What affects your credit score?

A number of factors could impact your credit score. We explore them in this guide.

You don’t have a single credit score

There are 3 main credit reference agencies in the UK. Each collects information about you from public records, lenders and other service providers, which helps them to create a ‘credit score’.

Because each agency does this independently, the details held and score they create may vary.

At Lloyds Bank, the credit reference agencies we use include TransUnion, Experian and Equifax.

Lenders and other service providers also complete their own scoring when you apply for credit, including information from your credit record. They also consider other factors like affordability and any past account history.

More about credit scores

What are the main factors which can affect your credit score?

Many factors can affect the credit score created by each credit reference agency, but the way you manage existing financial accounts is a major influence.

Your borrowing history

If you’ve little or no experience with credit, even if you have a good income, your credit score may be low, simply because there’s little to indicate how well you can manage borrowing and repayments.

The average age of your active credit accounts can influence your credit score. Having the same accounts for a long time suggests you can manage them responsibly.

Using a range of credit options

Having a range of credit accounts shows you can manage different types effectively, from secured lending, such as a mortgage, to unsecured credit cards or overdrafts.

Just bear in mind, whether or not you’re accepted, ‘hard’ credit searches may affect your credit score, especially if you make a number of full applications in a short period of time.

Your repayment history

Making payments on time is an important way to show you can manage your finances responsibly. Lenders and other service providers report arrears, missed, late or defaulted payments to the credit reference agencies, which may impact your credit score.

This isn’t limited to mortgage, credit card, loan, car finance and overdraft payments. It’ll also help to carefully manage store cards, mobile phone contracts, TV subscriptions and other household bills.

Joint accounts

Things like bank accounts, mortgages and even utility bills may create a financial link between you and any joint account holders. This may impact your future credit eligibility if the joint account holder doesn’t have a good credit score.

People you’re linked to financially will show on your credit record. If you’re no longer linked to someone, you could contact each credit reference agency to submit a notice of disassociation.

Existing credit and balances

If you carry a lot of debt and are often close to your credit limits, it may suggest you rely on credit.

This may affect your credit score, and the way lenders or service providers view your credit eligibility.

For the health of your credit score, it should help to keep unsecured balances on things like credit cards below 25% of your available credit limit.

Moving house

Your address links your financial activity and identity, helping to prevent fraud. Having the same address for a long time also suggests your circumstances are reasonably stable.

Being on the electoral roll is one way that your identity and home address can be confirmed, which could help to improve your credit score. If you do move house, get the electoral register updated as soon as you can to limit any impact to your credit score.

You may not have considered

Below we explore some of the other things which may impact your credit score.

‘Buy Now Pay Later’

Companies like Klarna and Clearpay give you the option to make purchases and pay in instalments. They will complete a ‘soft’ credit search before allowing you to do this, but that won’t affect your credit score. What could have an impact though, is missing one of your instalment payments.

Current account overdrafts

An overdraft is a form of borrowing attached to your current account, which can act as a short-term safety net, whether you need a little extra to cover unplanned expenses, or just to tide you over.

Managing an ‘arranged’ overdraft carefully, i.e. limiting how much you use it, paying it off regularly and staying within your overdraft limit, can boost your score. Managing it poorly can do the opposite.

Some banks and building societies will allow you to use an ‘unarranged’ overdraft, however your credit score could be negatively impacted as a result.

Unsecured borrowing

As well as more traditional forms of borrowing, you might see options like PayPal Credit when you shop online. To be accepted for those, a hard credit search may be completed, which could impact your credit score, regardless of whether you’re approved or not.

As with all types of credit, it’s important to keep up with repayments to avoid any negative impact to your credit score.

Student loans

The interest rate may be very low, but student loans are still a form of debt, so will affect your credit score and credit eligibility until they’re repaid in full.

As with any other type of credit, missing a student loan payment may impact your credit score.

In addition to your credit record, lenders and service providers also consider affordability, so regular outgoings servicing existing debts could impact your credit eligibility overall.

Closing a credit account

Credit reference agencies also track the amount of credit available to you, and how much you’ve used – otherwise known as a ‘credit utilisation ratio’.

Closing a credit account you don’t need anymore will affect this ratio, but it’ll also change the average age of your credit accounts, both of which could have a short-term impact on your credit score.

Gambling transactions

Your credit score won’t be impacted by the way you choose to spend money, but if you experience financial difficulties, e.g. because gambling has become a problem, you have missed payments and carry a high level of debt, this may severely affect your credit score and future credit eligibility.

For some types of borrowing, such as a mortgage, lenders will usually review your bank statements and outgoings. Gambling transactions, especially if they’re funded by credit, could be a red flag.

What will not affect your credit score?

Although lenders will consider some of the following things from an affordability perspective, they won’t impact your credit score.

Your income and savings

Your credit report primarily reflects what you borrow, rather than what you earn and have in savings.

Lenders will ask about your income though, helping them to make decisions about what’s responsible to lend, and what should be realistic for you to repay.

It’s just worth remembering, if you have money in savings, that’s always a cheaper alternative to paying interest on anything you borrow.

Receiving benefits

Things like Universal Credit aren’t listed on your credit record, and won’t impact your credit score.

However lenders and other service providers may ask for information about your income to build a picture of your finances and what you can reasonably afford to repay, which could impact your eligibility when you apply for new credit.

Living with other people

If you live with other people, but don’t have shared financial commitments like joint accounts, mortgages or other credit accounts, this should not affect your credit score.

People you’re linked to financially will show on your credit record. If you’re no longer linked to someone listed, just contact each credit reference agency to submit a notice of disassociation.

Mistakes from long ago

Things like missed payments and going over your credit limit will have a short-lived impact, but you may be able to improve your credit score again within a number of months.

Payment defaults, County Court Judgements (CCJs), Individual Voluntary Agreements (IVAs) and bankruptcy will affect your credit score for a number of years, but not indefinitely. In the UK, these will show on your credit record for 6 years.

Using debit cards

If you’re spending your own money with a debit card, that won’t affect your credit score in any way.

Just bear in mind, if you dip into an overdraft by using your debit card, it could affect your credit score – there’s more detail earlier in this page.

Soft credit checks and quotes

Although they will show on your credit report, soft credit searches and quotations will not affect your credit score. That includes a mortgage agreement in principle, insurance or credit quotes, or a credit card eligibility check.

If you submit a full application, that’s when a hard credit search will be completed, which could impact your credit score, whether you’re approved or not.

Checking your credit score

It’s good to keep track of your credit score and the information credit reference agencies hold about you, especially if you plan to apply for credit in the near future.

If you identify something that’s wrong, you could submit a data dispute to the relevant agency, so they can investigate and update their records.

Why is a good credit score important?

  • The higher your credit score is, the more likely it could be that a mortgage, credit card, personal loan, overdraft or car finance application will be accepted.
  • Depending on the type of borrowing, the lowest and longest lasting interest rates might be offered to low risk applicants, who’ve shown they can manage credit responsibly over time.
  • Your credit score can also affect the amount of credit you are offered.
  • Bad credit might affect your ability to get some jobs, e.g. in legal or financial services.

Lenders also check

Details you provide

As part of a credit application you’ll be asked for some personal and financial information, which could include your address, employment status, income and regular expenditure.


Lenders might review what you can reasonably afford to repay, based on your income, outgoings and existing borrowing.

Your account history

Lenders usually keep records about accounts you’ve held with them in the past, including information about how well they’ve been managed.

Key points about what affects your credit score

Credit reference agencies collect information about you and your financial past, then create a score.

  • The credit reference agencies Lloyds Bank work with include TransUnion, Experian and Equifax.
  • Things like your repayment history, the amount you’ve borrowed and even moving house, can all affect your credit score.
  • Missing payments could damage your credit score – that includes credit card, student loan or even utility bill payments.
  • Some things won’t impact your score, including your income and savings, or spending your own money with a debit card.

Where next?

Know where you stand with Lloyds Bank

Sign up for ‘Your Credit Score’ to see your rating with TransUnion. It’s free to check and won’t hurt your credit score.

More about Your Credit Score