What factors impact my credit score?

The main factor that decides your ability to borrow money, take out a personal loan, or to setup any kind of finance depends on your credit score or rating.

Your potential lender will weigh up different details about your financial history to calculate your credit score. It’s worth considering your spending habits, such as the amount of money you owe versus the amount of available credit you have, and how you’ve handled past payments. If you’ve always paid your monthly amounts by the due date, this will help your rating. If your history includes missed or late payments, this could lower your score. Public records are also checked for bankruptcy, judgements and collection items – all of which can cause your rating to dip.

The lender will take a look at your accounts too – and in this case less can be more. If you’ve opened multiple accounts in a short period of time, or have lots of accounts open and in use, this activity can lower your rating.

Credit scoring works by awarding points based on the information:

• you provide on your application form
• the lender may already have about you, based on previous accounts you have with them, and
• on your credit report, which is held by one of three credit reference agencies – Experian, Equifax and Callcredit