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What is a good credit score?

Credit scores and ratings explained

Rosie Hamilton
Rosie Hamilton | Edited by Luke Warren
Updated 27 November 2023

While there's no magic number when it comes to what makes a 'good' credit score, knowing your rating can give you an idea of how lenders might view you. In this guide we'll look at how credit ratings are worked out, what can lead to a high credit score, and how you can make yourself more appealing to lenders. 

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How do credit scores work?

A credit score provides a snapshot of your financial history. It can shine a light on how you might appear to companies when you're applying for credit. 

As a general rule, the higher your credit score, the lower risk you appear to potential lenders (and the better chance you have of being accepted for products such as credit cards, mortgages and loans).

A high credit score suggests that you've handled money and credit responsibly in the past – and are likely to continue to do so in the future.

While you can see your credit score as a number when you check your credit history, you don't actually have one single score. In fact, mortgage lenders, credit card companies and loan providers won't see a number at all. 

They'll only see the information on your credit report, and use this alongside any details they've asked you to provide (such as your income) to decide whether you're the ideal customer.

This means that having a good credit score doesn't guarantee you'll be accepted for every credit product you apply for, it's simply a guideline.

How do credit reference agencies calculate my credit score?

Credit ratings are calculated using information held by the three main credit reference agencies: Equifax, Experian and TransUnion.

Credit reference agencies collect and hold financial information about every adult in the UK, which can be used by companies when they need to check your credit history. The agencies take into account how often you apply for credit, how much you currently owe, and whether you've been able to keep up with your payments. 

Your credit score is the agencies' attempt to put a value on how well you've managed your money in the past, and how confident they are that you'll be responsible in the future. It's quite often based on a general set of rules, which provide a good indication rather than any definite fact. For example, having the same bank account or credit card for a long time is seen as a sign of reliability. 

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What are the different credit scores?

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The three credit reference agencies – Equifax, Experian and TransUnion – all hold information on you that lenders can use. 

Each agency has slightly different information about your financial history, because no lender reports in to all three of them. They also use your info in slightly different ways, but you should usually end up in the same range – 'excellent', 'good', 'fair' or 'poor' – no matter which agency you're looking at.

On top of this, lenders will usually combine the data on your credit report with the information you provide when applying for a product. For example, the three credit reference agencies won't include details about your income or savings in their credit reports. Yet when you make a credit application, a lender might ask you to provide these details, and use them when deciding whether or not to accept you.

All this means that the actual credit-score number should be taken with a pinch of salt. It provides a good overview of how you look to lenders, but it isn't the full story. 

Each credit reference agency has its own scoring range, and different general ranges for what it considers a 'poor', 'good' or 'excellent' credit score. 

We've put the three agencies' credit-score ranges in the table below – you can see just how much the numbers vary across the companies.

Credit score ranges 

Credit reference agency 'Poor' score 'Fair' score 'Good' score 'Excellent' score Full range
Equifax  0 to 438 439 to 530 531 to 810 811 or higher 0 to 1,000
Experian 0 to 720 721 to 880 881 to 960 961 or higher 0 to 999
TransUnion 0 to 565 566 to 603 604 to 627 628 or higher 0 to 710

Which credit score should I use?

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We'd suggest you check all three agencies' credit reports, because, as we've seen, they each hold slightly different information about you. However, if you're doing an application for a specific company and you know which credit reference agency it uses, it's a priority to check that one. 

Don't worry about over-checking your credit report. Your checks can't be seen by the company you're applying to, so it won't have an impact on your chances of getting accepted.

We cover how to check your credit score for free (and what you should be looking out for on your report) in our Check your credit report guide.

What can affect my credit score?

Your credit score is worked out based on the behaviours that credit reference agencies believe prove that you can manage your money responsibly. But there are limits to what the agencies can actually see about your life and spending habits.

If you know what they're looking for (and what they're not), you'll be able to understand why your credit score is what it is.

Watch out for the following main issues affecting your credit score:

  • How long you've had any accounts: Credit reference agencies will look at the average age of any accounts you already have. So if you switch bank accounts a lot (which can be a good thing), this could temporarily bring down your credit score.

  • Being close to your credit limit: Maxing out any credit cards you have can make it look like you're reliant on them for day-to-day spending, and are therefore at risk of financial difficulty.
     
  • Missing payments: If you find it difficult to keep up with your bills, or regularly pay off debts late, this will damage your credit score. Always get in touch with the creditor if you think you're at risk of missing a payment before you miss it.

  • Not using credit at all: If you haven't taken out any credit or aren't responsible for paying any household bills, it can be difficult for companies to see how well you manage your money (or predict how you'll behave in the future) – meaning you'll likely have a lower credit score.

  • Joint accounts: Bank accounts, mortgages and utility bills that you share with someone else can create a financial link between you and any joint-account holders. If one person has a poor credit score, this will affect the other person too.

What doesn't affect your credit score?

There are many common myths about what can affect your credit score, but you don't need to worry about any of the following affecting your score:

  • Who lived at your address before you: Your credit score is tied to you as an individual, rather than your address. So you don't need to worry about whether the previous tenant or homeowner paid off their bills on time.

  • Friends or family you live with: Unless you have a 'financial link', such as a shared mortgage or bank account, the people you live with won't have an impact on your credit score.
     
  • Anything older than six years: Defaults and county court judgments only stay on your credit report for six years. After this, these will no longer have an effect on your credit score.

  • Checking your credit score: When you check your own file, it'll appear on your credit report (usually it'll come up as 'administration check' or 'quotation search' or similar). But lenders can't see this, and it doesn't affect your credit rating.

How to improve your credit score

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While it's not the score itself that's important, having a healthy credit history means you're more likely to get accepted for – and get the best rates on – credit. And, it's not just about whether you can get a mortgage, credit card or loan, it can also affect mobile phone contracts, monthly car insurance, bank accounts and more.
 
Follow these tips to give your credit score a boost:
 
  • Register to vote: Registering to vote helps lenders to confirm your identity and home address easily, and is perhaps one of the simplest ways to give your credit score a quick boost. You can register online on the Gov.uk website.

  • Keep your personal info up to date: Making sure you update your address and contact details with your banks and utility providers is another easy way to keep your credit score in good shape.

  • Try not to max out your credit limits: Because credit reference agencies are looking for evidence of responsible money management, it looks good if you use less credit than you're technically allowed to borrow.

  • Don't take out cash with your credit card: Similarly, taking out cash with your credit card is seen by credit reference agencies as evidence of poor money management, so try to avoid it if you can.

  • Space out credit applications: Even if you're accepted for them all, making lots of credit applications can reduce your credit score. So if you know you're going to want to make a 'big' application – such as a mortgage – soon, consider putting off smaller applications (such as for a credit card, or switching bank account) until after that's been accepted.

  • Use eligibility checkers before you apply: To reduce your risk of being rejected for an application (and the need for doing several applications), use an eligibility checker (such as this free MSE one) before you apply to see how likely it is you'll be accepted.

  • Check your credit report regularly and before any major application: Even small errors can cause problems, so it's important to check through your credit report (with all three credit agencies) once a year. We go through what to look out for, and how to get it fixed, in full in our Check your credit score guide.

  • Strategic credit-building: If you don't have much credit history, you'll need to build one up from scratch to show that you can be responsible with credit and use it well. The solution is to grab a credit rebuild card. See our Credit cards for bad credit guide for step-by-step help.

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