How to check your UK credit score

Interest rates may be coming down and reducing the cost of borrowing, but it is your credit score that can make a big difference to the type of financial product you can access.

Your credit score plays a "key role" in your chances of being approved for a credit card, loan or mortgage, said Which? "and the rate you're offered".

Despite its importance, just a third of UK consumers are "currently aware of their credit score", said TransUnion.

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What is a credit score?

It is a measure of how well you have managed debt and other financial accounts such as loans and credit cards.

Your score is based on information compiled by three credit reference agencies: Equifax, Experian and TransUnion. Each has a different scoring or rating method.

Banks are "secretive" about how they use the scores, said MoneySavingExpert, but there isn't "one credit rating or score that is a market-wide judge of your creditworthiness", plus there's no "blacklist of banned people".

The better you are at paying off debts, the higher your score.

Actions such as missing payments, maxing out credit cards, and applying for credit too often "can negatively affect your score", Experian said.

When you apply for a loan or a credit card, the prospective lender will want to know how well you have managed your finances in the past, and "how reliable you are when it comes to repaying money". The higher your credit score, "the better your chances of being accepted for credit, and at the best rates".

Bad credit and a low score "can affect more than just your finances", said MoneySuperMarket. They can increase insurance premiums and cause problems when you try to rent a property, or set up a new phone or utility contract. Some employers even require credit checks during job applications.

It is "sensible" to check your credit score occasionally for any mistakes, said The Times. You should check the information held with all of these agencies, added National Debtline, as the details held by each may differ.

How do I check my credit score?

Experian, TransUnion and Equifax are the three main credit reference agencies.

They "can see into our financial souls", said the Financial Times. They hold records of your finances on a credit report, which details information including your current and former bank accounts, car finance, mobile phone contracts, credit cards and loans, any late payments, county court judgments (CCJ) and bankruptcies.

Bad marks such as a default, CCJ, or bankruptcy will stay on your record for six years.

Everyone has a legal right to request a statutory report on data that credit reference agencies hold on them, but this won't include your score.

Equifax will let users check their credit score and report for free for 30 days before a monthly £14.95 charge kicks in, unless you cancel.

Experian has a free online service to check your score but you will need to take a 30-day trial to view your actual report and there is a £14.99 monthly charge afterwards.

TransUnion has its own free Credit Karma service that lets you access your report and score for free by registering with your email. It will also update you when your score changes so you can check for any errors.

Alternatively, ClearScore uses Equifax's data to provide your score and report for free and MoneySavingExpert's Credit Club uses Experian to do the same.

You can check all three reports and scores in one place by using Checkmyfile.com. It has a 30-day free trial followed by a monthly charge of £14.99. You have to enter a number of personal details including name, age, address and debit card details to confirm your identity, but the site won't take any money if you cancel before the first 30 days are over.

You also need to answer a few questions about any credit cards, loans and mortgages you have held. The service should then give you an overall score out of 1,000, as well as details of your payment history.

If any information on your credit reference file is incorrect, the National Debtline charity said, "you have a right to ask the agency to remove or correct the information".

Each of the main credit reference agencies has a scale for what it considers a "'good' or 'excellent' credit score", said Which? but it's "not a guarantee that all lenders will extend credit to you or treat you in the same way" as each lender has its own system.

How can I improve my score?

It is important to pay bills and loans on time, every time, to maintain a high score. Setting up direct debits is one of the easiest ways to ensure payments are not missed.

But "even the wealthiest Britons are at risk of 'credit invisibility'", said the Financial Times. Good savings and income do not register as they do not predict repayment behaviour.

"Not having products like credit cards is also something that will limit future lending decisions – which could come as a shock to those who are careful with money," the newspaper adds.

While renting doesn't automatically boost your score, said Metro, there's a "little-known route" for tenants to get the same benefit known as rent reporting. Services like CreditLadder and Canopy give tenants the option to register and each rental payment is reported directly to agencies including Experian, Equifax and TransUnion.

Keeping your details on the electoral roll up to date is also an "easy way" for anyone to boost their credit rating, said ThisIsMoney. In addition, you could use a credit builder credit card if you have a poor score as these can increase your rating and help those "who may not be accepted for standard cards".

Other tips include having a bank account and if you have an overdraft, said LoveMoney, staying within your limits can "help you collect some positive credit history". Closing any unwanted bank accounts can also help boost your score, as lenders may see all your accounts and the "potential to borrow lots of money and get into debt, even if you never do".

Avoid making lots of requests in a short period of time, said The Sun, as "this can be seen as a sign of financial distress – and each application will be recorded on your file".

Use a "soft-search" eligibility calculator on a comparison website or if offered by a provider, which doesn't show on your credit report, to show how likely you are to be accepted.

Financial associations, such as a joint bank account, with someone who is bad with money could also harm your own score and borrowing prospects.

"Breaking these financial links with someone who has a poor score can be difficult," said HealthWell, "but could boost your credit score within a month."