The credit score is a ranking method used by lenders to decide whether to give the borrower a loan or a credit facility.
Credit scores range from 0 to 999. A higher score increases the chance of getting approved for credit.
The credit score is calculated by using data from credit reports, which includes:
- Payment history
- Used vs available credit (loans, credit cards, and mortgages)
- Type of credit accounts
- Length of credit history
- The number of accounts
- Details of any court judgements in the borrower's name
- Information obtained from electoral roll or register
- Information about any searches made on a credit file
- Financial associates and their credit score
How to check Credit score?
Checking credit scores will help consumers understand the probability of getting approved for the loan. Users can examine the credit report and can boost the information if needed.
There are three leading credit reference agencies in the UK are Equifax, TransUnion and Experian.
Credit score in the UK
Most credit rating companies divide credit rating into three categories: fair, good, and excellent.
Different ways to improve Credit score
- A name on the voter registration list
- Have a credit facility and maintain good payment history
- Make every effort to pay credit obligations on time
- Examine credit report for any errors
- Check credit report for any unauthorised activities
- Check to see if any financial connection to another individual, such as a mortgage or a shared bank account. If that person has a poor credit score, it will impact your credit score
- Reduce debt percentage utilisation