What is a credit score and how does it work?

Your credit score gives lenders an idea about how well you manage your finances.

What is a 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’.

This number reflects how likely you are to repay anything you borrow, based on your track-record of using credit and managing your finances. The higher it is, the better your chances of being accepted when you apply for credit. Your score changes over time, just as your circumstances do.

It’s useful to know that you don’t have one credit score though. Each credit reference agency could hold different information about you, and has their own way of scoring.

Not only that, but lenders and other service providers do their own scoring when you apply for credit, looking at information from your credit record. They also consider other factors like affordability and any past account history.

Get a better understanding by watching a short video.

Watch our video to understand what a credit score is.

What else do lenders check?

Lender credit scoring – how it works (PDF 80kb)

What does your credit score mean?

Each credit reference agency uses a different scale, but as a general rule, the higher your credit score is, the better your chances are of being accepted when you apply for credit.

It’s useful to know this could be different to what lenders and service providers see – they consider other factors, as well as information from your credit record – but it still gives you a quick idea about your financial position at any moment in time.

Below are examples from the credit reference agencies Halifax work with:

Experian

Excellent	Very good	Good	Poor	Very poor
Excellent 961 - 999	Very good 881 - 960	Good 721 - 880	Poor 561 - 720	Very poor 0 - 560

Equifax

Excellent	Very good	Good	Poor	Very poor
Excellent 811 - 1000	Very good 671 - 810	Good 531 - 670	Poor 439 - 530	Very poor 0 - 438

TransUnion

Excellent	Very good	Ok	Needs some work	Needs work
Excellent 628 - 710	Very good 604 - 627	Ok 566 - 603	Needs some work 551 - 565	Needs work 0 - 550

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