What is a credit score?
Your credit score is a numerical snapshot based on your credit report, calculated by agencies like Experian, Equifax, and TransUnion.
How it works
Lenders use your report to decide whether to lend to you and at what interest rate.
Report history
Your report tracks your repayment history on credit products over the last six years.
The agencies
Experian
Often used by larger high-street banks.
Equifax
Commonly used by various lenders for credit assessments.
TransUnion
Often used by credit comparison apps.
Why it matters
A strong score is essential for:
- 1
Cheaper borrowing
Low rates are only offered to those with excellent scores.
- 2
Ease of approval
Many lenders will automate rejections for low or thin credit files.
Building your credit
You can improve your score if you are:
Consistent: Being on the electoral roll and maintaining reliable payments.
How to compare agencies
Follow these steps to make an informed choice:
- 1
Check all three
Lenders might look at different ones, so check them all.
- 2
Check for errors
Look for incorrect addresses or debts you don't recognise.
Pros and Cons of checking
Pros
- Early error detection
- Helps in planning for large loans
- Builds financial discipline
Cons
- Requires regular checks
- Some apps offer trial subscriptions
Why care?
A single mistake can cost thousands in interest over a mortgage term.
Potential risks
Engaging with ignoring your credit report requires care to ensure you don't overpay or miss critical protections.
For energy, failing to switch or manage your smart meter can lead to higher costs. For finance, errors on your report can lead to loan rejections.
Always use verified, independent sources like Ofgem or regulated financial services to compare options.
Alternatives
To build a better financial picture:
Credit builder cards
Used sensibly, they help demonstrate reliable repayment habits.
FAQs
About this guide
Written and reviewed by the Grow Your Business team, and kept up to date as rates, rules and provider terms change.
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