Inside Your Credit Report: Understanding Your Score and More

Your credit score forms a vital cornerstone of your personal finance, and a bad score can be the difference between being accepted for a personal loan or not. This can be a major impediment on your plans, which means your credit report is one of the most important documents you’ll ever read – so it’s key that you understand it properly.

What is a credit report?

Your credit report is a compilation of financial information that is held against your name. It will typically include a list of your credit accounts, such as bank and debit accounts, outstanding loan agreements and any utility company debt.

It’ll also include details of anyone you’re financially linked to, such as your spouse, any public record information such as County Court Judgements, home repossessions, IVAs and bankruptcies.

How to check your credit score

There are currently three companies in the UK that offer a credit score check – Experian, Equifax and Callcredit (which trades under the brand name Noddle). These companies have a statutory obligation to provide a free credit report, and they also offer a more comprehensive service – but the free version is normally all you’ll need to get a good idea of your financial standing.

Different lenders and credit companies rank your credit score with a wide range of methods. Typically, though, the higher the number on your score, the better. However, this is no guarantee that you’ll be able to borrow money, as every lender has differing criteria for accepting a loan application. Think of your credit score as a guide to what kind of loan you should apply for (a bad credit loan, a guarantor loan, or a secured loan are just some examples), rather than a hard-and-fast condemnation of your financial situation.

What is a good credit score?

Your credit score will typically be a number between 0-999, with a higher score being better.

Taking Experian as an example, credit scores can be broken down into parameters, which are listed below:

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

Don’t fret if your credit score is too low, as there’s plenty of ways to build it back up – all based upon sound financial management and a good level of credit card discipline. You can read our blog on cleaning away bad credit for some actionable tips, but the bottom line is fairly simple – you need to appear trustworthy and financially solvent in the eyes of lenders.

Does checking my credit score affect my report?

Inquiring into your own credit status counts as a ‘soft inquiry’, and is therefore not added to your credit report. The only time a credit check is added to your report is if a lender has actioned the check as part of your application for a financial product. Your score will be lower if you apply for various financial products all at once – so it’s best to go forward with a ‘soft inquiry’ first, and then shop around for your ideal loan.

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We hope this blog post has been useful and will lead to a more savvy mindset and a brightening in your financial future. For more personal finance tips from our team of experts, dive into the Jolly Good Loans blog.