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Things that Affect Your Credit Score

Mar 5, 2019

Your credit score is a vital aspect to consider when applying for credit of any kind. If you are in the market for a loan, mortgage, a mobile phone contract, or a short-term loan, you are likely to have to rely on your credit score to allow you access. Bad credit, or little credit history could both be a hindrance to gaining access to certain financial services and products, especially from traditional lenders and high street banks. Your credit score is therefore vitally important to your financial future, and serves a purpose for a number of reasons. Do you know enough about your own credit score though, and understand how it functions?

The first thing to understand is that you do not have just one credit score. In the UK there are three credit agencies, each with a unique credit file held for your individual credit and financial history. These are:

Each credit agency has its own way of calculating your credit score, utilising different information depending on the criteria at play and the data that they have access to. Your record could for instance look positive to one agency, and negative to another, depending on what the company that has requested a credit file is looking from you specifically.

There are general steps you can take though that are good for your credit score and will help you build a positive score in all agency credit files. Some companies often like to see that you have borrowed money on occasion, even if this shows you have required assistance in the past. What this does is display clear evidence as to whether you can stick to an agreement and make repayments on time. This is vital when making a decision on whether to confirm an application for a payday loan, for example.

The basic rules for building a good credit score are:

  • Borrowing only what you can afford to repay, always meeting minimum repayments at least
  • Set up direct debits to make regular payments to companies, such as mobile phone providers and credit card providers
  • Pay off credit regularly, and if full whenever you can
  • Maintain a consistent account with your bank, as companies love stability
  • Register to vote and update any inaccuracies on your records, as this helps confirm your identity
  • Look out for any inaccuracies on your credit file and request they are updated immediately

Of course, there are responsible lenders available that can offer you payday loans even if you do have adverse credit, or a bad credit history. These responsible lenders are available to help you when you have been turned away by traditional lenders, so always be aware that there are options open to you, even at the worst times. Understanding your credit score, and working out a plan to improve it will only help you in the long run however, so always be aware of how it is affected, and actions you can take to ensure it remains on an upwards curve moving forward.

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