Credit scores (also called credit ratings) help lenders make decisions. When you apply for a loan, mortgage or other credit, lenders don’t just look at the information you provide. They also ask a credit reference agency to check your credit history. That helps them determine whether or not to provide the loan.
Here’s how your credit score is put together:
- Your application form provides the foundation of everything else, so it’s vital you get it right.
- Your history with the lender – they’ll consider any and all previous dealings with you.
- Credit reference agencies provide information about your credit history on request. The main UK agencies are Equifax, Experian and CallCredit. They pull together information from the electoral roll and court records. They also examine the records of other lenders who have searched your file as the result of a credit application. They’ll look into addresses you’re linked to, and any other people you have a financial association with. Finally, they’ll look at any credit checks carried out by utility providers.
- Account information. Various organisations use credit reference agencies to share details about how you manage your finances. These include credit/store card providers, banks, energy suppliers and mobile phone operators.
- Social rent payments for social housing and to housing associations can form part of your credit files.
Agencies will also normally report on payday loan activities, changes to your gas or electricity supplier or how you pay your bills and whether there’s any record of fraudulent activity against your name.
Once all the information has been received, lenders allocate points according to their own systems and preferences. The total number of points is your credit score.
More information on how to manage your credit score can be found on our website.