Credit Scores

What is a Credit Score?


A credit score is a number which is used by a lender to help determine whether you qualify for a particular credit card, mortgage or other financial service.
In the UK, there are three main credit reporting agencies. These are: Equifax, Experian and TransUnion. Each of these agencies has a slightly different way of calculating each individuals credit scores. However, the factors which impact your credit score (regardless of agency) are as follows:

  • How much of your total credit you are using.
  • Your total debts.
  • Your repayment history.
  • The number of hard searches on your credit report.
  • Public records such as your electoral roll.
Please note: For the exact details of what affects your score on each agency, please visit their respective websites.

Why is this important to know?


As a young person, it can often be very difficult to be eligible for credit (loans, credit cards, mortgages) for example. And due to the importance of such services in our lives, it is vital to have some sort of indication of how to become eligible for such services. Also, when you turn 18 years old, this is where you are first allowed to make use of these financial services, however when you are this young, you have very little or no credit history, therefore you cannot prove to the lender that you are able to pay back any money lent for example. The following services all give excellent indications of how to improve your report, including showing you exactly what you are doing right and wrong:

With the use of these services, you can learn (from a young age) how to build a strong credit report for when you progress into your later life, and are in need of a mortgage or another service.

How I Personally Used These Services.


First of all, please note that this is not what will be suited best for everyone, and one should always research the best things to do for themselves.
When I turned 18, I initially downloaded ClearScore, then also downloaded the other services which were mentioned above. This first showed me how my own credit score at the time was far below for what would qualify me for any financial services other than some very limited credit building services The one I used in particular was LOQBOX, which is a service which allows you to effectively take out a loan with no ability to spend that loan until it has been paid back. And what this does is shows lenders that you are able to reliably pay back to a lender every month when your payment is due. Reflecting that you are a reliable lender. Along with giving other tips specific for me on how to improve my credit report.
This then allowed my score to progress to a level which was sufficient to qualify for a credit card for users with lower scores. Allowing me to further show that I am able to responsibly handle my credit (keeping my credit utilization below 10 percent), and that I was able to pay off my debt reliably. This is something I am still doing, ensuring that I am able to build a strong credit report for the future where financial services may become very important to building my financial security.

Important Things to Remember

  • Most importantly of all, always ensure that you can afford any credit that you take on. And that you are always able to pay any debts on time.
  • Ensure that you do not miss any payments, as even one miss payment will create a big hit to your credit report.
  • Credit cards and loans - particularly for those with lower credit scores have extremely high interest rates, therefore, to avoid having to pay back more than you borrow, pay back on time in full if you can.
  • Having a low credit score at a young age is not a bad thing, it is due to the fact that there is little or no credit history for you, therefore once you start building that (by using the provided services) this will quickly improve.
  • Do not take everything here as gospel, researching what is best for yourself is always important and allows for you to gain much more knowledge on the topic.