What is a Good Credit Score and How to Maintain it?
Although it may not feel like a completely fair system, building a good credit score is important as it enables you to access better borrowing rates on credit cards and loans.
Checking your credit score is free through sites like Experian, Credit Karma and ClearScore. Don’t worry if your credit score’s not perfect, there are things you can do to build it up - making better credit rates more obtainable.
Read on to explore what a good credit score is, how to get a loan with bad credit, and discover some tips for improving your credit score…
How to check your credit score
Keeping up-to-date with your credit score is important as it will give you an idea of the kinds of credit you may be eligible for.
Credit reference agencies will typically compile the following information:
A list of your current credit arrangements, like outstanding loan agreements and utility payment records.
Public record information, this will include things like County Court Judgements and any history of bankruptcy, home repossessions and debt relief orders - these will stay on your credit report for at least six years.
Items relating to fraud, i.e. whether you have committed or been a victim of fraud or identify theft.
Details of people who are financially linked to you, e.g. people who you have a joint bank account with.
Your name, date of birth, current and previous addresses, and whether you’re on the electoral register
Your current account provider, but only details relating to any overdraft information
In the UK, there are three main credit reference agencies and three associated websites where you can check your score, these are:
Experian - check your Experian Credit Report on www.experian.co.uk
Equifax - Equifax credit report available through www.clearscore.com
TransUnion - your TransUnion credit report can be reviewed on www.creditkarma.co.uk
The importance of checking your credit score with all three credit reference agencies
Most people will only look at their credit report from one agency; however, it’s worth getting a copy from all three reference agencies. This is because the agencies may hold slightly different information from different credit providers. Essentially, checking your credit score with the three providers will give you the best idea of how lenders view you.
Explore our What Information goes into Calculating a Credit Score? blog below for information on how credit reference agencies work out your credit score.
What are ‘good’ and ‘bad’ credit scores?
Definitions of a good and bad credit score will depend on which service you use, for example, Experian use the following score thresholds to determine their ratings:
‘Very poor’ - 0 - 560
‘Poor’- 561 - 720
‘Fair’ - 721 - 880
‘Good’ - 881 - 960
‘Excellent’ - 961 - 999
The ClearScore bandings, on the other hand, are:
‘Poor’ - 0 - 438
‘Fair’ - 439 - 530
‘Good’ - 531 - 670
‘Very good’ - 671 - 810
‘Excellent’ - 811 - 1000
Meanwhile, Credit Karma’s score ratings are:
‘Needs work’- 0 - 565
‘Fair’ - 566 - 603
‘Good’ - 604 - 627
‘Excellent’ - 628 - 710
It is important to remember that lenders will be looking for different things. For example, some companies may prefer customers to repay their loans quickly, so could favour potential borrowers with a record of overpaying. So, although you might not have a perfect credit score, some lenders might look at your credit experiences more favourably than others.
How to raise your credit score
Improving your credit score can be difficult, especially if you can’t currently access the best credit rates. However, there are things that you can do to boost your credit score without increasing how much you pay back per month.
Here are three top tips for improving your credit score:
Review your details - things as trivial as a spelling mistake in your address can impact your credit score.
Register to vote - even if you’re not interested in politics, registering to vote can benefit your credit score. Councils regularly send voter data to credit reference agencies, so registering to vote and ensuring your address is up-to-date can improve your credit score within a few weeks.
Avoid multiple credit applications - if you’ve already been rejected for credit, don’t keep applying. Numerous applications in a short time can negatively affect your credit score. If you’re sure your application is valid and you can afford the repayments involved, you could look for lenders that take the full picture of your finances into account, using Open Banking (like us!).
How to maintain your credit score
Once you have completed tasks to raise your credit score, you need to maintain it. To maintain a credit score, you should:
Make repayments on time - sticking to repayment plans and not missing payments proves to lenders that you’re responsible with your money.
Not apply for too much credit - applying for too much credit or making too many applications will appear on your credit file and may put off lenders from offering you credit.
Essentially, maintaining a good credit score is all about only borrowing what you need and ensuring that you’re able to pay it back.
While this may seem easy, credit lenders do not take into account extenuating circumstances that may affect how well someone can pay back the amount borrowed. When making a credit application it may be a good idea to think about if your situation could change during the repayment period.
How to get a loan with a bad credit score
If you have struggled to access good credit rates, whether it’s due to previous financial hardships or because of things out of your control, it can be difficult to know where to turn. Worse still, the credit that could be accessible to you may be high-interest, from lenders that are irresponsible, loan sharks or not accredited by the FCA.
As a community interest company, Fair for You was established to make fair credit and loan options available to as many people as possible, regardless of their background.
We offer a selection of affordable credit options, enabling you to buy hundreds of products from trusted retailers. Fair for You also gives you the option to repay on your terms, whether that’s weekly, fortnightly or monthly, and for as long or short a period as you like*.
We even let you change your repayments if your circumstances change.
Read our blog to learn more about what a community interest company is using the link below.
If you’re looking for a new appliance or piece of furniture, we have you covered, with a range of affordable repayment options on a wide range of products.
Head to the Fair for You homepage to start your search or use our loan calculator, which clearly explains how much you could pay back depending on what you borrow.
*Our loans can be repaid over a period of 12 weeks to 52 weeks. Our Food Club Card product is only available to apply for with weekly repayments.
*Please note we’ve used links to external websites. Although we make every effort to ensure these links are accurate, up-to-date and relevant, Fair for You Enterprise CIC cannot take responsibility for pages maintained by external providers. Views expressed on external sites we link to are not necessarily those of Fair for You Enterprise CIC.
If you come across any external links that don’t work, we would be grateful if you could report them to the web content team.
The content of this blog does not constitute personal financial advice, and the views expressed in it are those of the contributor or author, which may not necessarily represent or reflect the views expressed by Fair for You Enterprise CIC.