Credit scores
What a credit score is, and how to check yours.
A credit score is a number that sums up how reliable you look to a lender, based on how you have handled money and borrowing in the past. A better score means easier borrowing and better rates. You can check your own without harming it, and there is no single national score: different agencies work it out in their own way.
What a credit score is
When you apply to borrow, a lender wants to know how risky you are. A credit score is a number that sums that up: it shows, roughly, how risky you may look to a lender. A higher score suggests lower risk, a lower score suggests higher risk.
It is built from your credit history, which is the record of how you have borrowed and repaid in the past. The history is the story; the score is the number that summarises it.
What shapes it
A score is not random. It is shaped by things like your payment history (whether you pay on time), how much of your available credit you are using, how long you have used credit, and how many recent applications you have made.
Handling borrowing well, over time, builds a stronger picture. Missing payments or applying for lots of credit at once pulls it the other way.
Checking, and the myth of one score
You can check your own credit score, and doing so does not harm it, so it is worth knowing where you stand. What surprises people is that there is no single, universal UK credit score: different agencies collect slightly different information and work it out in their own way, so your number can vary depending on who you ask.
That is why the exact number matters less than the pattern behind it. A steady history of paying on time looks good wherever it is measured.
- 'Checking my score damages it.' Checking your own score does not harm it. You can look as often as you like.
- 'There is one official credit score.' There is not. Different agencies work it out differently, so your score can vary between them.
- 'A credit score and a credit history are the same thing.' The history is the record of your borrowing and repayments; the score is a number based on it.
Key terms
- Credit score
- A number that sums up how risky a borrower you appear.
- Credit history
- The record of your past borrowing and repayments.
Not examined
Check your understanding
- What is the difference between a credit score and a credit history?
- Does checking your own credit score harm it?
- Name two things that affect a credit score.
Show suggested answers
- The history is the record of your borrowing and repayments; the score is a number based on that history.
- No.
- Any two of: your payment history, how much of your available credit you use, how long you have used credit, and recent applications.