Your credit score directly affects your ability to secure loans, credit cards, and other lending services. Knowing how to build a good one is an invaluable skill for all, since we all want access to the best lenders, with the best interest rates, on the best terms.
Your credit score (or rating), is determined by the data contained within your credit report (or file). This report tracks your spending habits, such as how you spend, how you save, if you borrow, and subsequently, if you pay borrowed money back on time.
Your credit score number will be between 0 at the lowest, and 999 at the highest. Different scores are divided into categories. If you are within the top two categories- good (881-960) and excellent (961-999)- then your chance of success in a credit application is very high. In contrast, if you get a score of fair (721-880) or below, then your prospects are very limited.
However, it is important to note that this number often differs from lender to lender, dependent on their specific criterion for assessing prospective clients.
The main things that your score will determine for lenders will be: whether to lend to you; how much to lend to you; and how much interest to charge you.
The three main credit scoring agencies in the UK are Experian, Equifax and TransUnion.
These agencies hold your financial information, which is then used by lenders. All of these agencies offer you access to both your credit report and score. This process is free and incredibly simple!
We at Gow & Partners encourage you to check these at least once a year, since even minor errors can cause problems for credit applications down the line. If you have any questions relating to Credit reports/scores, or credit applications more generally, then do not hesitate to contact our dedicated team of accountants on 01254 589799.
There are many straight forward things you can do to improve your credit score. The most effective and assured methods are as follows: