How does a credit score work?

There is no single credit score. Each agency calculates its own, and lenders apply their own criteria on top. What the agencies hold is a factual record — accounts, balances, payment history — and that record is what genuinely matters.

What you'll need

• Access to a credit report (optional)

Step by step

1. Get your report from the main agencies.There are several and they hold different data. A problem can appear on one and not another, so check each.
2. Check the basics are correct.Name, addresses, accounts. Errors are common, and an account you do not recognise can be an administrative mistake or a sign of fraud.
3. Understand that payment history dominates.Missed payments are the single most damaging entry and stay on the file for years. Never missing one is the most valuable habit by a wide margin.
4. Keep credit utilisation low.The proportion of your available credit that you use. Below about 30% is generally treated favourably; near the limit is not, even if you pay in full.
5. Register on the electoral roll.It confirms your address and is one of the few genuinely quick improvements available.
6. Avoid several credit applications in a short period.Each leaves a mark, and a cluster looks like financial difficulty. Space applications out where you can.
7. Keep old accounts open if there is no cost.Length of credit history counts in your favour. Closing your oldest card can shorten it.
8. Dispute anything wrong, in writing, with the agency.They must investigate. Include evidence. Corrections do happen and can matter a great deal.

Tips

• Checking your own report is a 'soft' search and has no effect whatsoever on your score, regardless of how often you do it.
• There is no such thing as a credit blacklist. Lenders make individual decisions on the data plus their own criteria.
• If you have no credit history at all, that is its own obstacle. A modest account used lightly and repaid in full builds a record.

Common mistakes

• Paying a company to 'repair' your credit — Nothing they can do is unavailable to you free. Accurate negative information cannot be removed by anyone.
• Closing unused cards to tidy up — It reduces available credit, which raises utilisation, and can shorten your credit history.
• Assuming one agency's score is the score — Each agency holds different data and lenders use their own criteria. One number is only part of the picture.

Questions people ask