Your credit score is more than just a number; it’s a key part of your financial health.
Whether you’re applying for a loan, a mortgage, or even a mobile phone contract, your credit score can determine the outcome.
But what exactly is it, and how can you make sure yours is in good shape? Let’s take a closer look.
What is a Credit Score?
Your credit score shows lenders how likely you are to repay anything you borrow. It’s based on your past use of credit and overall financial habits, helping lenders assess the risk of lending to you. Generally, the higher your score, the better your chances of being approved for credit at competitive rates.
In the UK, three main credit reference agencies (CRAs) generate these scores: Experian, Equifax, and TransUnion. They collect data from public records, banks, utility companies, and lenders. Each CRA might calculate a slightly different score, as not all lenders report to all three agencies.
What affects your Credit Score?
Several factors influence your score, including:
- Credit history: how often you’ve borrowed and repaid credit in the past.
- Bill payments: whether you pay your bills on time.
- Types of credit: the mix of accounts you have, such as credit cards, loans, or mortgages.
- Account age: older accounts with a solid history tend to boost your score.
- Credit use: how much of your credit limit you’re using compared to what’s available.
- Credit applications: multiple applications in a short period can lower your score.
- Address stability: your postcode and residential history can also have an impact.
Negative factors: like missed payments, defaults, County Court Judgments (CCJs), Individual Voluntary Arrangements (IVAs), debt management plans (DMPs), and bankruptcies can bring your score down.
Why should you care about your credit score?
A good credit score can open doors to lower interest rates, pre-approved credit offers, and higher credit limits.
On the other hand, a poor score might mean being denied credit or being offered it at a higher cost.
Checking your credit report regularly is also important to spot any fraudulent activity, such as credit being taken out in your name without your knowledge.
How to improve your credit score
Building and maintaining a strong credit score takes time, but its possible – and these tips can help:
- Pay on time: ensure you meet payment deadlines for bills and credit accounts.
- Use credit wisely: borrow only what you can afford to repay and keep your credit use low.
- Limit new applications: avoid multiple credit applications in a short period.
- Check your report: look for errors and correct any inaccuracies.
- Cancel unused accounts: if you have unused credit cards, consider closing them to reduce the risk of overspending.
- Register to vote: Being on the electoral roll can improve your credit score.
How to check your Credit Score
You can check your credit score for free using services like ClearScore or by visiting one of the three main CRAs. MoneySavingExpert.com also offers a free tool called Credit Club that can help you understand your score and ways to improve it.
How we can help
At The Money Co-op, we’re here to support you in building a brighter financial future. If your credit score is holding you back, we may be able to help.
We offer a range of affordable loans tailored to members’ circumstances, and we consider a range of factors when assessing if a loan is affordable.
Unlike BNPL, our loans don’t just give you access to fair rates – they also give you a chance to build your credit score by repaying on time.
For those with poorer credit, our Family Loan may be an option. Because repayments are made from a member’s Child Benefit payments, it has a higher approval rate than our standard loan products. This means we can help most applicants, except those with the worst credit history.
The Family Loan also helps members to strengthen their finances by borrowing affordably, building savings and improving their credit profile. Successful repayments are reported to the credit rating agencies so that the Family Loan account will help members to borrow elsewhere in future.
We also encourage saving alongside borrowing. By setting aside a little money each month, you can create a financial safety net for unexpected expenses, helping you rely less on credit in the future.
If you’re unsure where to start, visit our website for budgeting tools and resources or speak to us directly—we’re here to help.
Take control of your Credit Score
Understanding your credit score is the first step to improving it. Whether you’re looking to borrow, build your score, or simply get your finances back on track, the credit union is here to support you every step of the way.
Ready to take action?
Explore our loans and savings options or get in touch to find out how we can help you achieve your financial goals. Together, we can make managing money simpler and more positive.
