Credit scores explained: what affects yours, how to check it free and common myths

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A credit score is a number lenders use to estimate how likely you are to repay borrowing. It can affect whether you are approved for a credit card, loan, mortgage or phone contract, and the interest rate you are offered. How scores work differs a great deal from country to country, so this guide covers the general principles first and then some specifics. It is general information, not financial advice.

Credit report vs credit score

Your credit report is the record: your accounts, balances, payment history, applications for credit and, in many countries, public records such as court judgments.
Your credit score is a number calculated from that report by a scoring model.

The report is what matters most. If it is accurate and healthy, the score follows.

What generally affects a score

Details vary by scoring model and country, but the same themes appear almost everywhere:

Paying on time. Late and missed payments are usually the most damaging thing on a report, and recent ones count more than old ones.
How much of your credit you use. Using a large share of your available credit limits can lower a score. A common guideline is to keep card balances well under your limits.
Length of history. A longer record of well-managed accounts generally helps.
New applications. Applying for a lot of credit in a short time can make you look riskier.
Mix of credit. Handling different kinds of credit responsibly can help a little in some models.

United States

The best-known score is the FICO Score, whose base range runs from 300 to 850. FICO says its scores are built from five categories, weighted roughly as follows: payment history 35%, amounts owed 30%, length of credit history 15%, new credit 10% and credit mix 10%. VantageScore is another widely used model. Lenders may use different versions, so you can have several slightly different scores at once. You can get your credit reports free from the three national bureaus (Equifax, Experian and TransUnion) at AnnualCreditReport.com, the official site. The bureaus made free weekly reports there permanent in 2023. Be wary of look-alike sites that ask for payment.

United Kingdom

The UK has three main credit reference agencies: Experian, Equifax and TransUnion. Each uses its own scale, so a score from one is not comparable with another. Importantly, lenders do not see the score a consumer app shows you; they look at your report and apply their own scoring. Everyone has a legal right to a free statutory credit report from each agency, and each also offers free ongoing access to a score, either directly or through a partner service. Being on the electoral roll at your current address is widely recommended as a simple way to help lenders confirm who you are.

Elsewhere

Many countries have their own bureaus and scales, and some rely more on bank relationships than on a single number. If you have just moved country, your old history usually does not come with you, so expect to start building a record again.

How to check yours for free

Use the official free routes in your country rather than paid subscriptions.
Read the report itself, not just the number. Look for accounts you do not recognise, wrong addresses and late payments you did make on time.
If something is wrong, raise a dispute with the agency or bureau. Errors can be corrected.

Common myths

"Checking my own score lowers it." No. Checking your own score or report is a soft search, which lenders do not see as an application and which does not affect your score. Hard searches, made when you formally apply for credit, can cause a small temporary dip.
"Carrying a balance on a credit card builds credit." You do not need to pay interest to build a history. Paying the full statement balance each month shows the same responsible use.
"Earning more raises my score." Income is generally not part of a credit score, although lenders consider it separately when deciding what to offer.
"Closing old cards always helps." It can reduce your total available credit and shorten your history, which may lower a score in some systems. Weigh that against fees and temptation.
"There is a blacklist." There is usually no single list that blocks you from all borrowing; each lender decides using your report and its own criteria.

Building a score from scratch

Pay every bill on time, keep balances low, apply for new credit sparingly and give it time. There is no quick fix, and anyone selling one should be treated with suspicion. Have a question about your credit report, or a tip that helped you rebuild a score? Share it in the comments.