Building your credit score

Unsure what makes a good credit score? Our clear guide explains what this means and outlines the steps you can take to improve your credit score.

Unsure what makes a good credit score? Our clear guide explains what this means and outlines the steps you can take to improve your credit score.

Alex Hasty
Insurance and finance expert
minute read
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Last Updated 9 JUNE 2022

What is a credit score?

A credit score is a figure used by lenders to determine if you’re a high or low risk when it comes to borrowing. It can give you an indication of how likely you are to be accepted for credit.

Your credit score is based on your credit report, which is a summary of how you’ve managed credit in the past. To be clear, credit means borrowing money under the agreement you’ll pay it back later.

How to check your credit score

You can check your credit score by using a credit reference agency. Three examples of these are Experian, Equifax or TransUnion (formerly Callcredit). Each of these credit companies will be able to share your credit report. If you’d like to find detailed information on your report, each agency offers access for free for a limited period:

  • Experian will give you your credit score for free, but you won’t have access to the full report. Alternatively, you can use their CreditExpert product for 30 days for free (after that, it will cost you £14.99 a month)[1].
  • Equifax also gives you free access for 30 days (it’s then £7.95 a month)[1].
  • TransUnion offers a free statutory credit check.

[1]Prices correct as of 30 November 2022.

What is a good credit score?

While we know our credit score is important, it can sometimes be confusing to know what’s classed as a good credit score. That’s because there are three different credit reference agencies (CRAs) in the UK and they all have slightly different credit score ranges. A figure can be a good credit score with one credit reference agency but an average, or even relatively bad credit score with another.

To help you make sense of it all, here’s a quick breakdown of the scores and how they measure between Experian, Equifax and TransUnion:

These credit score ratings are accurate as of 30 November 2022.



Grade Score
Excellent 961-999
Good 881-960
Fair 721-880
Poor 561-720
Very poor 0-560



Grade Score
Excellent 811-1,000
Very good 671-810
Good 531-670
Poor 439-530
Very poor 0-438



Grade Score
Excellent 628-710
Good 604-627
Fair 566-603
Poor 551-565
Very poor 0-550

What are the benefits of having a good rating?

A good credit rating can improve your chances of successfully applying for credit in the future. A high score shows lenders that you’re able to manage your finances sensibly and can make repayments on time. 

Benefits of a good credit rating: 

  • It could unlock lower rates of interest, which could make borrowing cheaper.
  • You might be able to get a higher credit limit and borrow larger amounts, which could be particularly useful when applying for a mortgage.
  • You might gain access to promotional offers, and a wider range of offers and lenders.

What can lower your credit score?

There are several things that can lower your credit score,

  • Late or missed payments – these will be marked on your credit report, almost certainly lowering your credit score.
  • Making too many applications for credit – if you’ve been refused credit, don’t immediately start applying to every other credit card provider. Applications for credit will be marked on your credit report, so lots of applications in quick succession could affect your credit score negatively. Getting a new credit card and never using it, or using it too much, could also negatively affect your credit score. So strike a good balance and make sure you pay off at least the minimum payment every month.
  • A history of large debt or bankruptcy – having a difficult past as a borrower can have a long-lasting effect on your credit score. If this fits your situation, you’ll need to slowly rebuild your credit score over time. Unfortunately, there are no quick fixes.

But I don’t even have a credit history, so why do I have a low credit score?

It may seem a bit unfair that you’re given a low credit rating just because you don’t have a credit history. But lenders base the risk of lending you money on your repayment history and debt management. If you’ve never had a credit card, loan, mortgage or overdraft, they have no evidence of your ability to pay back what you owe.

To start building up a credit history, consider taking out your first credit card and making a few small purchases. Be sure to pay back the full balance each month to show you’re capable of good money management.

How to build up a credit score?

There’s a number of things you can do to help improve your credit score:

1. Get on the electoral roll

Register to vote. It’s quick to do, even if you live in shared accommodation. Credit providers use this information to confirm your details are correct and it’s a key factor in building your credit history.

You can register to vote at any time on the Gov UK website.

2. Check your credit report for any mistakes

Before you apply for credit, check that your credit report is accurate and up to date. If you’ve moved over the past few years, make sure the registered address is your current one. Also check that any old bank accounts have been closed.

A regular check of your credit report could also unmask any fraudulent activity that you weren’t aware of, helping protect your credit score. If you see any suspicious activity, like a surge in the amount you owe or an application you didn’t make, report it immediately to your lender.

3. Try to avoid moving home a lot

Sometimes moving can't be helped, but lenders like stability. They could see moving home regularly as a sign that something’s wrong, such as you have issues paying rent.

4. Always pay on time

If you meet all repayments and repay outstanding debts on time, your score is likely to improve. But the opposite is true if you miss payments. A missed or late payment can remain on your credit file for up to six years. That’s a long time to have a black mark because of a bill you forgot to pay. Avoid late payments by setting up a direct debit for utility, phone and credit card bills.

5. Make sure your name is on some of the bills

If you share a house, make sure your name is on one or more of the utility bills, for example, gas, electricity or water. Utility bills in your name can help boost your credit score. If you’re contributing to the household bills each month but they’re in someone else’s name, only they will benefit.

6. Beware of your partner’s credit history

If you’re setting up home with someone else, it’s not unusual to take out joint financial products. But applying for a joint bank account, mortgage or loan financially links you together. If your partner has a poor credit history, it could affect your own chances of getting credit in the future. If this is the case, it’s best to keep your finances separate.

Having separate finances can also make things easier if you split up. If you have joint finances together and decide to call it a day, you’ll need to contact the credit reference agencies and ask for a letter of disassociation. This will stop your ex’s credit history affecting yours in the future. You’ll need to close any joint bank accounts or pay off any joint loans before you can do this though.

7. Consider getting a pre-paid card instead of a credit card

Applying for a credit building pre-paid card is an alternative to getting a credit card. Pre-paid cards allow you to load cash on to them to spend in any way you choose. They can also be a useful alternative to carrying cash.

8. Avoid using your credit card to withdraw cash

Using a credit card to withdraw cash from an ATM can be very expensive. You’ll be hit with high fees and interest, especially if you take out money using your credit card abroad. It can also be a red flag for lenders who may think you’re having trouble managing your finances.

9. Use a soft search eligibility checker

Every time you make a credit application, a hard search will be marked on your credit report. If you’re rejected or make too many applications, it can damage your credit score.

Before you apply for a credit card, use a soft search eligibility checker to find out how likely you are to be accepted. A soft search of your credit report can only be seen by you, not the lender. It won’t affect your credit score in any way.

10. Don’t keep applying

If your application has been rejected, don’t keep applying elsewhere. Every time you apply for credit, it leaves a footprint on your credit file. Too many applications over a short period of time makes it look like you’re struggling financially and are desperate for money. It could make lenders think you’re a credit risk.

11. Pay insurance premiums upfront if possible

If you choose to pay for your car or home insurance in monthly instalments, a hard search will usually be done beforehand. It could also end up costing you in interest charges over the course of a year. If possible, pay upfront to avoid any hard searches being marked on your credit file.

12. Keep your credit utilisation low

Your credit utilisation is the percentage of your credit limit you use. For example, if you have a credit limit of £1,000 and use £500, your credit utilisation is 50%. Lenders see a low utilisation percentage as a big plus - it can also increase your credit score.

13. Only borrow what you can afford to pay back

Getting into deep debt is never a good thing. Struggling to make repayments could eventually lead to a County Court Judgment (CCJ), Individual Voluntary Agreement (IVA) or even bankruptcy. These can stay on your credit file for up to six years and can have a massive impact on your credit score for years to come. Only borrow what you can afford to pay back. At the very least, make sure you’re able to pay the minimum monthly repayments.

How long does it take to improve my credit score?

Once you’re using credit responsibly, it can take up to six months for your score to improve. That’s because it takes time for credit agencies to ensure they have the most relevant information about how you’re using credit.

Just be aware that opening a new current account or getting a credit card could lower your score for a while.

What is new credit and how will it impact your credit score?

New credit is exactly that - a new line of credit you’ve opened. This could be a new credit card, loan or mortgage. Once you’ve opened that new credit, you might see a slight change to your credit score. This could be an increase or decrease, but it shouldn’t be too significant. However, if you don’t have a long credit history - or any credit history - a negative impact on your credit score can be more impactful. 

As long as you continue to meet your repayments and keep on top of your credit, your credit score should improve. This is because you’re proving that you can manage your money well as a borrower, which looks good to a credit card provider or other lender.

If you start making late repayments or miss them entirely, you’ll quickly feel the impact on your credit score.

What is a credit builder credit card and how can it help improve your credit score?

If you’re concerned about having a bad credit history, think about applying for a credit-building credit card. If you’re accepted, you might be able to improve your score and potentially unlock better deals in the future. That’s because you’ll have a chance to prove that you’re able to make all your repayments on time and can manage a credit card balance or other lines of credit.

With a credit builder card, you can expect any initial credit limit that you’re offered to be fairly low and interest rates to be high. So before you apply, it’s crucial that you work out a budget to ensure you’re able to pay off more than the minimum amount each month. Setting up a direct debit is one way to help you do this.

Find out more about how credit building cards can help you build up your credit rating.

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