Improving Your Credit Score

What is a credit score?

A credit score is used by lenders to help them decide whether to give you a credit product.  This might be a loan, credit card, overdraft, insurance product or any service where you pay for something in instalments.

There are three main agencies which keep databases of credit history: Equifax, Experian and TransUnion.  These agencies use your credit history to calculate a credit score, based on your past history of using credit services, which lenders can then use in their decision making.

How can I improve my credit score?

There are a number of factors that are used in calculating someone’s credit score.

• The history of your credit accounts.  Even missing one payment can cause your score to go down by several points.
• The amount of available credit you have.  If you are close to the limit on one or more of your accounts, this will affect your score
• Being registered on the Electoral Roll at your current address will count in your favour
• Any County Court Judgment (CCJ) will be very detrimental to your score.  CCJs remain on your record for 6 years, or possibly longer if not settled
• If you have applied for a number of credit facilities recently, then these will show up as searches on your record, and will reduce your credit score.

Applications like TotallyMoney are very good for monitoring your credit score, month by month, so you can see the effects of improvements you make.