Credit Score Guide

Your credit score is a reflection of your credit behaviour in the past. When calculating your credit score, information found in your credit report is taken as an indicator of your likely future behaviour when it comes to managing your money and repayments.

There are three big independent ‘credit bureaus’ that generate and store these scores called TransUnion, Experian and Equifax. You might notice that your score differs depending on the bureau the information is coming from - but they should tell a similar story.

Some of the factors that credit scoring models will consider when calculating your score include:

• The number of accounts you have
• Your payment history
• The length of your credit history
• Your available credit vs used credit
• The types of accounts you have

As a credit score is unique to an individual and their circumstances, the length of time it can take to improve your credit score will vary.

Typically, you can take small steps to improve your credit score in a matter of weeks – such as registering to vote in order to verify your address – but, in other instances, it can take months to make significant improvements to your credit rating.

The length of time that it takes to see new information reflected on your credit report (even if it doesn’t change your score) depends on the type and source of the information. Credit searches could be visible immediately, while additions to the electoral roll might take months depending on your council’s processes and the time of year you enrolled.

Having an arranged overdraft is unlikely to affect your credit score but the way you use your overdraft can have an impact on your credit rating.

If you have an arranged overdraft that you rarely dip into or clear the balance when you get paid each month, this shouldn't harm your score. However, if you have an unauthorised overdraft or incur charges for not paying back your overdraft, this could demonstrate to potential lenders that you struggle to manage your finances and may be a risky candidate for credit.

Checking your credit score will not have a negative impact on your credit report. In fact, regularly checking your credit score is a great way to monitor your financial health and make adjustments to positively amend your credit profile.

However, applying for credit often involves a 'hard credit check', which will appear on your report.

There is no definitive number when it comes to what credit score is required to purchase a new car. The credit requirements can vary from lender to lender, each using its own policies to evaluate your financial health based on your credit report.

As with any loan, the higher your credit score, the more likely you are to have your credit application approved. However, if you are applying to purchase a car using finance, you should find that you are still able to obtain the loan you need, even with a low credit score.

Unlike other loans and financial products for borrowing money, student loans do not appear on your credit report and, as a result, your credit score is not affected by them.

It's worth remembering that missing your student loan repayments can harm your credit score, though.

It depends on where the money used for gambling is coming from. Gambling activity itself does not show up on your credit report or impact your credit history.

However, if you were to take out payday loans or cash advances to spend on recreational gambling, this could have a negative impact on your financial health and, should you miss repayments, your credit score.

You should be careful not to close your oldest account, which could affect your score. But as long as you have repaid any outstanding overdrafts on your previous account, opening a new current account shouldn’t impact your credit rating.

Additionally, most banks will have to perform a 'hard credit check' when you apply for an account with them. These checks will appear on your credit report and influence your score.

While a balance transfer can be a strategic move to consolidate debt and accelerate repayment, its immediate impact on your credit score might be negative. Applying for a new credit card for a balance transfer typically results in a temporary credit score dip. However, by successfully managing the transferred balance and paying it off promptly, you can potentially improve your credit score in the long run.

Claiming Universal Credit won’t impact your credit score.

Your credit score reflects your borrowing history, debts and repayment record. As Universal Credit is considered part of your income, it won’t appear on your credit report and therefore won’t affect your score.