A third of UK adults don’t know their credit score, according to new research – even though it plays a key role in whether you’re accepted for a credit card, loan or mortgage.
The latest figures from credit reference agency TransUnion highlight how confusing the system can be. But understanding how your score is calculated – and what you can do to improve it – could help you access better rates.
Here, Which? clears up the confusion around credit scores and explains how you can check yours for free.
Why your credit score matters
Your credit score plays a key role in whether you’re approved for a credit card, loan or mortgage – and the rate you’re offered.
A higher score could unlock better deals, while a lower one might mean paying more or being turned down. With half of all credit card balances currently incurring interest (according to the latest figures from UK Finance), it’s worth knowing your score and understanding how to improve it.
TransUnion’s latest research found that, while many people plan to apply for credit, not everyone is taking steps to improve their score. Those aged 60 and over were the least likely to check theirs – even though they were among the most likely to apply for a new credit card in the next year.
- Find out more: how to check your credit score for free
What your credit score means
Your credit score is a three-digit number that is used to indicate how reliable you are at borrowing and repaying money, based on information in your credit report
There are three main credit reference agencies in the UK – Experian, Equifax and TransUnion – and each uses its own scoring system. That means your score can vary depending on where you check it.
The table shows how scores are typically rated by each agency:
Where to check your credit score for free
You have a legal right to access your statutory credit report for free from any credit reference agency, but these reports don’t include your score.
All three credit reference agencies offer paid subscription services but there are ways to view your score for free.
Experian
The free Experian account allows you to view your credit score along with a summary of your total credit. This account doesn’t give you access to your credit report, so you’ll either have to request a statutory report or sign up to Experian’s paid service to get a more detailed understanding of your credit history.
The platform can be connected to Experian Boost, which allows you to improve your score by adding council tax payments and subscriptions to your credit report.
Equifax
You can view your Equifax score for free via Clear Score. The credit broker is an intermediary company that reports Equifax data and makes money from commissions on products you take out via its website.
TransUnion
You can see your TransUnion report and score for free via its Credit Karma service, which also provides tips on how to boost your score.
Alternatively, you can join the Money Saving Expert Credit Club, which grants you access to your TransUnion report and score along with two new Money Saving Expert ratings, designed to give you a deeper understanding of your ability to borrow.
All three at once
If you want to view all three credit scores at the same time, you can sign up for a free 30-day trial with CheckMyFile. However, you’ll need to remember to cancel your subscription – once the trial ends, you’ll be charged £14.99 a month.
Could your score cost you?
Lenders will use your credit report to decide whether to grant you credit and what interest rate to give you. Generally, the best interest rates are given to customers with high credit scores.
Analysis carried out on behalf of credit broker Totally Money found that people with low credit scores could be charged over £800 more per year in interest than those with good ratings.
If you do find out that you have a low score, it’s worth checking your credit report for mistakes that could be affecting your rating.
An investigation carried out by Which? last year revealed that over a third of people who checked their credit reports found errors, from false debts to incorrect addresses.
- Find out more: best credit cards for bad credit
3 ways to improve your score
While the credit reporting system can seem convoluted, remembering these three general rules will help you build and retain a healthy score.
1. Don’t miss payments
Your credit report reflects your borrowing history and repayments. Paying on time – whether it’s a credit card, loan or utility bill – shows lenders you’re a reliable borrower.
Missed or late payments can harm your score and stay on your report for up to six years.
2. Try not to use all of your credit
Using too much of your available credit can make you appear overextended to lenders. This is known as your credit utilisation ratio – the proportion of your total credit limit that you’re using.
For example, if you have a credit card with a £2,000 limit and you’ve spent £1,600, your credit utilisation is 80%.
If you’re struggling with credit card debt, you can access free, impartial help from organisations such as Citizens Advice, StepChange or National Debtline.
- Find out more: how to pay off your debts
3. Keep accounts open – even if you don’t use them
The longer your credit history, the better. Even if you don’t use an older credit card, keeping it open (as long as it doesn’t come with fees) can help boost the average age of your accounts – something lenders often look for.
- Find out more: best credit card deals
