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A credit score predicts borrower behaviour

Your credit score is credit through your FICO score, a uniform score created to rank an individuals credit. Due to the fact various credit rating companies use various factors to calculate your rating, your FICO score may vary between lenders. Your FICO credit score is created by taking your credit history and comparing it with other consumers, using your credit score as an initial lending decision tool.

The more credit you have been approved for, the bigger your total balance as a percent of your total credit limit across all your credit cards, and the higher your credit score will be. The ideal is only to use aorund 30% of your available credit limit at one time, e.g If you can borrow £3000, don’t exceed a £300 balance.

If you know you need to apply for credit, don’t use your other cards for at least 60 days before applying for a loan, that way it's likely that all the payments you've made to date will be reflected in your credit score by the time a lender requests it!

Low credit score? You can still borrow

Today’s lenders will offset bad credit scores with higher interest rates to make lending an option for those with a poorer history.

Credit scores: the good, the bad, and the average

Your payment history has a massive impact on your credit score

The most important factor of your credit score is your payment history. This includes payment information on credit cards, mortgages, auto loans, and other loans. Missing payments or making late payments will affect your credit score negatively. Bankruptcy or other financial judgments against you also have a negative impact on your credit score.

Other factors affecting your credit score

Money you owe, how much credit you have available to you and the amount your credit balance is compared to your credit limit are all taken into account when calculating your credit score. Your credit activity is also analysed, such as any applications for credit, and the type of credit you have used in the past, such as credit cards and instalment loans.