Credit Where It’s Due: Your Credit Score

Your Credit Score is something that will impact you at some point, but if you don’t know what it is or how it works can be bewildering. Credit score is quite simply a way of letting a lender know how well we manage our finances and it does this by taking into account our expenditure, our loans, our credit cards, our debts and more.

Every time you need to make a big investment, such as a house, car, or a bank loan, your credit score will be checked first to ensure the lender that they will get the money back. Hence, if you have a poor credit score, this is likely because you have handled money poorly in the past and are regarded as less reliable in paying that back.

Your credit score changes all the time since we use money every day. Simply making sensible financial decisions is enough to maintain, or rebuild a good credit score.

What might affect your credit can seem obvious: if you think something could damage your credit score, it probably does.


1. Overdrafts

Every time you have used your overdraft facility; this will have negatively affected your credit score. If you went wildly into your overdraft in your student days, then scoring can be more forgiving.If you have had an overdraft facility and never or rarely used it, this can positively affect your credit score as it proves you are deemed financially responsible, which would make a lender more likely to lend to you.

2. Credit Cards

If you’ve applied for a credit card and used it over a longer period of time, then paid it off immediately; this will prove you’re financially stable. Credit scores understand that everything costs money and needing to borrow money isn’t judged; only your choices on how to use that money and how quickly you pay it back.

Therefore, if you have a credit card, avoid maxing it out and then paying it back slowly in small instalments. This negatively affects your credit score. It’s important not to apply for lot of credit cards at once. It can be mistaken for poor budgeting, overspending and poor money handling generally. Instead, try applying for one, using it frequently, paying it off as soon as possible before applying for another.

3. Avoid Cash Advances

Don’t look for a cash advance on your credit card; avoid payday loans for the same reason.

4. Late Payments

If you’re late making payments whether on scheduled repayment plans or on rent, even one late payment can reflect poorly on your credit score. If you are planning to make an investment, save up enough that you can also pay any financial commitments on time in the 12-month run up to applying for whatever it is that will require your credit score to be checked.

5. Partner’s Credit Score

If your partner has poor financial management, try and keep your payments separate by avoiding shared bank accounts.

6. Your Address

One of the first things you’ll be asked when establishing your credit score is if you are on the electoral roll. It’s a way of monitoring where you’ve lived. Unfortunately, moving around a lot tends to reflect poorly on credit score so minimise if you can.

It’s important to check your credit score frequently. You can check it online easily. Experian is an example of a credit scoring site that offers a free trial.


Credit scoring goes up to 999 in the UK.

Below 720: Poor

721+ : Fair

881+: Good

961+: Excellent

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