What is credit?
Although they all have a similar purpose, there are many types of credit to choose from.
Types of credit
There are many types of credit available. Below we’ve provided descriptions of the main ones:
What is a credit score?
When you apply for credit, lenders and service providers contact their preferred credit reference agencies to check your credit record. This may highlight any potential risks associated with offering you credit, and can influence the interest rates and any amount of credit you’re offered.
Not only that, but lenders and other service providers complete their own credit scoring (PDF 915kb) when you apply for credit, including information from your credit record. They also consider factors like affordability and any past account history.
How using credit affects your credit score
The way you use and manage credit is just one factor which could impact your credit score, although the amount you borrow, the age of your accounts and how well you manage payments and credit limits can all have a bearing on your rating.
Other factors include being on the electoral register, how often you move home and change your address, how well you manage household bills, and even who you have financial links with.