The Zen and Art of Credit Score Maintenance

Have you ever been baffled by credit scoring and why yours seems to fluctuate? Is there any rhyme or reason to it? Is it possible to have a good credit score and a large amount of debt? Can you genuinely improve your score over a short space of time? And most importantly, is it still possible to apply for a loan even though you have a low credit score?

In this guide about credit scores, we will answer all of these questions and more. It’s everything you will need to know before making a guarantor loan application with UK Credit. We’re here to help you navigate through the puzzling world of credit scoring to ensure things are clear, manageable and easy to address.

What is a Credit Score?

Your credit score, which is also known as a credit rating, is a number that reflects how likely you are to be accepted for credit. Banks, credit card companies and loan providers (like us!) will always check your credit history when they calculate your credit score, it shows them the level of risk in lending to you.

The Art of Scoring: How your Credit Score is calculated

Your score will be based on your credit report which is a record of how you’ve managed credit in the past. When we talk about credit we mean those instances you have borrowed money with an agreement to pay the money back later. This could be anything from a personal loan, mortgage, credit card or overdraft to mobile phone contract, car finance or utility bills.

If you’ve already checked your score more than once, you may have noticed that it’s not always apparent what’s actually impacting your score. That’s because of how it’s calculated alongside other things going on in your report.

In fact, there’s less of a science involved when calculating your score, and more of an art to it. In that, a bit like art, there are different interpretations out there of your score. Your credit score will be calculated by a credit reference agency (CRA). There are three major CRAs here in the UK: Experian, Equifax & TransUnion. When one of these credit reference agencies calculates your score, they take into consideration your overall level of risk.

Each of the above CRAs uses a different combination of factors to calculate your score. For example, if you miss a payment but have a good credit history, it’s not as likely to lower your score, while if you have a history of managing your debt poorly it could. Each agency will have a slight variation on how they score you on these factors. Credit scoring is about predicting if you’re likely to pay back credit based on how you’ve handled it in the past. So, if you have never borrowed money before or only borrowed a little, it will make it more difficult for lenders to judge whether you will be a high or low-risk person to lend to.

How to Find Your Credit Score

ClearScore provides a free way to find your Equifax score. Your credit score and report is displayed clearly and updated monthly through ClearScore. You can check as often as you like – it won’t affect your score.

All you need to do is complete ClearScore’s online form with your personal information. You will need to know previous addresses for the past 3 years, who you currently hold credit with, your bank and you may have to answer a few security questions. It only takes a few minutes.

Your score is then calculated and you will also be given a full report which highlights things you are doing well and areas where you need to improve. It will also give you a summary of what you currently owe to creditors and a record of your most recent credit searches.

What’s a Good vs. Poor Credit Score?

Considering that each CRA calculates credit scores differently, it’s difficult to provide a single figure but as a guide, here is a rough outline of the various credit ratings.

Excellent: 961 – 999
Good: 881 – 960
Fair: 721 – 880
Poor: 561 – 720
Very Poor: 0 – 560

Excellent: 811– 1000
Very Good: 671 – 810
Good: 531 – 670
Fair: 439 – 530
Poor: 0 – 438

Excellent: 628 – 710
Good: 604 – 627
Fair: 566 – 603
Poor: 551 – 565
Needs Work: 0 – 550


High Credit Score

Lenders will naturally prefer to loan money to an individual who is deemed low risk. If you have a high credit score this will mean your credit report contains information that shows you’ve met repayments on time and you’re low risk. You’ll have a better chance when applying for credit and you’re likely to benefit from the lowest rates of interest.

Low Credit Scores

Unfortunately, if you have a lower credit score, you might be seen as a high risk. Your report might highlight some issues with payments in the past. As a result, lenders may be more cautious about lending to you. You may be offered a higher rate of interest or your application may be rejected. However, there are lots of things you can do to boost your score.

Credit Scores & Borrowing Money

Whenever you take out credit or apply for a loan it’s always worth checking your score first. It’s important to know how attractive you are to a potential lender. It’s useful to know this in advance of your application. If your score is low, you will have a chance to improve your rating before you apply and therefore boost your chances of being accepted.

How to Boost Your Credit Score

If you have a low credit score, there are several steps you can take to turn your rating around.

  1. Electoral Roll: Being on the electoral roll is a big booster to your credit score. Not only does it provide a lender with proof of your residency, but it also shows stability with your situation. It’s easy and free to do via the website.
  2. Cut Financial Links: If you once had credit with a previous partner, this may impact your credit. If you have now cut ties with your ex-partner, you can simply ask all three CRAs to add a ‘notice of disassociation’ to your records.
  3. Show Stability: Another way to boost your score is to show that you can manage your debts adequately. Setting up a direct debit for your monthly payments and staying within your credit limit will help with this.
  4. Monitor Your Credit Report: Regularly checking that the information held about you is correct and fixing any errors is important to keep your record on track. Even if your address is slightly wrong, it could have an impact on your score.
  5. Don’t Hint You’re a Risk: Apart from missing payments, suddenly paying less or spending more than you normally do might change your score. So consider these behaviours when you’re looking to improve your score.
  6. Pay Your Bills On Time: Paying your utilities or phone contract on time is a good way to prove to lenders that you’re capable of managing your finances.
  7. Limit Credit Applications: If you make too many credit applications in a short space of time, this could impact your credit score, as lenders may think you’re desperate for credit. Waiting until some time has passed (usually 30 days) will usually prevent this.

The things that have the biggest negative impact on your score include:

  • Repeatedly missing or making late payments
  • Defaults on debt
  • County Court Judgments (CCJs)
  • Bankruptcy

These factors each indicate serious financial difficulty and suggest you couldn’t manage the debt you have taken on. They remain on your report for around 6 years and during that time lenders could be less willing to provide you with a loan or credit.

Why is your credit rating important?

If you have a low credit score you could end up paying a higher rate of interest compared to someone with a good rating.

Buying a home: If you are considering buying another property, your credit score (along with your income and your deposit) is one of the most important numbers in the process. If you have a fair to good credit rating, you’re more likely to be approved for a mortgage. You’re also likely to benefit from better rates!

Employment: Not all employers require credit checks, but if you are in finance or a position requiring that you handle the company’s money, it may be a requirement for you to have a good score. The thought behind this being that if you can manage your own finances, you’ll have no problem managing other people’s money.

Renting Property: If you have a low score it may also impact your rental opportunities as your file will show that you might have trouble paying your rent on time. Those with poorer credit history may even be asked to provide a guarantor before being accepted for a tenancy.

Utility Bills: Although this is less common, low scores can impact you from establishing new utility contracts. Some suppliers may require you to have a prepayment meter installed to ensure you don’t get into further debt.

Can you apply for credit with a low score?

Every credit provider varies. There are no guarantees that you’ll be approved even with a fantastic credit score. However, if you do need to borrow anything from £3k to £20k and are a UK homeowner, we may be able to help you.

As long as you

  • are employed, retired or in receipt of certain benefits
  • live in England, Scotland or Wales
  • have been a resident of the above country for at least three years
  • are a UK homeowner
  • can afford the repayments

As long as you are not

  • currently bankrupt or have been within the last three years
  • currently in a Debt Management Plan (DMP) or Individual Voluntary Arrangement (IVA) or had one active within the last year
  • currently subject to a Trust Deed or had one active within the past year

In a financial nutshell

    1. A credit score is a three-digit number calculated about your credit history
    2. A higher score will mean you are a better candidate for credit and you’ll be more likely to be accepted
    3. Having no credit history can affect your score negatively. Simply put, if you don’t have any evidence how will creditors know that you’re a reliable borrower?
    4. The key things that have the biggest negative impact on your score tend to be late or missed payments, defaults, County Court Judgments (CCJs) and bankruptcy
    5. Everyone has three different credit scores, from the three major credit reference agencies in the UK.
    6. There are lots of things you can do to improve your score and you can considerably boost your rating in just three months.
    7. You can still apply for a loan with UK Credit*

*All loans and interest rates are subject to final acceptance and a credit check.

Please note, none of these articles are intended to constitute financial advice and should be used for informational purposes only.