Get your financial health in check! Credit scores explained…

Blog image for Get your financial health in check! Credit scores explained…

Here at TransUnion, we recently put people’s knowledge of credit scores and reporting to the test – and found that two out of three (66%) don’t know what their own credit score is.

Equally, the research highlighted that people are unsure about the information within their credit report and the impact their credit score can have. Kelli Fielding, our managing director of consumer markets, sheds some light and explains what a credit score is all about:

Do I really need to know my credit score?

In short, yes…your credit score is your financial passport. It plays a part in everyday life and is used by businesses to help make decisions that could range from whether to provide you with an overdraft to whether you can let the rental property of your choice.

Given the important role of credit scores today – with over a fifth of those we surveyed saying their credit score has helped them achieve a life goal – it’s essential that people are familiar with their score and the information that sits behind it.

What information is used to create my credit score?

Your credit history starts being compiled when you turn 18 and become eligible to vote. It’s a detailed picture of your financial situation, based on information supplied on a regular basis to credit reference agencies, like TransUnion. This comes from banks, credit card providers, utilities companies, leasing and hire companies, retailers, and other companies which provide credit.

It covers four key areas which are: payment and credit history, outstanding debt, credit utilisation (how much of your available credit you’re already using) and stable address history. This information is then used to create a credit report and calculate your credit score. Worryingly less than four out of 10 (38%) feel confident that they know what information is stored in their credit report, according to our survey. But remember, this is your data so there’s no reason to be in the dark about it; take control and access it. You can also correct it if you spot something that isn’t right.

How often should I check my credit score?

If you haven’t checked your score recently, don’t worry – you’re not alone. We found that 46% either hadn’t checked it in over a year or didn’t know when they last checked. Of course there are times when people are much more likely to look; typically when applying for either a mortgage, loan, or credit card, but you should be treating it like you would your bank account and checking in regularly, ideally weekly or fortnightly. Our survey showed that 53% check their credit report when applying for a mortgage but in reality, that might be too late! If there is anything on the report that might cause concern, you want to know about it before you apply. You can then either take action if you think there’s an error, or ensure that you’re applying for the products you’re most likely to be accepted for.

If I’m not applying for credit why do I need to check my report?

It’s not just about financial decisions. Your credit report can help you monitor for ID fraud, as if someone tries to use your identity in a scam, this might be one of the first places you spot it. It can also be used for ID checks by businesses; from online gambling companies that want to ensure you’re over 18 to letting agents vetting tenants on behalf of landlords. The checks all use information from your credit file – although the business will only see a small part that is relevant to their request.

How is my score used?

Six out of 10 people (62%) don’t know how their credit report is used, according to our research, which is a worry given the reach it can have. Your credit score can influence companies in their decisions on whether to offer you things like a credit card, overdraft or mobile phone contract.

However, it’s important to note, a high credit score is not a guarantee that you’ll be accepted for any product you apply for, nor does a lower one mean you’ll be turned down; this is at the sole discretion of the product provider. Every credit provider has their own rules and will use the credit score alongside a combination of other factors, such as information supplied in the application and their own policies.

What makes a healthy credit score?

Once you’re familiar with your credit score you should aim to keep it in good check at all times. A few tips to help in this are:

  • Make sure you’re on the electoral register
  • Pay bills on, or ahead of, time
  • Avoid keeping a high balance on your credit card
  • Don’t make multiple applications for credit in a short time period
  • Close down out of date credit cards and cancel old agreements
  • Sever old financial relationships if you are divorced or separated, making sure your former partner’s details are removed from any joint accounts

You can get a free copy of your credit report from all credit reference agencies, including TransUnion, or for the chance to check it more regularly why not sign up to one of the many online services on offer including: Credit Karma, MoneySuperMarket, or TotallyMoney.

If you’re a consumer with questions or issues related to your personal credit report, drivers history report, disputes, fraud, identity theft, credit report freeze or credit monitoring services, please visit our Customer Enquiries page for assistance.

Contact Us

TransUnion would like to send you original insight, commentary and research on data, software and analytics, early notifications of exclusive events and information about our products and services. If you would like to receive that information, please let us know using the following options:

Business enquiries: If you have a non-sales related query please call us on (+44) 0113 388 4300

Please read our privacy notice , which explains who we are, how we collect and use your personal information and how you can exercise your privacy rights.

We're sorry, your request failed. Please try again in a little while.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.