How to check your credit score for free
You might have discovered that your credit history is less-than-perfect after being turned down for credit. If this is the case, you can ask the lender the reason for this.
To get a more detailed idea of how lenders see you, you’ll need to look at your credit report.
You can access your report from the three main credit reference agencies in the UK: (Experian, Equifax and TransUnion). You can also use our partner, CredAbility who can provide tips and help you set achievable goals – for free.
How are credit scores calculated?
Each credit reference agency uses their own scoring system. This means you can have more than one score, as it will differ from one agency to the next. Their brackets are as follows:
- Experian 0 to 999
- Equifax 0 to 700
- TransUnion 0 to 710 (or 1 to 5)
Plus, each agency may hold different information about you, as some lenders only report to one or two agencies - not all three. This is another reason why your score can vary.
What can affect your credit score?
There are many factors that can affect your credit score, and in turn, your chances of acceptance. Lenders each use their own criteria, and they may weight the factors differently. So, in theory, the same lender could accept you for a credit card but not a personal loan, for example.
However, there are certain things that lenders tend to have in common. When you apply, most will consider the following:
Lenders will want to make sure you can afford to borrow more – on top of your current bills. They won’t want you to overstretch yourself financially and end up struggling with money. To work out how much you can afford to repay each month, they’ll ask for your income and outgoings on your application form.
2. Credit history
Your credit history shows up on your credit report. Lenders will review this when you apply for finance and it can have a big influence on whether you get approved.
You may be surprised to hear that lenders cannot see your credit score on your report. They are more interested in your credit history, which shows them if you are a responsible borrower.
Those with good credit histories normally have good credit scores as a result. If you’ve managed money well in the past, you should come across as low risk, which may improve your chances of approval.
This is because lenders use your past financial behaviour to predict how you will behave in the future. So, it’s important you manage your existing accounts well, as every payment you make goes on your credit history. If you miss a payment or pay it late, a lender will see this and may be reluctant to lend to you as a result. Negative markers will stay on file for six years and just one missed payment can knock your credit score by around 130 points.
Don’t forget your credit history doesn’t just include loans and credit cards. Mobile phone contracts and monthly insurance payments will also show up, so remember to keep up with those too. The easiest way to do this is to set up a direct debit for each of your bills.
3. Credit utilisation ratio
Your credit utilisation ratio shows how much you’ve spent out of your total available credit limits. It’s usually expressed as a percentage. To boost your credit score, you want to aim for a credit utilisation ratio of around 25% or less – meaning you spend a quarter of your available credit limit (or less).
For example, if you have a credit limit of £1,000 overall, try to keep your outstanding balance under £250. If you go over this threshold, lenders may see you as being too reliant on credit. As a result, they may think you are a high-risk borrower, which could put them off.
4. The electoral roll
Lenders check the electoral roll to see if you have a stable address, and carry out identity checks. Registering to vote can boost your credit score by around 50 points. It doesn’t mean you have to vote, but it may improve your chances of being accepted.
To see if you're eligible, visit the Government’s website. It only takes 5 minutes to register online.
5. Making multiple credit applications
Try to avoid making multiple applications for credit within a short period. Otherwise, it could give lenders the impression that you’re desperate to borrow money. Plus, each time you make an application it causes a temporary drop in your credit score. If, for example, you plan to apply for a mortgage soon, you may want to put other credit applications on hold for the time being.
6. Joint finances
If you’ve shared a financial product with someone else in the past, (e.g., a joint mortgage or bank account with an ex-partner), their credit history may impact how lenders see you. It won’t impact your credit score, but if the other party has a bad credit history, it could reflect badly on you.
There is a way around this though. You can ask the credit reference agencies to apply a notice of disassociation to your credit file. If they agree, your financial link to the other person will be undone, meaning their credit history will no longer have an impact on you.
7. Mistakes on your report
Simple errors on your credit report can also show as red flags to lenders. These could include old surnames or spelling mistakes, for example. Perhaps one of your accounts has the wrong address or a closed account is still showing as open. If you spot a mistake, contact the lender involved and/or the credit reference agency to get it fixed.
Also, if you notice an account or transaction you don’t recognise, there’s a chance you’ve fallen victim to fraud, in which case contact your lender immediately.
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Intelligent Lending Ltd (credit broker). Capital One is the exclusive lender.