Understanding your credit rating

Thinking about applying for credit?

Your credit rating can affect everything from mortgage applications, to mobile phone contracts. Put together by credit reference agencies, lenders look at your credit history to check your past and present borrowing behaviour. This then helps them to decide how risky it is to give you credit.

Use our Credit Building tool to get simple personalised tips to improve your credit rating. And you'll find more useful information on how credit works by visiting 'Improving your credit score'.

What are credit reference agencies?

They’re independent organisations that hold information about you to help banks, building societies and credit companies, decide whether you’re likely to pay the money back.

Everyone who has or applies for credit in the UK has a credit rating and there are three main credit reference agencies:

When we tell credit reference agencies about you

We report your financial activity to credit reference agencies once a month, which we have to do as part of our regulatory requirements. Other businesses have to do the same, including utility, mortgage and loan companies.

We can only update your information with the agencies once a month. How current your rating is depends on your statement date and when you pay your bill, as well as when we and the credit reference agencies update our records. This means it can take between four and eight weeks for your file to be updated. Here’s how the process works:

1. We collate your credit information on the last day of every month, based on your statement history for that month

2. We send your file to credit reference agencies the 15th of the following month. (Other companies send their data on different dates)

3. The credit reference agencies process your information and update your report. They have to update it from all financial companies, so how quick your file updates varies by several days.

4. In total, it can take up to two months for your information to be collated and for your file to be updated

  • Why your credit rating is important

    Before a lender decides whether to give you credit, they’ll look at a range of information in your credit file. The most obvious is any credit you’ve had or have in your name during the last six years. This includes credit cards, loans, mortgages, current bank accounts and utility and mobile phone contracts. Other criteria they’ll look at includes the length of your credit history and how many times you’ve applied for credit within short time periods. Plus, information that’s publicly available will also be considered, for example County Court Judgments (CCJs) and the electoral register.

    We have to report your financial activity to credit reference agencies once a month and this information can stay on your file for up to six years. So, if you miss or make a reduced payment, this will be reflected in your credit history. Any default information – for example if you become bankrupt, insolvent or you’re on a repayment plan – will also be recorded.

    What your credit rating might be checked for

    Think your credit rating’s only checked for things like mortgage and credit card applications? Think again. Lenders check credit reference agencies for:

    Mortgages and re-mortgages

    Car finance

    Credit cards


    Utility bills

    Mobile phone contracts

    Home and car insurance

    Potential employers may also check your credit rating before offering you a job

  • What can impact your credit rating?

    There are a number of factors that can give you a poor credit rating, including:

    • Missing or making late payments
    • Making too many credit applications in a short space of time
    • Joint accounts with a bad credit record
    • Properties where a previous occupier has had bad debt and not updated their address
    • Going over your credit limit
    • Defaulting on credit agreements
    • Frequently withdrawing cash from your credit card
    • Not spotting mistakes on your credit file
    • Not being on the electoral roll
    • Moving house too often

    How a poor credit rating can affect you

    • Credit and loan applications may not be approved
    • Interest rates on credit cards and loans will be higher
    • Difficulty getting approved for a mortgage
    • Getting approval to pay utility bills monthly
    • You may not be able to get a mobile phone contract
    • You may be denied employment
    • Difficulty starting your own business
    • Getting car finance may be difficult
    • You may pay higher insurance premiums
  • What you can do to improve your credit rating

    Our Credit Builder tool is a great way to learn what you should and shouldn’t do when trying to improve your credit rating.  It’ll help you understand what has an impact on your credit score and by just answering a few simple questions, you’ll get personalised tips which can help build your credit rating.

    The best way to improve your rating is to stay on top of your finances and here are a few helpful tips that you should always try and tick off:

    • always make your payments on time
    • stick to your credit limit
    • get on the Electoral Register
    • settle any outstanding CCJs or credit agreement defaults
    • spread out your credit applications, so they’re not over a short space of time

    For even more ways to improve your rating, visit improve your credit score

    You can apply for your credit report with ExperianCallCredit or Equifax though there may be a charge. 

    Useful websites

    The Money Advice Service  
    Citizens Advice  
    ICO (Information Commissioner’s Office)  
    CIFAS (Credit Industry Fraud Avoidance System)