How to improve your credit rating and check your credit score for free
YOUR credit score can have a huge impact on you getting the best credit card, mortgage and loan deals.
But how can you check your credit rating and how can you improve it? We explain all you need to know.
What are Credit Reference Agencies?
So-called "Credit Reference Agencies"(CRAs) compile information on how well you manage credit and make your payments.
In the UK, there are three main CRAs:
- Experian
- Equifax
- TransUnion (formerly Callcredit)
All three firms hold data on your financial history.
These details include your bank accounts, any credit cards or loans you have and the debt associated with them, any late payments you've made, any County Court Judgements (CCJs) made against you or if you've been declared bankrupt.
This information is used by lenders, such as mortgage and loan providers as well credit card companies, to decide whether to lend to you and at what rate.
All of the companies hold slightly different information about you as not all lenders share information with all three CRAs.
What is your credit score?
Your credit score, sometimes called credit rating, determines your creditworthiness to lenders.
One thing that confuses many people is the score you are given if you check your rating.
All three companies have different scoring systems and there is no universal rating or score.
Experian will rate you on a scale of 0-999, Equifax from 0-700 and TransUnion from 0-710.
For all three, the higher your score, the better your rating.
Keep in mind that these scores are not a guarantee - just an indication of how favourably a lender is likely to view you.
How can I view my score for free?
All three CRAs offer you the chance to view your score, report and more for a monthly fee BUT you can get hold of your score for free without paying for a subscription.
For on-going monitoring, here's what the three credit reference agencies provide:
- Equifax: You can for free for the first 30 days, after which it's £7.95 a month.
- Experian: You can check your score for free using its . But if you want to itself, you can only do this for free using a 30-day trial, after which you'll be charged £14.99 a month.
- TransUnion (formerly Call Credit): You can sign up to its for free to get unlimited access to your report and score for life.
You also have a legal right to request a statutory report on data that credit reference agencies hold on you but this won't include your score. You can usually apply for this on a credit reference agency's website or by post for free.
Alternatively, you can check your credit score for free using the following third parties:
- ClearScore: ClearScore uses Equifax's data to .
- MoneySavingExpert.com: This tool uses Experian's data to
How can you improve your credit score?
While there is no credit blacklist which bans people from any sort of borrowing at all - if you have struggled in the past you may find lenders won't consider you.
If that's the case then there are steps which you take to help improve your rating:
- Get on the electoral register - This proves who you are and where you live meaning it's easier to get credit if you're on the list. Also check the electoral role for any errors. You can sign up by .
- Don't make too many credit applications - Making lots of requests in a short period of time can be seen as a sign of financial distress - and each application will be recorded on your file. Use a "soft-search" eligibility calculator to show how likely you are to be accepted.
- Always pay your bills - Late payments are also recorded in your file so make sure you pay your monthly bills on time including utility and credit cards.
- Pay down your debt - Try and cut down your existing debt before applying for new credit as lenders may be reluctant to lend to you if you already a large amount of debt.
- Use a credit-builder credit card - These cards tend to have high interest rates compared to normal cards but if you can show you're a responsible spender with them, it can improve your chances in the eyes of lenders.
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