Your Credit Score – What Is It? How Can You Boost It?

What is my credit score?

When you apply for credit, responsible lenders want to make sure that (1) you have the intention to pay back what you have borrowed and (2) that you can afford to pay it back. To do this, many lenders use what is called a credit score. A Credit Score uses various types of information that lenders have available to them that relates to both you and your application, and this will include information held on your credit report.

A credit report is a record of your credit history as held by credit rating agencies (CRAs) such as Experian or Equifax). Other information is also used, such as the information you supply on your application, and any past information the lender might have on you from previous accounts you’ve held with them.

A score is then given to each item of information.  Scores are normally awarded in order of importance, for example higher points will be awarded to customers who appear on the Voters Roll (VR), or who have a landline telephone number. Equally, points may also be deducted if a customer has no VR trace and/or no land line contact number. Points can also be deducted for each item of bad credit or missed payment that a customer has. Both current and historical bad credit can affect your score.

These points are then totted up and your individual credit score is calculated.

The higher your score, the more confident any possible lender will be when considering how good you are at managing your credit. Those with a high credit score can therefore normally access credit more easily than those with a low score. Equally those with better/higher scores often have a wider choice of loan products and thus can often benefit from lower interest rates.

How else does it work?

The organisations you have a financial relationship will make regular reports to credit report bureaus detailing your interactions with them, and it’s these that will have the biggest effect on your score.

Your credit report, and therefore your credit score, can be negatively affected by a number of things. Some of these include:

Generally, lenders want to make sure that you are not financially over-stretched, and that you can reliably make payments. In addition lenders want to make sure that you are keeping good track of your finances and that you are who you say you are.  

Your credit score will change over time as your circumstances are prone to change over time. For example, paying off a loan could boost your credit score while missing several bill payments could reduce it. Moving home a number of times within a short period of time can also negatively affect your score.

How can I boost my credit score?

The best thing to do to boost your credit score is to avoid the things mentioned above that can negatively affect it. If you already have a poor credit score however, there are certain steps you can take to improve it. These include making sure you stop applying for credit until such a time that you have improved your score. Having too many searches against you can make your credit score lower. In a lender’s eyes applying for lots of credit means that you may be in financial difficulty, and thus desperate for money. Most lenders will score you down for this.

What is thus needed is activity that can add points to your score such as getting on the voters roll, as if a lender can trace you then they are more likely to lend to you. Make sure that you cancel any unused cards, as having too much available credit can make lenders think that you are over indebted/have too many possible outgoings. Finally, if you have bad credit take positive steps to sort it out. Contact all lenders that you have missed payments with and/or defaulted with and negotiate with each of them to come up with a reasonable payment plan. Any potential new lender will want to see that you have the ability to face up to any historical issues and that you then have the means and ability to pay them off.

In the long term, lenders simply want to know that you can borrow responsibly, so demonstrating this will also help boost your credit score.

Always pay your bills on time, and if you are in a situation to manage it effectively, consider putting a small amount on a credit card every month (some people use a credit card to pay for petrol, for example) and then paying it off immediately. Make sure you pay off your balance in full every month, or you could get into further debt that you may struggle to repay.


FairMoney™ is a brand new loans comparison website that can help you find the right loan for your circumstances. We believe that customers deserve a fairer, better loan comparison experience, and promise we will only show you lenders we consider to be responsible and fair providers.

By using our SMART Search Technology, you can be confident that you will be presented with loan products that best match your credit profile and that your credit score will not be harmed.

This means that you are more likely to be approved by the lenders presented to you. However, applying directly to multiple lenders could adversely affect your credit score and profile, as each individual lender will normally need to carry out a full credit search against you.

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