Everything you need to know about your credit score in the UK

Credit score


May 2023

Everything you need to know about your credit score in the UK

Learn everything about your credit scores in the UK, understand how scores are calculated, what factors impact them, and how to check and maintain a good score.

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Are you curious about credit scores and how they affect your financial future? Great! Let us break it down for you, hopefully in an easy-to-digest way.

Credit scores are like an overall rating of your credit history. They show lenders, credit card companies and insurance providers how trustworthy you are when it comes to paying back credit. Credit reference agencies such as Experian, Equifax, and TransUnion generate these scores in the UK.

You can check these scores online. However most services online will give you only one of these scores and often you have to pay for the service. At Pillar we’ve decided to include all three of them for free in our mobile app, have a go if you’re curious!

A good credit score can make it easier for you to get approved for loans, credit cards, insurance policies or even a phone contract. If you are new to credit or an international nomad who just arrived in the UK from abroad you might also find it necessary when searching for a place to rent as letting agents usually run a soft search on you when assessing your profile.

In this article, we'll go in-depth on everything you need to know about credit scores. We'll talk about how they're calculated, what factors influence them and how you can check and maintain a good score. Plus, we'll give you some tips on improving your score and protecting it from fraud and identity theft. Let's dive in further!

Need tips tailored to you? Download Pillar Monitor for free, there’s loads of cool insight into how to improve your credit score.

What’s a credit score?

How credit scores are calculated

Credit reference agencies (CRAs) gather information from various sources to determine your credit score. This information includes your payment history, credit usage, outstanding debts, and other factors that show how likely you are to repay a loan, a credit card balance or a mortgage. In the UK, there are three main credit reference agencies, Experian, Equifax, and TransUnion. Each agency has a different scoring range:

  • Experian scores going from 0 to 999, 
  • Equifax scores from 0 to 1000
  • TransUnion scores from 0 to 710. 

The higher your score, the lower the risk you pose to lenders. But here is the catch, lenders might use only one credit reference agency to make a decision and not all lenders report to the three CRAs. That’s why at Pillar we’ve designed our app so you can keep an eye on all three of your scores and the use of our products (credit cards and rent reporting) are getting reported to all three credit reference agencies.

What affects my credit score

Here are some of the most crucial factors that impact your credit score in the UK:

  • Payment history: Late or missed payments can bring down your credit score. Make sure to always pay on time. This includes your utility bills!
  • Credit utilisation: How much credit you use compared to how much you have available also matters as it proves you can manage a credit line effectively. Try to keep your credit utilisation low, below 30% if possible.
  • Length of credit history: A longer credit history can give your score a boost as it shows lenders you have a track record of responsible credit use.
  • Credit mix: Having a mix of different types of credit, like loans, credit cards, and mortgages, can also help with your score.
  • New credit applications: Opening too many credit applications too quickly can raise red flags for lenders, making them see you as a higher risk. This can play a role in a decrease in your credit score.

Other factors can affect your credit score and simple things like getting on the electoral roll can help you improve. With the combination of such factors and your individual circumstances, it is always advised to keep in mind at all times that your score might go down as well as up.

Why do I have different credit scores

In the UK, the most commonly used credit scores is the Experian Credit Score, which ranges from 0 to 999. This score is based on information from Experian's credit reference database and gives an overview of your credit history. Equifax and TransUnion are two other well-known credit reference agencies, with Equifax scores ranging from 0 to 1000 and TransUnion scores from 0 to 710.

Remember, while credit reference agencies may use different methods to calculate scores, they all use similar information to evaluate your creditworthiness. Your credit score may also vary slightly between agencies because they have slightly different information in their databases and some lenders don't report to every agency. 

At Pillar we have your back when it comes to building your score. Pillar Monitor is designed to give you a good overview of your three scores and when using our credit cards or our rent reporting feature you can rest assured that your activity is reported to the three CRAs.

What’s a good credit score in the UK

Three scores, three meanings of what a good credit score is

As previously mentioned there are three credit reference agencies producing three different scores. Each one of these institutions has defined ranges to define what a good score is. The below table summarizes what a good credit score is for Experian, Equifax and TransUnion:

TransUnion Experian Equifax
Excellent 628 to 710 961 to 999 811 to 1000
Very Good 671 to 810
Good 604 to 627 881 to 960 531 to 670
Fair 566 to 603 721 to 880
Poor 551 to 565 561 to 720 439 to 530
Very Poor 0 to 550 0 to 560 0 to 438

Access to credit

A good credit score - or an excellent one of course - opens the doors to better terms when it comes to loans, credit cards, and insurance policies.

Lenders use it to gauge the risk of lending to you, and a high score shows them you're a low-risk borrower.

This means you'll have an easier time getting the credit you need to reach your financial goals. On the other hand, a low credit score can make it harder to get credit and may result in higher interest rates, fees, or even loan rejections. 

Lower interest rates and fees 

When you have a good credit score, lenders offer lower interest rates and fees since you're seen as a low-risk borrower.

This can save you a fair bit over the life of a loan or credit card, as well as lower monthly payments.

You might not need or want credit now but it’s always good to understand early on what opportunities a good credit score might open for you in the future, should the need for credit arise.

Insurance premiums

Your score also affects the cost of insurance premiums. Those with high credit scores are seen as lower risk, so insurance providers may offer them lower premiums.

On the other hand, if you have a low credit score, you may end up paying higher premiums, making insurance coverage more expensive. Some new players in the insurance sector such as Marshmallow are also trying to bridge the gap that exists for people with a thin credit history.

Improving your financial health

Maintaining a good credit score shows lenders that you're responsible with credit and can improve your overall financial health.

Checking your credit score regularly and taking steps to improve it can help you identify and correct errors, protect your identity from fraud and prevent future financial problems.

Protecting your identity

A good credit score can also help protect your identity from fraud and identity theft. Regular credit score and report checks can help you detect any unauthorised activity and take action to resolve it. You can also place a credit freeze or fraud alert on your credit report for extra protection.

Renting and phone contracts

Something usually little-to-not-known is also that a good credit score might also help you if you plan to rent a home. Letting agents and some landlords will do a credit check to see if you've had problems paying bills in the past.

If you want a phone contract you will typically have a credit check run on your profile too. This is an issue that many foreigners settling in the UK will face upon arrival, no matter their credit score in their country of origin!

How do I improve my credit score?

Pay your credit or bills on time

Payment history is one of the most important factors that affect your credit score. Late or missed payments can significantly impact your credit score, so it’s important to pay your credit card balance, your loan monthly repayments or your bills on time.

You can set up automatic payments to ensure that you are paying on time, or set reminders to avoid forgetting a payment.

Get on the electoral roll

Your address history is of importance to lenders. By registering on the electoral roll, you demonstrate to lenders that you have a stable address history and that you are a responsible and trustworthy borrower. This, in turn, can positively impact your credit score and help you secure the credit you need.

It's simple and easy to register on the electoral roll. All you need to do is visit the website of your local electoral registration office and follow the steps to register. Being registered at your current address, even if you are renting will not only help improve your credit score, but it will also give you the right to vote in elections and be heard on important issues that affect your community.

Keep your credit card balances low

Credit utilisation, or the amount of credit you’re using compared to the credit limit you’ve been granted is also a key factor in determining your credit score.

Keeping your credit card balances low can improve your credit utilisation and positively impact your credit score. Aim to keep your credit utilisation below 30% of your credit limit to get the best leverage over your credit score building effort.

Maintain a long credit history

A long credit history is a weighing factor in determining your credit score. Maintaining your credit accounts for a long period of time can help establish a positive credit history, which can help organically improve your credit score over time.

Limit credit inquiries

When you apply for new credit, a credit inquiry is made in your name. Too many hard credit checks in a short period of time can negatively impact your score.

Limiting the number of credit inquiries can help avoid a decrease in your credit score.

How do I protect my credit score?

Monitor your credit report regularly

Regularly monitoring your credit report is important for identifying any unauthorised activity, errors, or potential fraud. You can obtain your credit report from one of the UK’s credit reference agencies, Equifax, Experian or TransUnion, or better keep an eye on these 3 scores and your credit report for free thanks to Pillar Monitor.

If you sign up for a credit monitoring service like Pillar Monitor you will have access to notifications that can alert you to any changes on your credit report.

Secure your personal information

Protecting your personal information, such as your name, date of birth, and address is crucial for protecting your score. You can help secure your personal information by using strong passwords, avoiding public Wi-Fi when accessing sensitive information, and shredding sensitive documents.

Oh, and removing your information on the parcels you receive once you’re ready to throw the boxes away, can be a good habit too.

Avoid Fraud and Scams

Fraud and scams can have a devastating impact on your credit score. Be cautious of unsolicited emails, phone calls, or letters that request personal information or money.

Always verify the identity of anyone who contacts you before giving out personal information or sending money.

Report Fraud and Identity Theft

If you suspect that you’ve been a victim of fraud or identity theft, it’s important to report it to the appropriate authorities as soon as possible. You can report fraud to the police and credit reference agencies, which will flag your credit report to alert lenders of the fraud.

Protecting your score is crucial for maintaining a good financial reputation. Monitoring your credit report regularly, securing your personal information, avoiding fraud and scams, reporting fraud and identity theft,  are all ways to protect your credit score in the UK.

By taking these steps, you can safeguard your credit score and ensure that your financial reputation remains intact.

The TLDR for the busy ones!

We know that’s a lot of information! In summary, having a good credit score is an essential component of your financial well-being in the UK. Lenders rely on it to assess your creditworthiness and determine the terms and conditions of loans or credit cards. A solid credit score opens doors to credit opportunities, loan and mortgage approvals, and attractive interest rates. But not only this your credit score also plays a role in renting a place to live, getting a phone contract or when getting insurance.

The good news is, there are things you can do to improve your credit score! You can start by paying your bills on time, keeping your credit utilisation low, monitoring your credit report regularly, and protecting yourself against fraud and identity theft. Remember, credit scores are not permanent and you can take steps to improve them. Hop on Pillar Monitor to get started!

Monitor your credit scores with Pillar. It's free!