What is a credit score?
Your credit score is information accessed by any lender in order to decide whether you are a viable recipient for their type of credit. This could be a mortgage, a loan, a credit card or other financial service.
Your application for any of these products can be affected by how you score and can determine whether your application is successful or not. Those with a higher credit score are often seen as a lower risk to lenders so will generally be more successful in their applications.
All lenders use their own policies when deciding whether or not to accept or deny an application, and that they will invariably use different credit score agencies; often this means that different lenders will arrive at different decisions. If one lender declines your application, another lender might still accept you. If you have an application rejected you can check your credit score to see the activity and understand what the rejection was based on. Understanding these factors can help you improve them and raise your credit score accordingly.
How does it work?
Each time you apply for any kind of credit a search will be made on your credit report and a reference to this will be left on your file. Too many applications in too short a period of time will give you a lower score.
If you show lenders you are stable by living at the same property for an extended period of time then this will raise your credit score as will being on the electoral roll. Again, this gives lenders the assurance of stability.
Any long lasting credit agreements show that you can adhere to your commitments; again this shows a positive towards how you handle your financial commitments.
Alternatively, if you miss a payment, several payments or are late paying any of your credit arrangements then this will lower your score. Missing a payment has a much more detrimental effect on your credit score than a late payment. Missing a payment can stay on your report for up to six years (the maximum length of time any credit information is held).
How much credit you’re utilising is also a key fact in your credit score. Using up to half of your available credit limit is seen as an acceptable amount, whereas between half and three quarters will trigger warnings – using over three quarters of your total credit limit will more than likely have a negative impact on your credit score and your loan applications.
Any legal financial disruptions on public record will also be available on your credit score report. County Court Judgements, Individual Voluntary Arrangements, or bankruptcy will all appear and will have a negative effect on your credit report and credit scores. If you have any of these you must adhere strictly to any conditions applied in order to not warrant further reductions in your score. There are options to help rebuild your score once you have the debt back under control. Credit builder credit cards are one such means.
Any mistaken information appearing on your report can affect your score. Simple errors such as the wrong address or a spelling difference in your address or previous addresses can alter your rating. Your electoral roll information might be missing or information about a loan might not feature – all of these elements can be updated in order to improve your score.
Having no credit arrangements will work towards a negative score. Even if this means you have always been in credit the lack of a credit application or credit repayment doesn’t offer the lenders any information in how you handle a loan or its repayments. To gain a better credit score try to at least engage in one such activity.
What is Clearscore?
Clearscore is a UK technology business that provides its users free access to their Equifax credit score and report. It is the only free access service to Equifax’s credit reports and registered over 5 million users in 2017.
What’s the difference between Experian, Equifax and CallCredit?
In the UK nobody has a universal credit score so there isn’t a hard and fast way to achieve a perfect rating over the various agencies. In the UK everyone has three credit scores, each of which gathers their own information from various banking facilities. These three credit reference agencies use the information to offer a maximum score and each also has a different score and scale depicting what is a good score and what isn’t.
The three agencies are Equifax, Experian and CallCredit. Equifax gives you a credit score out of a maximum of 700 points, Experian’s score from a maximum of 999 points, and CallCredit from a maximum of 710.
Equifax’s credit scale dictates that scores between 0 and 279 are poor, between 280 and 379 are poor, 380 to 419 is fair, 420 to 465 is good and 466 to 700 is excellent.
The Experian credit scale however shows 0 to 560 to be very poor, 561 to 720 to be poor, 721 to 880 to be fair, 881 to 960 to be good and 961 to 999 to be excellent.
CreditCall give you a credit rating that they work out from your credit score where 1 is very poor, 2 is poor, 3 is fair, 4 is good and 5 is excellent.
Over 55% of all lenders, for example banks and finance companies, supply financial and loan information to Equifax, 77% of all lenders supply information to Experian and 34% supply information to CallCredit.
Not all lenders supply their information to the same agencies, some will supply their details to Experian only, some will supply to Experian and Equifax but not CallCredit, as will other lenders will choose their own choices across the three agencies and this is why each offers a different view of your credit rating, in turn leading to why one lender migh approve your application and another might not.
Should I use Clearscore?
Realistically you should utilise all three of the credit score agencies to achieve a complete picture of your credit reports and scores and which instances over which agencies offer weak areas you can improve on.
So you should be using Clearscore to check your credit report with Equifax, CreditExpert or CreditMatcher to view your Experian score, and Noddle or CheckMyFile to view your CallCredit report and credit score.
You need to choose which of these website services offers the detail of information that suits your needs best and consider if you can get the same level of information from the free services provided