What does your Credit Score really mean?

There are so many theories around about your Credit Score, it’s hard to know what your Credit Score actually means.

Is it a way for Credit Reference agencies just to make extra money or will it actually help you get accepted for credit?

What is a Credit Score and does it matter?

credit score

A Credit Score is presented by most Credit Reference agencies when you view your Credit Report online.

The first and most important thing to know is each of the three UK Credit Reference agencies may vary. This is because some companies report to 1, 2 or all three of the Credit Reference agencies.

So your Credit Rating with each Credit Reference agency will always vary.

The way each Credit Reference agency scores you will also vary, for example, the highest possible score on Experian is 999, where as on Equifax and Call Credit you cannot score above 750.

Each credit reference agency will also put you into a band, usually these bands will show your credit score as either very poor, poor, fair, good or excellent.

Of course, we all want to be seen as Credit Worthy, we all want to reach that Excellent mile stone.

So first, let’s discover what your actual Credit Rating is going to be used for.

What use does the Credit Reference agency credit score have?

When you apply for a Job, want to take out Insurance or even just want to move house, your Credit Rating Score could be used. You could end up paying more for products and services with a low credit score. You could even be stopped in your tracks in terms of getting Jobs or being able to move.

So taking the positive steps today could help you in the future

Will your Credit Score actually help you get accepted?

credit scoring how it worksThe truthful answer is no. Credit Reference agencies do not lend money, they simply review your details, your financial conduct, the number of Credit Searches you have made then score you against the millions of other customers they hold details on.

However, when you apply for Credit, the Company is likely to carry out a credit check. A Credit check will request information from your Credit Report and this in turn will help the lender make a decision.

They will not ask the Credit Reference agency for your score, simply because they will score your application from the details you have submitted and the information they receive back from the Credit Reference agency.

Therefore, the score from the Credit Reference agency doesn’t mean you will be accepted or rejected for credit.

The Credit Score Provided is an indication to you on what your Credit Rating is…

However, the score does have some meaning. The Credit Score is an indication to you about your own performance.

If one is attempting to rebuild their credit after previous problems, you can use the score to ensure you do everything you can to build up the score.

As the Credit Score gets higher, you can have a warm feeling that actually lenders will start to see you in a more positive light.

Making too many applications for credit for example will damage your credit rating, each time you apply, your credit score is reduced at the Credit Reference agencies, this should show you that future lenders will not look at this in a favourable light.

Even if you have an excellent Credit Score on all three credit reference agencies, this doesn’t mean you will be approved.

In fact, some one with a Poor Credit Score could actually obtain credit whilst you are rejected.

Remember, each application is actually considered on your own information, such as your Age, your Living Circumstances, your Debt levels and of course your income.

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  • Free access applies to Noddle (for your Call Credit Report) and Clear Score for your Free Equifax Credit Report.
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