How to Check Your Credit Score

Your credit score is one of the most important numbers of your life. A credit score is a three-digit number calculated based on your credit report. Understanding how the credit score system work is very important. If you took the time to building and managing your score, then you will have no trouble getting credit when applying for loans or an overdraft. This is because a higher credit score means your credit report contains information that shows you’re low risk and able to make repayments on time,  so you’re more likely to appeal to lenders.

A higher credit score means your application for credit is more likely to be accepted, and you’re also more likely to be offered cheaper rates of interest. However, if your credit is not good enough, then securing credit can be a huge challenge. Creditors and lenders will conduct a credit to decide whether to approve your credit application. Therefore, you should check your credit score (credit report), so you have an idea of what lenders and creditors will see when they pull your credit report.

What Credit Report Shows

Your credit report will show all your financial history and your Credit Score is essentially an indication of how lenders and creditors would asses you when you apply for credit. When applying for credit, lenders and creditors use credit search to try and predict your future behaviour based on the financial decisions you have made in the past. This is done by analysing data of your financial history such as the number of credit applications you have recently made, how much credit you owe, what credit products you currently have or had, have you paid back the credit you have on time and have you ever missed any repayments. They combine this information together and give you a Credit Score. You should think of credit score as your financial CV.

Getting Your Credit Score

You can order your credit score which is based on your credit report  from a variety of sources. In the UK there are three credit reference agencies, Equifax, Experian and TransUnion (formerly Callcredit), and they all hold information on you which lenders use. You can check your credit score for free through any one of these services. Please aware that these big credit reference agencies try to lure you in with free month-long trials followed by paid subscriptions. if you would like detailed free credit report you should consider using the Credit Club from Money Saving Expert, there’s no real need to pay at all unless you really need a detailed report from each credit reference agency.

Why and What You Should Check on Credit Report

Small or minor errors can cause problems, so it’s important you check through your credit report to ensure that you do not have incorrect information recorded on it. The list below shows some of the most important things you should check is correct on on credit report:

1. Review your credit report and score to ensure the information is correct.

2. Fight incorrect or unfair defaults on your file.

3. If you no longer have joint accounts with someone, ensure you financially de-link these accounts.

4. Always check your credit reports after rejection.

5. Close any unused credit accounts, as having a large overall credit limit may be viewed negatively by lenders.

6. Check if you are on electoral roll or Register on the electoral roll.

7. Request for incorrect information to be amended, updated or removed.

What It Means

Each credit reference agency uses its own credit scoring system. Credit scores are a three-digit number, often ranging from zero to 999, with zero being the lowest credit score you can have and 999 being the highest possible credit score. The higher your credit score is on the scale, the better your credit is. Some credit scoring models may use a slightly different range, but higher scores will always be better than lower ones.  The table below shows the scale each Credit Reference Agency uses and what a particular score means in terms of your creditworthiness:

How do Credit Agencies Score You?
Credit Reference Agency Experian Equifax /Clear Score TransUnion (formerly Callcredit) /Noddle
Maximum score 999 700 710
What your score means Very poor: 0-560 Very poor: 0-278 Very poor: 0-550
Poor: 561-720 Poor: 279-366 Poor: 551-565
Fair: 721-880 Fair: 367-419 Fair: 566-603
Good: 881-960 Good: 420-466 Good: 604-627
Excellent: 961-999 Excellent: 467-700 Excellent: 628-710

High credit scores mean that you’ve typically done a good job of managing your credit in the past. You have been managing your credit accounts properly, keeping your credit balances at a manageable level, you’ve made your payments on time, and you’ve avoided major credit blunders. With a high credit score, you’re more likely to have your credit card and loan applications approved and you are likely to be offered favourable terms.

On the other hand, low credit scores indicate that you’ve had trouble managing credit in the past. You may have racked up high credit card balances, borrowed more than you could afford to pay, missed several repayments, or possibly have had a foreclosure or repossession. A low credit score makes it more difficult to get approved for credit cards and loans. When you are approved, you may be offered higher interest rates.

If you want to understand the importance of good credit score read have a quick look at Advantages of Maintaining a Great Credit Score.

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