What Is a Credit Score?
A credit score is a three-digit number that lenders use to assess how likely you are to repay borrowed money. The higher your score, the more financially trustworthy you appear to banks, mortgage providers, and other lenders. It influences whether you're approved for loans, credit cards, and even rental applications — and what interest rate you're offered.
Understanding how your score is calculated is the first step to improving it.
How Credit Scores Are Calculated
While different credit bureaus use slightly different models, scores are generally based on five core factors:
| Factor | Typical Weight | What It Means |
|---|---|---|
| Payment History | ~35% | Do you pay bills on time? |
| Credit Utilisation | ~30% | How much of your available credit are you using? |
| Length of Credit History | ~15% | How long have you had credit accounts? |
| Credit Mix | ~10% | Do you have a variety of credit types? |
| New Credit Enquiries | ~10% | Have you recently applied for new credit? |
What's Considered a Good Score?
Score ranges vary between bureaus and countries, but a general guide is:
- Excellent: 800 and above — access to the best rates and products
- Good: 670–799 — most lenders will approve applications
- Fair: 580–669 — approval possible, but terms may be less favourable
- Poor: Below 580 — harder to access credit; likely higher interest rates
How to Check Your Credit Score
You're entitled to check your own credit report without it affecting your score — this is called a soft enquiry. Many credit bureaus offer free access to your report annually. Reviewing it regularly helps you spot errors or signs of fraud early.
Practical Ways to Improve Your Score
1. Pay Bills On Time, Every Time
Since payment history is the single biggest factor, setting up direct debits or automated payments is one of the most impactful changes you can make. Even one missed payment can dent your score.
2. Keep Credit Utilisation Below 30%
If your credit card limit is £2,000, aim to keep your balance below £600. High utilisation signals financial stress to lenders, even if you pay it off monthly.
3. Don't Close Old Accounts Unnecessarily
Older accounts contribute to the length of your credit history. Unless an account has fees you can't justify, keeping it open (even unused) can benefit your score.
4. Limit New Credit Applications
Each hard enquiry from a new application can temporarily lower your score. Space out applications, especially when preparing for a major loan like a mortgage.
5. Dispute Errors on Your Report
Mistakes on credit reports — like incorrect late payments or accounts you didn't open — are more common than people realise. Disputing these with your credit bureau can result in meaningful improvements.
Common Credit Score Myths
- Myth: Checking your own score hurts it. Fact: Soft enquiries don't affect your score.
- Myth: Earning more money raises your score. Fact: Income isn't a direct factor.
- Myth: A bad score is permanent. Fact: With consistent habits, scores can improve over time.
Key Takeaway
Your credit score is a snapshot — not a life sentence. Understanding what drives it puts you in control. Focus on consistent, responsible habits: pay on time, keep balances low, and review your report regularly. Improvement takes time, but it's entirely achievable.