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What affects your credit score?

You understand that late repayments and high amounts of debt can affect your credit score but there are lots of other things that can have an impact – and some might surprise you.

Take some time to read through this guide on what affects credit score, why it does and how you can get back on track if you have some of these things against you. It’s never too late to repair your credit score and we are here to help every step of the way.

How your credit score influences potential lenders

When you apply for a credit product, such as a credit card or a loan, the first thing the company you will do is check out your credit report. This holds all of the important information on you and your financial history, including where you have lived, what credit accounts you have open and whether you have had any issues with repaying debt in the past.

The report itself doesn’t necessarily tell them whether to say yes or no – instead they will look for warning signs such as things like defaults and numerous credit applications in a short time listed on it. If they spot any of these there’s a chance they may increase the interest rate on the credit product they are offering to protect themselves – or even reject your credit application.

Lenders always aim to ensure they get back their money, and so to have a good chance of getting credit, your report needs to look good – to prove that you can handle your loans and credit products responsibly.

What affects your credit score?

Late repayments

Late repayments won’t destroy your credit score but they are a red flag for creditors and so should be avoided if you want to ensure your credit applications have a better chance of being accepted.


If you have been consistently late on repayments for three to 6 months your creditor may issue a default notice. This usually involves a formal letter, telling you that you need to repay your debts.

Defaults can have a big impact because they are proof of whether or not you can be trusted with credit, and are one of the first things a potential lender will look for. It doesn’t matter if it’s your mobile phone bill or mortgage – if you defaulted on a credit account there will be a mark on your payment history and it will stay on your report for 6 years.

Debt solutions

If you have any debt solutions listed on your credit report, they show that you have made the effort to sort your debts but also suggest that you can be a risk to lenders. An IVA (Individual Voluntary Arrangement) or bankruptcy listed on your report will bring your credit score down.

IVAs and bankruptcy will have an effect on your credit score for at least five to 6 years, as they remain listed on your report even when completed. If you’ve taken on a debt solution such as a DMP (Debt Management Plan) then this will be marked against defaulted accounts, and while it might not directly impact your score, it is there for lenders to see.

Not having credit

Surprisingly, not having any credit under your name can impact your score. This is because lenders cannot see if you can responsibly make repayments or not. To improve your score, a history of responsible lending and repayments work in your favour and will boost your credit score.

If you don’t have any credit and your score is low, it is a good idea to take on something like a small credit card and pay this off regularly. Many people do this by using their card just to pay for petrol or their weekly food shop, then clear the debt at the end of the month to prove they can responsibly manage their money and what they are loaned.

While debt is not recommended, sometimes it is necessary to improve your financial future for when you need to make big life decisions, such as buying a home or taking on a substantial loan for home improvements.

How much available credit you have left

Available credit is the unused amount of borrowed money you have access to. If there is a lot that has been left unused, this might make future lenders nervous because they may think you are planning on making some big purchases in the future.

So if you have a credit card you don’t use, for example, that is up to date in repayments and has a large amount of money available – it may be better for your score to cancel this rather than have it sitting there.

Being registered to vote

The electoral roll is used by credit agencies to confirm your permanent and current address, as well as where you have lived and had credit before – so if you aren’t listed this goes against you and your credit score.

It’s so easy to register to vote, so if you know you aren’t on your local electoral roll at your current address then register to get things in order. You don’t have to actually vote if you don’t want to and no one will want to know your political views, but it’s important you register to ensure you can continue to take on credit without any issues.

Credit applications

The more you apply for credit, the more this pushes your score down. Every credit application leaves a footprint and when you’re wondering later ‘what affects my credit rating?’, it may just be those several credit cards or store cards you’ve recently applied for.

For other credit products – like insurance – soft searches will take place that won’t affect your score. Even some mortgage lenders only do soft searches when considering you.  

Partner’s finances

If you have any joint credit with your partner, then their credit report can potentially impact yours. If they apply for credit, your report will also be searched as well, and if they have anything negative on their report it could also start to impact your chances of getting credit.

This is something to bear in mind if you and your partner are intending on making any serious financial decisions together in the future – such as buying a house or taking on a loan – so it may be worth rectifying your credit reports first before linking them in any way.

Types of credit

When calculating your credit score, credit agencies will prefer to see non-mortgage credit on your report than mortgage products, simply because there is less risk involved. This means non-mortgage credit will better improve your score more, over time. Your overdraft is an example of a non-mortgage product you don’t use often, but you may have proved you can make repayments on when necessary.

Mortgage products when first taken out will severely impact your credit score, but over time and as you make regular repayments it will creep back up. Maintaining a good credit score takes time and patience, as well as careful thinking before making any big financial decisions once you already have credit products in place.

Length of your credit history

The length of your credit history will impact your score. A longer history with a good track record of repayment will go massively in your favour. This is because it proves that over time you can take on credit products and maintain them – and that you aren’t a future risk.

What doesn’t affect your credit score?

There are a number of things that won’t affect your credit score, including:

  •  age
  •  ethnicity
  •  salary
  •  occupation and employment history
  •  student loans
  •  where you live
  •  marital status
  •  religion
  •  whether you have children
  •  informal debt solution agreements between you and your creditors.

What type of credit products are listed on my report?

There is a wide range of things that contribute to and affect your score, including:

  •  Utility bills – Your payments to your water and gas and electric providers may be listed on your report.
  •  Mortgages – This is one of the biggest credit products to feature on your report and your payment history will be available for lenders to view.
  •  Personal loans – If you take on a loan, this will sit on your report and impact your score.
  •  Credit cards – Your credit card repayment history will be viewable on your report.
  •  Car finance – If you take on a finance deal, or a PCP loan with a car manufacturer, this will be listed.
  •  Mobile phone contracts – Phone contracts are classed as credit deals and so the repayments you make will be listed.
  •  Buy now pay later agreements – Any financial contract you take on will be listed, including repayment schemes.

Why you must check your credit score regularly

It’s a good idea to keep tabs on your credit report and check in regularly. This is to look out for things like identity fraud as well as errors which can occur and impact your score. Here’s what to look for:

Check your address is up to date and correct and your report shows at least 6 years worth of previous addresses.

Why? Credit agencies use the electoral roll and cross examine your address and credit applications to check it’s you.

Check that there are no credit products or applications not approved by you.

Why? Identity theft is a big concern when it comes to loans and credit cards and any products taken out in your name will sit on your report and affect your score. If you see any financial products that you didn’t agree to, get in touch with the lender directly and explain your situation.

Check that closed accounts are really closed.

Why? If you’ve moved address or changed energy provider, it’s important you check that the credit accounts are closed correctly so there is no chance that payments can be classed as late. Closed accounts in good order can stay on your report for ten years.

Check there are no duplicated credit products

Why? If you notice that a loan has been listed twice or any details are wrong, it’s important you rectify this immediately with your lender. Incorrect details can impact your score and it’s up to you to ensure everything is right.

Signing up to a credit agency

Experian, Equifax or TransUnion will allow you to check in on your credit report, pick up anything that looks wrong and see where you can start, when it comes to improving your score. They can also alert you to searches you may not be aware of and even monitor the web to ensure no one is using your details for financial gain. Other reputable credit reference agencies include Clear Score and Credit Karma, both of which are free to use.

If you are trying to clear your debt to improve your credit score then get in touch with our helpful team at PayPlan today, we may be able to help with a debt solution that puts you on the right track and helps you to start living again.

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