What is a credit score?

A credit score is a numerical value that reflects an individual’s creditworthiness. It is calculated using information from the individual’s credit report, which includes details such as repayment history and any outstanding debt. The higher the score, the more likely it is for an individual to be approved for loans and other forms of financial services, however, it's not always accurate and the number you may see might not be reflective of your creditworthiness. There is not a ‘number’ in the UK that determines whether an induvial is accepted or not, the number you see from the credit reference agencies is just simply an indication of what you ‘might’ look like to a lender.

Credit scores can range anywhere from 0 up to 1000, with higher scores indicating better creditworthiness. It is important to note that different lenders may use their own scoring system and criteria when assessing an individual’s creditworthiness hence why the ‘score’ doesn’t actually mean much, it’s the report and activity that matters more the score is just there to simply give you an indication of what an average lender might value your report at. Most credit reference agencies have 5 tiers starting with very poor, poor, fair, good & excellent. The higher the individual sits in the tiers the more chance they have of being accepted for credit but also the interest rate applicable on the products.

What are the main credit reference agencies?

The three biggest credit reference agencies in the UK are Experian, Equifax, and TransUnion. All three of these agencies collect financial information about individuals such as their credit scores, repayment history, address, and other financial details. This information is then used to inform lenders when making decisions about loan applications and other forms of financial services. It is important for individuals to check their credit reports regularly to ensure that all the information is accurate and up to date. This can help them maintain a good credit score, which will make it easier for them to secure favourable loan terms in the future. Additionally, these agencies are also used by employers to carry out background checks on job applicants. Therefore, it is important for individuals to manage their credit information carefully. Not all lenders report to every credit reference agency either.

According to debtcamel.co.uk, Experian is the most used CRA with around 78% of lenders reporting to them, 54% of lenders reporting to Equifax and just 30% reporting to TransUnion. However, Lenders can check any reporting agency so it's important to ensure all your data is correct with all agencies. The table below shows some comparable information about the 3 main agencies: