Credit Scores: Explained

6 May 2019

Loans. Whether it’s to invest in a qualification or equipment, or to cover a big unforeseen cost, sometimes you need credit to make it happen 💳

As someone with an irregular income, it’s hard to build a credit score because you work for yourself or have varying earnings month on month.

Here’s how to get onto the credit ladder and build your score.


What is a credit score?

Your credit score tells lenders how reliable you are when it comes to repaying debt.

People with a higher score are seen as being lower risk, and therefore more likely to be approved for credit.

There are three main credit rating agencies in the UK: Experian (out of 999), Equifax (out of 700) and TransUnion (out of 710).


You can improve your credit score by:

1. Paying your bills on time

Paying certain utility bills on or before the deadline improves your score as it shows lenders that you are used to making regular payments.

The easiest way to do this is by setting up a direct debit with your providers so your bill is automatically charged before the deadline.

Or, if you need extra credit - opening an account, meeting payments on time and not borrowing more than you can afford can increase your score.

2. Keeping old bank accounts open and don’t constantly apply for new loans or credit cards

Your credit age makes up 15% of your credit score. The only way to increase your “age” is to keep old accounts open with a good record for a long period of time and avoid opening new ones excessively.

Every time you open a new credit card or take out a new loan, your average age decreases.

So, if you sit tight and keep things in order, your score may increase on its own.

3. Being on the electoral register

This is a publicly available register which credit agencies may refer to to check your address and residence details. Not being on it can impact your credit rating, and it’s easy to do.

Use this link to register.

4. Applying for credit builder loans.

Try not to take out more loans where possible, but if you do need to take out a loan, there may be specific credit builder loans with good rates that can help.

Make sure you pay back your minimum repayments as this is what will boost your credit score and give you access to more products further down the line.


Remember, building your credit score takes time, so pick your providers carefully and make sure they’re offering a fair rate.