How to check your credit score

Kalpana Fitzpatrick
·5-min read
Photo credit: Getty Images
Photo credit: Getty Images

From Cosmopolitan

You’ve probably heard of credit scores and wondered if it’s something you need to know about. It might sound boring and annoying, but the simple answer is yes, credit scores are important.

According to Experian, a whopping 72% of young adults aged don't know what theirs is, despite the fact it's one of the most basic things you can check to help you manage your finances. Better still, it's free, quick and easy to do.

Note sure how to get started? Here's everything you need to know about checking it, building it, improving it and getting a step closer to being better with money.

What is a credit score?

Whether you’re applying for a new mobile phone contract, trying to arrange an overdraft or maybe even looking to apply for a mortgage, the first thing lenders will look at is your credit score.

It’s basically a three digit number that shows lenders how reliable you are when applying for credit. If it’s bad, you won't get the best deals and could even be rejected.

So, before you apply for anything, it’s a good idea to check what information companies can see about you. You have the legal right to check your credit score for free.

How to check your credit score

There are three main credit reference agencies (CRA) - Experian, Equifax and Transunion.

It’s a good idea to check your score with all three as they may hold different information about you - they are all free to use for basic services (you’ll have to pay for more comprehensive checking services).

Each CRA will hold a credit file about you, such as information on bank accounts, credit cards, overdrafts, County Court Judgements, whether you are on the electoral register, your name and date of birth. Think of this as your financial CV.

Based on this information, you’ll be given your credit score; it’s usually colour coded in traffic light colours, so you can see how well you’re doing.

Photo credit: xur82 - Getty Images
Photo credit: xur82 - Getty Images

According to Equifax, credit scores from 580 to 669 are considered ‘fair’, 670 to 739 are ‘good’, 740 to 799 are ‘very good’, with 800 and up is seen as ‘excellent’.

Now every time you apply for credit or financial products then lenders will check this score before agreeing anything with you.

A low score means you may not get the best monthly phone contract or be rejected for a 0% finance deal for example. A bad credit score will ultimately end up costing you more, so you should work towards keeping it in good shape. So, it’s time to bite the bullet and check the score.

How to improve your credit score

Don’t worry if your score is on the low side, there are easy moves you can make to improve it.

According to James Jones, head of consumers affairs at Experian, there are six simple ways to improve your score:

  1. Register to vote (make sure you use the address you live at and are using to make applications).

  2. Reduce your debt (credit card payments and overdrafts for example).

  3. Don’t apply for too much credit in a short space of time.

  4. Pay your bills on time (set up a direct debit to avoid missed payments).

  5. Don’t have joint accounts with someone who has a bad credit score, because you’ll become financially linked to them.

  6. When you do apply for credit cards or loans, ask for a 'soft search' . A soft search won't leave mark on your score if you are rejected or decide not to take out a product, whereas a 'hard search' will leave a footprint on your file. A CRA may have an eligibility tool you can use or try this one from MoneySavingExpert before making nay applications.

You can also sign up to Experian’s ‘Boost’ service which allows you to use your payments made to streaming services, like Spotify and Netflix, to count toward your improving your credit score,” adds James.

If you are renting, check out CreditLadder, which ensures your rent payment counts towards your credit score. Next year, NatWest Bank is also launching a new app, Housemate, which will also help make your rent payment count towards building your credit score.

If you are paying rent on time, then making sure your payments count could significantly improve your credit score.

What if I don’t have credit history?

If you are young and have never borrowed, then you won't have a credit history; but a clean slate doesn’t mean you’ll be accepted for credit applications. You still need to prove you're a reliable person to lend to.

Even if you don't plan to borrow anything right now, building some kind of credit history for the future is a good idea - like for when you make your first mortgage application or want to buy your first car. A good way to start is to prove you are a reliable borrower by starting with a credit builder credit card.

These cards are for those with no credit (or even bad credit). You’re more likely to be accepted and given a small borrowing limit, but they do come with high interest charges. The trick is to use it for small purchases and set up a direct debit to pay the bill in FULL each month and on time, and that way you will not be charged interest or cause damage to your credit score. It's important to pay this in full and on time. This will slowly help build your credit file and score.

Keep an eye on your credit score

Once you've checked it and taken steps to make your credit score the best you can, keep an eye on it regularly. It's also a good way to detect fraud, should anyone try to open an account or take out a loan using your details. If this happens, be swift to report it to the credit agency.

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