It pays to know your credit score, it's your financial footprint.
Why your credit score matters
There are real benefits to staying on top of your credit score.
That’s because a strong credit score can translate into real perks, like access to a wider range of products and services including loans, credit cards and mortgages. You could also enjoy better interest rates and more generous credit limits. Meanwhile, if your credit score isn’t quite where you want it to be, knowing the score is the first step to improving it.
Either way, it pays to know your credit score. It’s your financial footprint – the way companies decide how financially reliable you are. A higher credit score means lenders see you as lower risk.
Checking your credit score is free – and it’s your right
You have the legal right to check your credit report for free. What’s more, it could be done in a few quick steps. That way, if any mistakes have crept into your credit file, you can catch them and have them removed. Here’s how to check your credit score.
How does your credit score compare?
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Most of the top credit reference agencies have five categories for credit scores: excellent, good, fair, poor and very poor. Each creditreference agency (CRA) uses a different numerical scale to determine your credit score – which means each CRA will give you a different credit score. However, you’ll probably fall into one category with all the agencies, since they all base theirscore on your financial history.
| Credit Score | Experian | Equifax | TransUnion |
|---|---|---|---|
| Fair | 721-880 | 380-419 | 566-603 |
| Good | 881-960 | 420-465 | 604-627 |
| Excellent | 961-999 | 466-700 | 628-710 |
A fair, good or excellent Experian Credit Score
Experian is the largest CRA in the UK. Their scores range from 0-999. A credit score of 721-880 is considered fair. A score of 881-960 is considered good. A score of 961-999 is considered excellent(reference:https://www.experian.co.uk/consumer/guides/good-credit-score.html).
A fair, good or excellent TransUnion Credit Score
TransUnion (formerly Callcredit)is the UK’s second largest CRA, and has scores ranging from 0-710. A credit score of 566-603 is considered fair. A credit score of 604-627 is good. A score of 628-710 is considered excellent(reference:https://www.finder.com/uk/transunion).
A fair, good or excellent Equifax Credit Score
Equifax scores range from 0-700. 380-419 is considered a fair score. A score of 420-465 is considered good. A score of 466-700 is considered excellent (reference:https://www.finder.com/uk/equifax).
To get a peek at the other possible credit scores, you can go to 'What is a bad credit score'.
What a fair, good or excellent credit score means for you
The better your credit score, the more choices you’ll have when it comes to applying for a loan or credit card. That’s the bottom line.
If you have a fair credit score and are approved for a credit card, you may be offered a slightly higher interest rate. Your initial credit limit may also be on the lower side. But if you make your payments on time and demonstrate financial stability, you might be able to have your limit increased after 6-12 months.
If you have a good credit score, your chances of being approved for loans and credit cards increases. You’re also more likely to be offered a more competitive interest rate, as well as a more generous credit limit.
Finally, an excellent credit score makes borrowing money and getting credit cards much easier. It’s also more likely to get you the best available interest rates and generous credit limits.
How your credit score is determined
All the leading credit rating agencies rely on similar criteria for deciding your credit score. Mostly, it comes down to your financial history – how you’ve managed money and debt in the past. So if you take steps to improve your score with one agency, you’re likely to see improvements right across the board.
Just remember that it may take some time for your credit report to be updated and those improvements to show up with a higher credit score. So the sooner you start, the sooner you’ll see a change. And the first step to improving your score is understanding how it’s determined.
Here are some of the factors that can harm your credit score:
- a history of late or missed payments
- going over your credit limit
- defaulting on credit agreements
- bankruptcies, insolvencies and County Court Judgements (CCJs) on your credit history
- making too many credit applications in a short space of time
- joint accounts with someone with a bad credit record
- frequently withdrawing cash from your credit card
- errors or fraudulent activity on your credit report that’s not been detected
- not being on the electoral roll
- moving house too often.
If you want to dig a little deeper into how your credit score is set, 'The truth about your credit score' will provide even more insights. No matter how good or bad your credit score is, there’s often things you can do right now to improve your credit score. Some are free and require just a few steps, like putting yourself on the electoral roll. Others will take a bit longer, like changing the way you manage your bills.
What's next?
Now that you know what your credit score means, here are some handy tips for improving it.
How to improve your credit score
