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What is a Credit Score?

 

A credit score is used by lenders to help them decide whether to give you a credit product.  This might be a loan, credit card, overdraft, insurance product or any service where you pay for something in instalments.

 

There are three main agencies which keep databases of credit history: Equifax, Experian and TransUnion.  These agencies use your credit history to calculate a credit score, based on your past history of using credit services, which lenders can then use in their decision making.

How Can I Improve My Credit Score?

 

There are a number of factors that are used in calculating someone’s credit score.

  • The history of your credit accounts.  Even missing one payment can cause your score to go down by several points.
  • The amount of available credit you have.  If you are close to the limit on one or more of your accounts, this will affect your score
  • Being registered on the Electoral Roll at your current address will count in your favour
  • Any County Court Judgment (CCJ) will be very detrimental to your score.  CCJs remain on your record for 6 years, or possibly longer if not settled
  • If you have applied for a number of credit facilities recently, then these will show up as searches on your record, and will reduce your credit score.
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Applications like TotallyMoney are very good for monitoring your credit score, month by month, so you can see the effects of improvements you make.