What can impact your credit score?

You might be surprised by what can impact your credit score.

It’s not one-size-fits all

With no one-size-fits-all scoring system, getting your head around your credit score can be confusing. So, we’re here to help. 

In the UK, there are three main credit reference agencies: TransUnion, Experian and Equifax. 

They each collect information about you from public records, lenders and other service providers. This information helps them build a picture to help them calculate your ‘credit score’. 

Each credit reference agency does this independently, so the score they generate can vary too. 

Other lenders and service providers also may have their own scoring systems, using information such as your application details, your credit report, any existing account information and when you last applied for credit.

More about your credit score

Things that may impact your credit score

There are lots of things that may impact the credit score generated by each of the credit reference agencies. But how you manage your finances is a big factor. Things like:

Paying on time

Paying things like your mortgage, credit card, personal loans and car finance on time can help your credit score. It’s not just the big things. Store cards, TV subscriptions and mobile phone contracts etc. can also count. 

Making your payments on time helps to show lenders that you are likely to be responsible with finances. Missed, late or defaulted payments are likely to be reported to the credit reference agencies and could impact your credit score. So, if you have any Direct Debits set up make sure you have enough money in your account when they are due.

Moving home

Did you know that registering to vote could help improve your credit score? 

Your address helps to identify who you are. If you’ve moved, make sure you’re on the electoral register at your new address to help us locate you.

Using credit

How you manage credit can impact your credit score. 

If you’re always close to your limit or have a lot of debt, lenders may be concerned about your financial stability. Could you repay what you’ve borrowed if your circumstances changed? 

It’s a good idea to keep unsecured borrowing to under 25% of your available credit limit.

Joint accounts

When you open a joint account with another person, you create a financial link between your identity and theirs. Things like mortgages and utility bills can also create these financial links. If the joint account holder isn’t managing their borrowing responsibly, then it could impact your future eligibility. 

If you’re worried that someone is still visible on your report but you are no longer financially linked to them, you can submit a notice of disassociation to each of the credit reference agencies.

Borrowing history

How long you’ve been borrowing money for may also impact your credit score. So, the average age of your credit accounts can also count. 

The longer you  show that you can manage your finances, the more confident a lender is likely to feel.  And having the same accounts over a long period of time suggests that you can reliably manage your debts.

Things you may not have thought of

There are some things you may not think impact your score but may do. Here are some of them:

Your overdraft

An arranged overdraft can offer a safety net, helping you manage unplanned expenses in the short-term. It’s borrowing that is connected directly to your current account. You may be able to improve your credit score by staying within your agreed overdraft limit and paying it off regularly. But going into an unarranged overdraft could have the opposite effect.

Other unsecured borrowing

Other types of unsecured borrowing, such as PayPal Credit will usually involve a ‘hard’ credit check when you make a full application. Multiple hard credit checks in a short space of time can influence your credit score with some credit reference agencies, no matter what the outcome. It’s important to keep up your unsecured borrowing payments. Any missed payments can also impact your credit score.

Closing credit accounts

Closing credit accounts can impact what’s called your credit utilisation ratio. This is how much credit you have available to you and how much of that you’re using. When you use more credit, that’s when the gap starts to close, and when it can impact your credit score. Closing accounts you no longer use can help keep you safe from fraud, but it’s worth noting that it may temporarily affect your credit score.

Dependant on credit

Lenders may review your incomings and outgoings. If you’re regularly close to your credit limits or missing payments this can be a red flag if you’re applying for borrowing. If you’ve had financial difficulties or high levels of debt, it could affect your credit eligibility. 

If you’re worried about money, talk to someone today.

Things that are unlikely to affect your credit score

Not everything affects your credit score. Some of the things that are unlikely to are:

Your earnings and savings

Your credit score powered by TransUnion is primarily focused on your borrowing habits.

Lenders may have their own credit scores and will likely assess your affordability by asking about your earnings and savings. This is to make sure you can afford to repay what you borrow and make decisions about what to responsibly lend. So, your income and regular income are important in terms of affordability but are unlikely to impact your credit score.

If you're on certain benefits

Information about benefits , like Universal Credit, do not appear on your credit report and don’t usually impact your credit score. You will usually be asked about your income by lenders, to make sure you can afford and sustain any borrowing.

Spending with your debit card

When you use your debit card, you’re spending money that you have in your account. It’s yours and not borrowed, and so it shouldn’t impact your credit score. 

The only instance where using your debit card could impact your credit score, is if you are using or have exceeded an arranged overdraft.

Looking at your credit score

Keeping an eye on your credit score can be a good habit to get into. Looking at your credit score won’t impact it or bring it down. 

Checking regularly means you’ll notice if something has changed, and you can take the steps to investigate. 

You can check your TransUnion credit score by using Your Credit Score.

Past credit history

If you’ve missed payments or been in other situations that have reduced your credit score, don’t worry, the results of these don’t usually last forever. You can take steps that could help to improve your credit score.

If you’ve had any judgments (such as CCJs), defaults, bankruptcies or insolvencies these could have an impact for a few years.

Getting a quote

Getting a quote or checking your eligibility will usually involve a ‘soft’ credit check on your credit report, but it won’t affect your ability to obtain credit. So, checking your eligibility for credit cards, or even a mortgage agreement in principle, is usually a safe bet. If you decide to complete a full application, that’s when a ‘hard’ credit check takes place. These are visible to credit lenders, no matter what the outcome.

Apart from your credit report, lenders will usually check...

  • Your affordability. What you can afford to repay based on what you earn and spend, and any existing debt. 
  • Your details. Personal information, like your address and employment status. 
  • Your account history. Lenders may have records of previous accounts that you’ve held with them.

Why your credit score matters

  • Higher acceptance. With a higher credit score, you’re more likely to be accepted for things like a personal loan, mortgage, credit card or car finance. 
  • Lower interest rates. You’re more likely to be offered lower and longer lasting interest rates, as you have shown to lenders that you can manage your finances and are lower risk.
  • Amount of credit. A higher credit score can mean that you’re offered higher credit limits than if you scored lower.

Want to know how you could help improve your credit score?

What could help improve your credit score

3 things you can do now

  1. Check your credit score. You can check your TransUnion credit score in the MBNA Mobile App or in our Online Services. 
  2. Manage your payments. Missing payments will usually bring your score down, while making payments on time might help improve it. Consider Direct Debits to help manage payments on time. 
  3. Register to vote. Getting your name and address on the electoral register could help to improve your credit score.

Keep reading

Applying for credit

How does a credit score work?
What is a bad credit score?
What is a good credit score?
Why has my credit score gone down?

Using credit

What are interest rates?
How to consolidate debt
What is APR?
What is a balance transfer?
What is a money transfer?

Ways to borrow

What is credit?
Credit cards
Loans
Knowing what you can afford
How a credit card works

Know where you stand with MBNA

Sign up for ‘Your Credit Score’. We’ve partnered with TransUnion to provide you with access to your credit score. It’s free to use and won’t hurt your credit file.

  • View your updated credit score every 7 days.
  • See what you’re doing well. 
  • Understand what you can do that might help to improve your score. 
  • Find out how your score compares to the UK average.

More on Your Credit Score