Credit Score

Many people wonder what a good credit score is and what it can mean for you.

A credit score is a personal rating, determined by information given to a credit reference agency (the credit reference agencies used in the UK are Equifax, Experian, Crediva and TransUnion). They collect and hold information such as your debts, how many credit applications you have made and whether you have been making repayments (and how much). The data collected from credit reference agencies provides potential lenders with an idea of how you manage your money. This helps them predict future behaviour, to see if you are someone they would be happy lend to. A higher score means lenders see you as lower risk. So, a good score will be good news if you’re hoping to get a new credit card, apply for a loan, or even a mortgage. As each credit reference agency uses their own methodology, each will provide a different score. The issue is not how your score compares across the agencies, but how it compares to others within the same agency.

But remember, Churches Mutual does not use your credit score to assess your application for a loan or the rate we charge – we assess your ability to fund the loan on an individual basis. You are a person, not a number!

How to see your credit score

To see your credit score visit any of the providers’ websites or contact your bank who may provide your score free of charge.

Ways to improve your score

Register on the electoral roll at your current address if you’re not already on it. This helps companies confirm your identity

Open a bank account. Having a bank account and managing it well shows companies you’re financially responsible, and starts to build your credit history positively. If you have an overdraft, stay well below the limit (using no more than 25% of it is a good rule of thumb) and try to pay it off as quickly as possible

Get a credit card – and use it responsibly. If you’ve opened a bank account and are managing it well, the bank may also be willing to give you a credit card to build credit. Paying it off on time and in full each month will help build a positive credit history and improve your score

Keep your credit utilisation low. This is the percentage of your credit limit you actually use. For example, if you have a limit of £3,000 and you’ve used £1,500 of it, your credit utilisation is 50%. A lower percentage is usually seen in a positive light and should help your score go up. To help improve your Experian Credit Score, try to keep your credit utilisation at 25%

Take out a small form of credit. This might be a mobile phone contract or store card. They’re usually easier to get accepted for than credit cards, but can still demonstrate your ability to pay your bills on time and be financially responsible

Manage your household bills well. Looking after your utility accounts (e.g. water, gas and electricity). These can help build your credit history and show lenders you’re responsible. Even your rent payments can improve your score, provided you make them on time and in full

How to keep your credit score healthy

Limit the number of credit applications you make. Don’t be tempted to make too many in a short space of time as this can make lenders view you as overly reliant on credit, and a higher risk. Each application you make will record a hard search on your credit report. Companies can see this, so it’s a good idea to space any applications out

Close unused accounts. If the amount of credit available to you is too high, lenders may think you won’t be able to handle any more

Keep up with your payments. Delinquent and defaulted accounts will harm your score. Accounts are labelled delinquent when you’re late on payments, and defaulted accounts are when your relationship with the company has broken down due to several missed payments

Only borrow what you know you can afford. If you get into trouble with debt, that leads to CCJs, IVAs or even bankruptcy, these will stay on your credit report for up to six years and will damage your score

Keep an eye out for fraudsters. Their activity could hurt your score badly. So, try to check your credit report for any suspicious signs

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We offer competitive, affordable loans and ethical savings to lay or ordained ministers, employees or trustees associated with our partner churches. Our friendly personal service provides direct access to a member of our expert, impartial staff advisors.

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