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Your credit rating reflects your creditworthiness — essentially, how reliable you are as a borrower.

A good credit rating means you’ve managed credit well in the past and you’re more likely to qualify for cheaper interest rates as well as access to a wider range of offers.

Where can I find my credit score?

Credit reference agencies, such as Experian or Equifax, compile information on how well you manage credit and make payments – this data is then compiled together and presented as your credit report.

Your credit score is part of your credit report and is calculated on how you use your credit accounts, how much you owe, and any overdrafts.

How do credit checks work?

There are two types of checks that your lender can explore when you apply for credit – these are called ‘soft checks’ and ‘hard checks’.

Soft check

This doesn’t affect your credit score and is typically done for background checks, pre-approvals, or when you check your own credit.

Examples include when a credit card company pre-approves you for an offer, when an employer does a background check, or when you look up your own credit score.

Hard check

This can affect your credit score, as it indicates you’re seeking new credit and is typically done when a lender reviews your credit to make a lending decision, like for a loan or a credit card application.

Examples include applying for a mortgage, a personal loan, or a new credit card.

The difference between soft credit checks and hard credit checks

Hard checks can affect your credit score, while soft checks don’t.

Hard checks also require your permission, but soft checks can sometimes be done without it.

How do I improve my credit score?

Rebuilding your credit score takes time and you’ll need to build a credit history to improve your score.

Here’s a breakdown of actions you can take to improve your credit score.

Check and fix any errors within your credit report

You can report any mistakes within your credit report to your respective credit reference agency (Experian, for example).

The mistake will be marked as disputed, and lenders won’t be able to consider the information until resolved (which takes up to 28 days).

Negative information usually stays on your credit report for six years and can’t be removed sooner if it’s accurate. However, if there were reasons why you fell behind with payments that no longer apply, you can add a ‘Notice of Correction’ to your credit report to explain this.

A Notice of Correction won’t affect your credit score, but it might slow down any applications you make to borrow.      

Build a positive credit history

Having no credit at all can lower your score. If you’ve looked at your report and are surprised your score is low, it’s usually because lenders like to see proof that you can handle credit before agreeing to give you it.

Taking on a very small amount of credit, which you can pay off on time and in full, shows that you can responsibly manage money.

Here are some examples of how to build a positive credit history:

  • Open and manage a current account and stay within any agreed overdraft limit
  • Set up Direct Debits to help pay your bills consistently and on time
  • Don’t link yourself to somebody with a poor credit history through a joint account

Adding additional information to improve your credit score

Here are some extra tips to help you improve your credit score:

  • One of the most important things you should do, to ensure your credit score is a true reflection of your credit history, is to register to vote
  • If you rent, you can add your rent payments to your credit report through Experian’s Rental Exchange
  • A credit-building card is often used by people who haven’t borrowed before and can help improve your score
  • Experian has a boost scheme which uses Open Banking data to include payments for council tax, subscriptions and savings accounts when calculating your credit score

If you’re worried about your finances and need free debt advice, we can help.

Contact us on 0800 316 1833 and fill in our form to get started.