What is a credit score and how does it work?
Credit scores can be difficult to understand, but they’re very important if you’re considering taking out a loan, credit card or mortgage in the future. Our guide tells you everything you need to know about how your credit score works.
Published:14 November 2025
1. What is a credit score?
A credit score is a number that lenders use to understand how likely you are to repay borrowed money. When you apply for credit, whether it’s a loan, a mortgage or even a mobile phone contract, your lender will want to know whether you’re someone they want to lend money to.
Your credit score is worked out based on you credit history, past repayments and current borrowing. Basically, your credit score is a profile that shows banks how good you are at paying back and managing money. It’s usually a number between 0 and 999 but some credit score agencies might use a longer number.
2. How is your credit score calculated?
Your credit score is calculated using information in your credit report, which includes things like:
- Whether you’ve used credit before
- Your payment history
- The amount of credit you use
- How often you apply for new credit
Your track record is then used to calculate a simple score. The higher the score, the less of a risk your bank thinks you are.
Not all lenders have the same scoring criteria, but thankfully, eligibility calculators and checkers may give you a way of seeing how likely you are to be accepted for a credit card, without impacting your credit score. This can be helpful because if you apply in full and get rejected, or complete multiple applications, it could affect your credit score.
Just keep in mind that some banks may also have their own credit scoring systems in addition to using credit agencies.
3. Why do I want a good credit score?
A good credit score may improve your chances of being approved for loans or credit cards, which could be useful if you’re looking to make big life changes.
Your score will help banks decide if you can get a mortgage, take out a loan or buy expensive items on finance. It can also help you get approved for a new store card or mobile phone contract.
4. What is a bad credit score?
A low credit score varies by agency, with Experian rating 0 to 579, Equifax 0 to 438, and TransUnion 0 to 600, and it can make borrowing more difficult or lead to higher interest rates and lower credit limits.
If you have a low score, banks and lenders are more likely to see you as a risk. They may be more wary of your ability to pay back what you borrow.
Thankfully, if you have a bad credit score, there are plenty of things you can do to improve it.
5. How can I improve my credit score?
There are many ways to improve your credit score, but bear in mind that they might not all apply to you, as everyone has their own unique circumstances. Sites like ClearScore and Experian might be able to help if you’re unsure of where you stand.
Here are some common things that can affect your credit score, and what you should keep in mind if you’re hoping to improve it.
- Paying rent and utility bills on time, and spending sensibly shows banks that you’re responsible with money.
- Applying for a credit card, meeting minimum monthly payments and paying off balances in full could show that you are responsible with credit.
- The fewer credit cards you have, the easier it should be to pay off your monthly balances.
- Lenders will look at the amount of credit you have available, so unused credit cards could affect your rating.
- Joint accounts, mortgages, cards or loans with people who have low credit scores can affect your credit rating (also known as 'financial association').
- Credit agencies use the electoral roll as a way to identify you, which is why people sign up to the roll before they apply for a credit card.
- Each request for credit is recorded and being turned down could actually lower your credit rating. If a person is refused credit, it might be in their best interests to wait a while before applying for any credit again.
- Your credit report includes details of fraud or fraud committed against you. In the CIFAS section of your report, you can check whether suspected fraud is on your file. You can find out more on the CIFAS website.
6. How can I check my credit score?
Checking your credit score lets you see where you stand, and what sort of progress you’ve made. The Consumer Credit Act gives you the right to a free credit check and you can do it online through the three biggest agencies:
If you spot anything wrong or incorrect in your report, you can ask the credit check agency to fix them.
If you’re looking to consolidate your credit or cut down on your number of credit cards, look at features like low APRs, or 0% interest balance transfers. You could also consider a debt consolidation loan.
7. Can I have a credit score without a credit card?
In short: yes, as the score is pulled from a variety of sources, including any loans you’ve taken out. Ultimately though, credit cards offer lenders a reliable way to see how well you handle credit, so they’re a big factor in determining your score.
Don’t panic if you have a low credit score, as some banks actually offer credit cards for bad credit that are designed to help improve or build your credit score. It’s worth remembering that taking out a credit card isn’t enough to get a good credit score – you need to use it responsibly too.
Important information
The content on this page aims to offer an informative introduction to the subject matter but does not constitute expert financial advice specific to your own situation. All facts and figures were correct at time of publication and were compiled using a range of sources.