What Affects Your Credit Score?

The factors that impact your credit rating in the UK.

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By Cai Bradley
Updated on Thursday 17 August 2023

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It’s no secret that, as a rule of thumb, the better your credit score is, the better your chances are of being accepted for the best credit deals, whether it’s a mortgage, loan, credit card or mobile phone contract.

But, in order to get a good credit score, you need to understand what factors affect it both negatively and positively, and how to improve your rating when needs be.

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In this guide:

Credit scores explained

Your credit score is essentially a three-digit snapshot of your financial health.

It is calculated using information from within your credit report, which is provided by one of the many credit reference agencies (CRAs) in the UK – most commonly Experian, TransUnion, Equifax or Crediva.

As the information within your credit report can vary between each CRA, and because they all use different credit scoring scales, there is no ‘universal’ credit score. Your credit rating will vary depending on which CRA is used to retrieve the information, so be mindful of this and try to get a multi-agency credit report when possible, to get the most accurate picture of your financial health.

While your credit score may vary between credit reporting websites, the factors that were used to calculate your rating are usually the same. This means that what affects your Experian credit score is also likely to affect your TransUnion or Equifax rating. 

What affects your credit score in the UK?

There are many factors that influence your credit score in the UK, but they primarily centre around your debt, payment history and credit history.

The following financial aspects are known to affect your credit score:

  • Payment history (missed payments)

  • Bankruptcies and County Court Judgments (CCJs)

  • Whether you’ve registered on the electoral roll

  • Your outstanding debt

  • How much of your available credit you’re using (credit utilisation)

  • The affordability of the credit you want (your earnings)

  • The extent of your credit history

  • Recent credit applications

Some of these may affect your credit rating positively under certain circumstances, while others will affect it negatively, as discussed later in this article. 

What impacts your rating the most?

In the UK, credit reference agencies don’t usually disclose what factors are the most important when it comes to calculating your credit score, but it’s generally a combination of all of the factors listed above.

It’s true that missed payments may impact your credit score more than making one or two credit applications at the same time, for example, but there’s no way of knowing which factors have the most significant impact on your credit score.

Generally speaking, having a well-rounded credit file and ticking all the boxes (in terms of having no missed payments, being registered on the electoral roll, etc.) is the best way to improve your chances of getting credit.

What can negatively affect your credit score?

There are several things that can negatively affect your credit score in the UK, and you may be surprised at some of them – for example, not being registered on the electoral roll could damage your credit rating.

Here are some of the most common factors that could negatively impact your credit rating:

  • Missed payments
  • Using too much of your available credit (usually over 30%)
  • Applying for too much credit
  • Defaulting on accounts
  • Bankruptcies and CCJs
  • Not being registered on the electoral roll
  • Having little or no credit history

Of course, the extent to which each factor affects your credit score depends on your personal situation and the severity of it. For instance, having one missed payment several years ago will probably impact your credit score, but not as much as how five recent missed payments will.

If you are worried about having an insufficient credit history, learn how you could build your credit history with a credit card here.

How to improve your credit score: What affects your rating positively?

As a borrower, the way you manage your finances throughout adulthood will inevitably have an impact on your credit rating. However, there are certain things that you can do to improve your credit score, including (but not limited to) the following:

  • Never miss payments
  • Put the bills in your name and pay them on time and in full, every time
  • Spend little and often on your credit card or use a credit-building card to build a credit history
  • Register on the electoral roll to verify your address and personal details
  • If you have any negative financial ties or associates, remove them
  • Limit your credit applications – too many in a short timeframe can have a negative impact
  • Never borrow more than you can afford to repay
  • Keep your credit utilisation rate under 30%
  • Clear any excessive loan or credit card debt
  • Look for errors or inaccuracies on your credit report and try to rectify them
  • Check your credit report regularly

Of course, doing the above does not guarantee that your credit rating will skyrocket straight away, but they have been proven to help those with poor credit records.

It can be a long process, so your best bet is to start building a credit history from a young age, and be patient. Plan ahead and think about getting your credit score in good shape before applying for any form of credit, whether it’s a loan, mortgage, credit card or even a mobile phone contract.

In order to improve your chances of success, you can also use a credit eligibility tool to help determine whether or not you will be accepted for certain deals before even applying. This should allow you to avoid the disappointment of being rejected, but also helps you keep your credit applications to a minimum, which should also help your credit rating.

For more information on credit scores and reports, be sure to check out our related guides:

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