What affects your credit rating? We look at what affects credit rating

Lenders need to know a lot more about you than you might imagine before they decide whether to give you any credit

It’s important to be aware of what affects credit ratings before you apply for credit. Our guide gives you a rundown of how the credit scoring system tends to work between credit reporting agencies.

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Credit scoring system

When you make your application, some of the things that influence the credit scoring system include:

  • your salary
  • your age
  • how many children you have
  • a history of your credit accounts
  • mobile phone contracts you have had

What affects your credit rating?

Not sure what affects your credit rating? Here are some tips to understand the credit scoring system and improve your credit score which you may not have thought of before.

Register to vote

Your political inclinations have little to do with your credit rating, but the fact that you’re registered to vote does have an impact on your rating. Being registered to vote gives lenders a proof of address. To register, contact you local council or visit aboutmyvote.co.uk.

Close any other accounts you may have

Credit companies want to be sure that you’re capable of paying off everything you owe, so they have a look at all the other accounts. This means that they’re likely to give you less if another provider is already giving you significant amounts of credit.

Read more about the possible affects that closing old credit card accounts could have on your credit score.

Don’t make too many credit applications

Be careful about how many applications you make, as this affects your credit rating.

To lenders, a person who makes a lot of credit applications is likely to be someone that’s failing to get the credit they need – which doesn’t look good on your record, so double check the minimum eligibility criteria before you apply.

Keep on top of your repayments

A missed or late payment stays on your credit record for at least 3 years. Even if you simply forgot to make the payment, lenders might assume that you’re not reliable enough to lend money to. Speak to your existing lender if you feel you aren’t able to keep up your repayments.

If you feel you can but it’s just becoming overwhelming, consider getting a balance transfer credit card to consolidate your debts onto one card that could let you pay off your debts interest-free over a long period.

Try not to move house too often

Lenders place less trust in those that keep moving house. When you apply for credit you’ll be asked to list the addresses you’ve lived at in the last three years. Your credit report also lists addresses that you’ve been linked to.

It is also worth checking the report and your application for typos and consistency as any inconsistencies could also damage your credit score.

Things that could affect your credit rating

Close any joint accounts that have a bad credit record

If you’ve held a joint account with someone who has a bad credit record, this may affect your ability to get credit. The reason for this is that lenders may assume that your partner could have an influence on your income at any time.

It’s important to close these accounts and take care of any shared debt you may have. It’s also worth remembering that insolvencies stay on your records for about 6 years.

Try to keep your income regular

If you have a few zero-hour contract jobs, the income you have could be big enough to match the minimum eligibility criteria for some credit cards and other lending products, but the fact that it is not fixed makes it harder to prove that you are a reliable borrower.

Some lenders and credit card providers will make it less difficult for people with low income or without fixed income to apply, but a permanent job is always better for your credit applications.

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Think twice before taking out any new mobile phone contracts

Is a new mobile phone contract good for you? If you already have bad credit or you’re not sure of what your credit score might look like, then you may wish to get a credit report before you take out a new mobile phone contract.

Even though a network is not lending you any money, they will do a credit check to see how reliable you might be in paying your monthly bills on time and will want to assess the likelihood of you committing fraud.

If you still think you would like a mobile phone contract, read our guide to bad credit mobile phone contracts for more information.

The same goes for a new gas and electricity contract

If you have bad credit you may be forced to pay more by using a pay-as-you-go energy meter rather than moving to a fixed price gas and electricity contract.

Consider the above points before you take out a new energy contract or mobile phone contract.

Getting a free credit report

If you are not sure of your credit score and you are thinking of taking out a mortgage, getting a new bank account, mobile phone, energy provider, credit card or loan, then checking your credit report could help you minimise any potential damage caused by applying and getting rejected.

With some credit reference agencies, you can see the data update live according to your repayments and financial decisions, and also see how likely it is for you to become a victim of identity theft.

See the below table for a paid-for and free credit reports comparison:

CompanyPriceOther information Apply
30 day free trial
£14.99 a month
Freephone UK call-centre
Email & SMS alerts
Proceed
30 day free trial
£7.99 a month
Three credit agency checks
Debt advice centre
Identity theft protection
Proceed
£19.99 One off credit report check
No monthly subscription
Proceed
30 day free trial
£7.99 a month
Unlimited credit report access
Alerts and tools
Support to improve credit rating
Proceed
7 day free trial
£14.99 per month
Daily web monitoring
Instant identity notifications
Unlimited credit report access
Proceed
30 day free trial
£14.95 a month
Weekly alerts
Customer support team
Proceed

Read more…

• Refused credit? – What to do Find out what your next steps are if you’ve been refused credit
• Unused credit cards – Learn about the possible risks behind having too many credit cards
• Get the right credit card for your credit rating – Find out which card is the right match for you

It’s your report

Join the campaign to fight for free annual credit reports for everyone

Sign the petition