What affects your credit score?

A lot of things could impact your credit score, but they’re not always things you’d expect.

There’s no single credit score

There are three main credit reference agencies in the UK, each collecting information about you from public records, lenders and other service providers, before generating a ‘credit score’.

Each agency does this independently, so the details they hold and the score they generate can vary.

The credit reference agencies used by Halifax include TransUnion, Experian and Equifax.

In addition, lenders and other service providers do their own scoring when you apply for credit, looking at information from your credit record, as well as other factors like affordability and any past account history.

More on credit scores


What are the main things that can affect your credit score?

The truth is, lots of factors can impact the credit score generated by each credit reference agency, but the way you manage your financial accounts is a big one.

Keeping up with payments

Making payments on time is an important way to show you’re managing your finances responsibly. Lenders and service providers will report arrears, missed, late or defaulted payments, which could impact your credit score.

It’s not just mortgage, credit card, personal loan, overdraft or car finance payments that you need to keep up with though. It could also help to carefully manage things like store cards, mobile phone contracts, TV subscriptions and other household bills.

If you make payments by Direct Debit, make sure there’s enough money in your bank account to cover these payments when they’re due.

Moving home

Your address links your financial activity and identity, helping to prevent fraud. Having the same address for a long time also suggests your circumstances are reasonably stable – lenders like that.

Being on the electoral roll is one way that your identity and home address can be confirmed, which could help to improve your credit score. When you do move home, make sure you get the electoral register updated as soon as you can to limit any impact.

How you use credit

If you’ve got a lot of debt and are often close to your credit limits, it could suggest you’re reliant on credit. If your circumstances changed, would you struggle to repay what you’ve borrowed?

This can impact your credit score, and the way you’re viewed by lenders and other service providers.

It’s a good idea to keep unsecured balances on things like credit cards below 25% of your available credit limit.

Using a few types of credit

Having a mix of credit accounts shows you can manage different types of borrowing, from secured lending, such as a mortgage, to unsecured credit cards or overdrafts. If you don’t use credit at all, your credit score could be low, even if you have a good income.

That’s not to say you should go out and apply for lots of credit – that in itself could impact your credit score – but as you need to borrow over time, it’s worth exploring alternative credit options. Your normal go-to might not offer the best interest rates and terms.

Joint accounts

Things like bank accounts, mortgages and even utility bills could create a financial link between you and any joint account holders. This could impact your future credit eligibility if the joint account holder doesn’t have a good credit score.

People you’re linked to financially will show on your credit record. If you’re no longer linked to someone, you could contact each credit reference agency to submit a notice of disassociation.

Your borrowing history

If you’ve little or no experience with credit, your score could be low because there’s not much to prove how well you can manage it.

The average age of your active credit accounts can also affect your credit score. Having the same accounts for a long time suggests you’re good at managing them responsibly.

You might not have thought about

Below are a some of the other things which could impact your credit score.

‘Buy Now Pay Later’

Companies like Klarna and Clearpay give you the option to pay for items in instalments. They’ll complete a ‘soft’ credit search first, which won’t affect your credit score. What could lower your score though, is missing any of your repayments.

Student loans

Although the interest rate may be very low, student loans are still a form of debt, so could affect your credit score until the balance is paid off.

Like other types of credit, failing to make student loan payments on time might negatively affect your credit score and record.

Lenders and other service providers might also consider affordability, so regular outgoings to cover existing debts could affect your credit eligibility overall.


An overdraft is a type of borrowing linked to your current account, which can act as a short-term safety net, whether you need a little extra to cover unplanned expenses, or just to tide you over.

Managing an ‘arranged’ overdraft well, for example, limiting how much you use it, paying it off regularly and staying within your overdraft limit, can boost your score over time. Of course, a slip up could have the opposite effect.

Some banks and building societies will allow you to use an ‘unarranged’ overdraft, however your credit score could be negatively impacted if you do.

Unsecured borrowing

In addition to traditional ways of borrowing, you might see options like PayPal Credit on offer when you’re shopping online. To be accepted, a ‘hard’ credit search might be completed, which could impact your credit score, whether you’re approved or not.

Again, it’s important to keep up with payments to avoid damaging your credit score.

Closing a credit account

Credit reference agencies check the amount of credit available to you, and how much you’ve used – this is known as the ‘credit utilisation ratio’. As this gap narrows, your credit score could go down.

Closing a credit account you don’t need anymore will affect this ratio, but it’ll also change the average age of your credit accounts. Both of these factors could reduce your credit score in the short-term.


Credit scores generated by the credit reference agencies won’t be impacted by the way you choose to spend, but if you experience financial difficulties, e.g. because gambling has become a problem, you’ve missed payments and have a high level of debt, that could affect your score and future credit eligibility.

For some types of borrowing, like mortgages, lenders usually review your bank statements and outgoings. A lot of gambling transactions could be a red flag, especially if they’re funded by credit.

What won’t affect your credit score?

You might also be surprised about the things which don’t impact your credit score, although it’s worth remembering lenders might consider some of them from an affordability perspective.

Income and savings

Your credit report is mainly focused on what you borrow, rather than what you earn or have tucked away for a rainy day.

Lenders and service providers might ask about your income though, helping them to make decisions about what credit is responsible to offer, and what’s realistic for you to repay, so your income and regular expenses are important in that sense.

If you have money in savings, that’s always a cheaper alternative to borrowing and paying interest, but if you choose to use credit and keep some savings aside, of course that’s up to you.

Receiving benefits

Information about benefits, such as Universal Credit, aren’t listed on your credit record and won’t impact your credit score.

However lenders and service providers do ask for information about your income and regular expenses to build a picture of your finances and what you can reasonably afford to repay, which could affect your credit eligibility.

Using a debit card

If you’re spending your own money with a debit card, that won’t affect your credit score either way.

However, if you dip into an overdraft by using your debit card, it could impact your credit score – there’s more detail earlier in this page.

Really old mistakes

Things like missed payments and going over your credit limit could have an impact on your credit score, but it should be short lived, and you may be able to improve your credit score within a number of months.

It’s true that defaults, County Court Judgements (CCJs), Individual Voluntary Agreements (IVAs) and bankruptcy will have a longer-term impact, but not forever. In the UK, these will show on your credit report for six years.

Living with other people

If you share a home with other people, but don’t have shared financial commitments, such as joint accounts, overdrafts, a mortgage or credit accounts, it shouldn’t impact your credit score.

People you’re linked to financially will show on your credit record. If you’re no longer linked to someone, you could contact each credit reference agency to submit a notice of disassociation.

Checking your credit score

In fact, it’s a good thing if you keep an eye on your credit score and the information credit reference agencies hold about you.

If you spot something that’s wrong, you could submit a data dispute to the relevant agency, so they can investigate and update their records.

Soft credit checks and quotes

Although they might show on your credit report, soft credit searches and quotations won’t negatively impact your credit score. That goes for insurance or credit quotes, a mortgage agreement in principle and eligibility checks for credit cards.

If you go on to submit a full application, that’s when a hard credit search will be completed, which could impact your credit score, whether you’re approved or not.

Why is a good credit score important?

  • The higher your credit score is, the more likely it could be that an application for a mortgage, credit card, personal loan, overdraft or car finance will be accepted.
  • Depending on the type of borrowing, the lowest and longest lasting interest rates might be offered to low risk applicants, who’ve shown they can manage credit well over time.
  • Your credit score can also affect the amount of credit you’re offered.
  • Bad credit might affect your ability to get some jobs, e.g. in legal or financial services.

What else do lenders check?

Details you provide

As part of a credit application you’ll be asked for some personal and financial information, which could include your address, employment status, income and regular expenses.

What you can afford

Lenders might review what you can reasonably afford to repay, based on your income, outgoings and anything you’ve already borrowed.

Your account history

Lenders usually keep records about accounts you’ve held with them in the past, including whether or not they were managed well.

A summary on what affects your credit score

Credit reference agencies collect information about you and your financial past, generating a score.

  • The information held by each credit reference agency can differ, so it might be a good idea to check your credit scores with TransUnion, Experian and Equifax.
  • Things like your repayment history, the amount you’ve already borrowed and even moving house, can all affect your credit score.
  • Missing payments can do a lot of damage, whether it’s for a credit account, student loan or even a utility bill.
  • Some things don’t impact your score, including your income and savings, or spending your own money with a debit card.

Want to read more?

Know where you stand with Halifax

Sign up for ‘Your Credit Score’ to see your rating with TransUnion. It’s free to check and won’t hurt your credit score.

More on Your Credit Score