Understanding Your Credit Score in the UK: What It Is and How to Improve It

How UK credit scoring works

Unlike the US, which has a broadly standardised FICO score, UK credit scoring is less standardised. Three main credit reference agencies — Experian, Equifax and TransUnion — hold your credit file, which records your borrowing history, current accounts, defaults, court judgments and electoral roll registration. Lenders pull from one or more of these agencies and apply their own internal scoring models to decide whether to lend and at what rate.

What affects your score

The most significant factors: payment history (whether you have missed payments, defaulted or have CCJs on record), credit utilisation (what proportion of your available credit you are using — below 30% is generally recommended), length of credit history (older accounts are better), and registration on the electoral roll (which verifies your identity and address). Hard credit searches (when you apply for credit) appear on your file and can temporarily reduce your score.

Checking your score

You can check your credit file for free through the agencies' free services: Experian's free basic membership, TransUnion through ClearScore, and Equifax through MSE Credit Club. You are entitled to a statutory credit report (your full file, used to make decisions about you) from each agency for a nominal fee (£2) under the Consumer Credit Act.

How to improve your score

Register on the electoral roll at your current address. Set up direct debits for all credit commitments (missing even a small payment has a disproportionate negative impact). Reduce credit card balances relative to limits. Avoid applying for multiple credit products in a short period. Keep older accounts open even if unused. Address any errors on your credit file (which are more common than people expect) by raising disputes with the relevant agency.