them for free. Here are the ones I use.

Check your Callcredit report for free

You can do this for free via CallCredits’s Noddle website. It’s the most basic of the credit agency sites but gives you all the information you need all year round.

Check your Equifax report for free

Clearscore is a free way to monitor your Equifax score for life. It’s simple to find your way around it and it explains what you’re seeing. Just ignore the products they try to sell you!

Check your Experian credit report for free

Money Saving Expert has its Credit Club. Here you get full access to your Experian files, as well as some added extras such as eligibility for credit cards and loans.


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