By viewing a full and accurate copy of your credit score and report, you are able to gain an indication as to how banks and financial institutions see you and whether they are likely to give you credit.
Credit Agencies use the information you supply to them during your registration to search their databases and compile your credit report. To show your full report they require all your previous addresses for these six years. To add previous addresses, you will need to log in and go to ‘Your Account’ and add to your address history.
What is a credit score?
Your Credit Score is calculated to give you an idea of how you’re doing financially. It is based on your credit report which most banks and financial institutions use. However some may have their own systems and result in slight variations. Your credit score is a rating based on your credit history, credit report and current financial status. It can change at any time, according to how you’re managing your finances. Banks and financial institutions use it, alongside the information you put on your application form, to help them decide whether or not to give you credit.
How is my credit score calculated?
Credit Agencies calculate your Credit Score by examining various factors e.g how you are managing your finances, against a series of Score Factors (which are shown in your Credit Report).
How can I improve my credit score?
The best way to improve you credit score is to regularly check which score factors are affecting your credit report. Look for the score factors increasing your credit score. Learn what you’re doing right, and keep on doing it. Find out which score factors are decreasing your score, and then follow your credit agency’s tips and advice to rectify them.
What is the difference between a credit score and a credit rating?
What is a credit score?
Credit Agencies give you a credit score between 0-999, with 999 being the best possible score. It is calculated using your Credit Report, based on how you manage your finances and how much credit history you have from the UK over the past 6 years.
What is a credit rating?
This is essentially a different word used to describe a numbering system. Designed to give you an idea of how you ‘rate’ on a scale, and therefore how likely you are to be accepted for a credit application. Other credit reference agencies such as CallCredit or Equifax might give you a credit rating. However Experian CreditExpert doesn’t give you a credit rating.
So, what is the difference?
Each bank and financial institution uses your credit report information to calculate their own score or rating for those that apply for their credit card, loan or mortgage products, for example. They also might have different scoring models for different credit products. This information is confidential to the individual bank and it is not something a credit agency, or you, can know. However, they are constantly researching what sort of credit applications get accepted and what sort do not, to give you as accurate an idea as possible as to whether you’re likely to get your application for that credit card or mortgage accepted or not.
Banks and financial institutions and lenders are companies which may lend you money
They use your credit report when they are deciding whether to give you credit. Every bank and financial institution uses their own credit scoring system and your credit agency. Credit Score is an indication of how a bank or financial institution may score you.
When we say ‘banks and financial institutions’or ‘lenders’, we are referring to any company that you could borrow money from. These include:
- Banks & Building Societies
- Mortgage lenders
- Credit card providers
- Loan providers
- Utility companies – gas, electricity
- Mobile phone contract providers
- Broadband, TV and phone line package providers
- Insurance Companies – house, car, life
Why do banks and financial institutions use credit scores?
When you apply for credit, such as a new credit card, a bank or financial institution will look at your credit report, and your application details. They will use this information to build their own credit score for you. Which will go towards their decision about whether or not to lend you credit, how much to lend you, and at what % rate. It is a way of ensuring they make a fair decision about each applicant, using an automatic system.
Do I have the same credit score for every Bank and Financial Institution?
No, in fact, every credit reference agency, bank and financial institution will calculate your credit score differently. They may even calculate your score for different products differently, e.g. the same bank could give you one score for a credit card application and a different score for a mortgage.
Your Credit Score is based only on the information your credit agency find and include in your Credit Report. They believe that is an accurate reflection of the various scoring systems currently in use, and provides a reliable guide to how banks and financial institutions will see you.
How do banks and financial institutions calculate my credit score and decide whether to lend me credit?
When you apply for credit (e.g. a credit card or mortgage) the bank or financial institution will calculate a score based on the same factors you’ll see in your Credit Report. Plus other things like your salary and homeowner status. They’ll then review this score alongside the information you put on your application form. From this they decide whether to lend you credit.