What Is A Credit Score?

what is a credit score?

When you apply for credit, lenders want to make sure you can comfortably afford to manage any new borrowing. To do so, they usually calculate a credit score, weighing up all the relevant information at their disposal - this helps them to assess the chances that you will be able to repay what you owe.

People with a high score are usually seen as lower risk, and could therefore be more likely to be granted credit - and possibly at better rates.

How lenders calculate your score

Lenders calculate a credit score using information from several sources - these can include:

  • Your credit report - The information on your past credit history as well as information that confirms your identity.
  • Credit application - The lender will ask for further information on your credit application, for instance, why you need to borrow the money, your job and your income.
  • Past information - If you’re an existing customer, they may use the information they already hold on you.
  • Credit scores do not take account of gender, religion, race or ethnic origin.

    Different lenders give different scores

    Because lenders have different acceptance criteria for products, they take different factors into consideration and can even score the same factors differently. The same lender may even, for example, score a mortgage application differently to a credit card.

    Credit scores change over time as your circumstances change. For example, paying off a loan could result in a higher credit score, while missing several repayments could reduce it. It's always a good idea to before applying for credit. You may spot areas you can improve upon.

    There is no magic number

    Just as lenders use their own formula when calculating a credit score, they also set different thresholds for accepting an application. These thresholds can vary according to the type of credit you want, so you could be accepted for an overdraft or mobile phone account but have a request for a car loan refused.

    Lenders specialising in, for instance, lower-income customers may grant someone credit when another bank refuses.

    A good way to stay in control of your finances is to check your Experian Credit Report with .

Get your free Experian Credit Report & Score

Experian CreditExpert provides more than just your credit report, including:

  • Access to your Experian Credit Score
  • Personalised tips on how to improve your score
  • Dedicated, specialist help if you're a victim of fraud
  • Be alerted to certain credit report changes which could indicate potential fraudulent activity
  • Help and guidance from our UK based call centre team
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