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How do Credit Reference Agencies Calculate Credit Scores?

Your credit score number is calculated using a points system based on the data in your credit file. It indicates the level of risk associated with lending to you.
A man using a calculator to understand his credit score.

Your credit score is a number that indicates the level of risk associated with lending to you. Financial lenders can see how reliable you are at repaying money that you’ve borrowed determine your creditworthiness. Essentially, the higher your credit score the more likely it is that your loan application, credit card, or any other borrowing option will be accepted.

How to check your credit score

There are three main credit reference agencies (CRAs) in the UK that each holds your personal information, such as your name and address, and your financial history in credit reports. The data is used to calculate your credit score.

Each CRA has its own credit scoring system, so your credit score value may depend on the agency although you’ll probably fall into the same bad, fair, good, or excellent category across the three credit reference agencies.

  • At Equifax, your credit score is rated between 300 and 700 with any credit score over 420 considered good and any credit score over 466 considered excellent.
  • Experian calculates your credit score between 0 and 999 with any credit score over 881 considered good and any credit score over 961 considered excellent.
  • TransUnion calculates your credit score between 0 and 710 with any score over 604 considered good and any credit score over 628 considered excellent.

Request your credit file to check your credit score for free, it won’t affect your credit rating! You can receive your credit file either online or as a written copy through the Information Commissioners’ Office. There are also online site partners that allow you to view your basic credit score and report for free on a 30-day trial, these include ClearScore (Equifax), MSE Credit Club (Experian) and Credit Karma (TransUnion).

Why does your credit score matter?

Your credit score matters as it can determine your ability to apply for a financial loan, a credit card, finance, or other borrowing options. It also informs lenders on how much money they should borrow you and the rate of interest placed on the repayments.

If you have a good credit score, you’re more likely to be accepted for a large loan amount at a competitive interest rate in the future. It’s important that you understand how your credit score is calculated and how to improve your credit score.

How do Credit Reference Agencies calculate your Credit Score?

Credit scoring is an analysis carried out by credit reference agencies. According to Equifax UK, your credit score is calculated based on numerous things:

  • Your personal information (such as date of birth).
  • Your electoral roll data.
  • Your credit repayment habits.
  • Information that is accessible on public registers (such as County Court Judgements).

What is included in your credit report?

  • Basic Personal Information, such as your full name, date of birth and current address.
  • Credit History such as previous loans, any outstanding debts and a record of any late or missed payments.
  • Previous Enquiries. Whenever you apply for credit or a lender or debt management company etc accesses your credit profile it leaves a footprint. If you have too many enquiries over a short time, it may look as though you’re struggling with payments and desperate for credit.
  • Public Records. If you have any previous Court County Judgements (CCJs) or have filed for bankruptcy, then this will also be evident on your credit report.

Although lenders may request the information separately, your income, student loan debt, council tax arrears, driving fines or any previous criminal records cannot be found on your credit report.

Any enquiries will stay on your credit report for up to two years, and on public records for up to six years. So, if you’ve borrowed money from a lender within the last six years and made the agreed repayments on time, you’ll likely have a good credit score that suggests you are in a position to apply for a loan and manage future debt responsibly.

How can I improve my credit score?

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Many credit reference agencies, such as Experian, suggest various ways to improve your credit score. Here are some of their top tips:

  • Register to the Electoral Role - Lenders use this to check you live at the address you have stated on an application.
  • Make regular and timely payments - paying your accounts on time shows provisional lenders you are reliable and responsible.
  • Complete regular credit report checks - this is a simple way to ensure your credit report contains no errors that could be harmful to your overall score.

Can I borrow money with a bad credit score?

If you’re concerned about bad credit and debt, then you’ve come to the right place. At Consolidation Express, we will always consider your loan application regardless of your credit score!

Our debt consolidation loan, ranging from £5,000 to £75,000 may be the best borrowing option for you if you’re struggling to make ends meet due to debts from multiple creditors and have a stable source of income to manage the repayments. By consolidating your debt into one monthly repayment, you’ll be able to manage your income better and take the first steps to improve your credit score and financial future.

Debt consolidation loans from Consolidation Express can be used to cover a wide range of expenses, including personal loans, store cards, credit cards, short term loans, utility arrears, phone bill arrears and more. To find out more about borrowing money with a bad credit score and the best way to manage your debt, contact our dedicated team of debt solution experts today on 0161 543 0738.

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Apply for a Debt Consolidation Loan

Whatever your credit score, regain control of your finances today and apply for a debt consolidation loan in three easy steps.

  • Complete the short online loan application, including your personal details and how much money you’d like to borrow.
  • Our friendly and experienced loan advisors will soon be in touch once we’ve reviewed your application.
  • If approved, the money will be paid straight into your account

We consider all credit scores, even bad ones and pride ourselves in offering a real debt solution for real people with zero hidden upfront fees. Check out some of the stories from the people we’ve helped manage their debt and plan for a positive future.

If you have any enquiries regarding our bad credit loans or debt consolidation loans, use the contact form, or fill in our quick online application.

Apply Now
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APRs from 5.8% to 89.9%

We are a broker, not a lender.

Unsecured Loan Representative 69.9% APR

Borrowing £7,500 over 36 months, repaying £502 per month, total repayable £18,083. Total cost of credit £10,583. Interest rate 69.9% (variable). The lenders on our panel offer loans for 12-60 months, with rates from 5.8% APR to 89.9% APR. The Representative Example is based on all loans paid out by lenders between 19th Apr 2022 and 23rd Dec 2022.

Secured Representative 11.7% APR

If you choose to add fees to the loan: Assumed borrowing of £25,000 over 120 months, plus a broker fee of £2,500 and a lender fee of £250 would result in monthly repayments of £345.55, the borrowing rate is 8.6% (variable), the APRC is 11.7% (variable), total charge for credit £16,466.00 and the total amount payable £41,466.00. You can opt to pay the lender and/or broker fees upfront, your adviser will discuss these options with you.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it. All rates vary subject to loan amount, loan type and status. Repaying your debt over a longer period of time may increase the amount you pay.

Further reading

What are the Different Kinds of Unsecured Loans?

Understand what an unsecured loan is, and how best to use the different kinds of unsecured loans in 2023.

What are the Different Types of Secured Loans?

With so many different types of loans available, it can be difficult to know which is right for you. For more information on secured loans, read this expert article.

Persistent Debt – What Does it Mean for Your Credit?

Persistent debt can affect your credit rating for a significant time period. Read to find out more.