Understanding and improving your credit score

There are three credit reference agencies in the UK: Experian, Equifax and TransUnion. Each scores you slightly differently and lenders use different ones, so check all three. Free services show your whole file; you do not need to pay for it.

• Your name, addresses and date of birth
• Whether you are on the electoral roll
• Every credit account: cards, loans, phone contracts, overdrafts, car finance, buy-now-pay-later
• Payment history for the last six years
• Searches by lenders
• Defaults, county court judgements, bankruptcies and IVAs
• Who you are financially linked to (joint accounts)

Electoral roll. The quickest win. Lenders use it to confirm who you are and where you live. Register at gov.uk; it takes five minutes.

Payment history. Paying on time, every time, is the single biggest factor. A missed payment stays on file for six years, but its effect fades after the first year or two.

Credit utilisation. How much of your card limits you use. Under 30% is good; under 25% is better. Maxed-out cards look like stress even if you pay them off.

Length of history. Older accounts help. Before you close an old card, remember it may be holding up your average account age.

Searches. Every full application leaves a hard search. Several in a few months looks like desperation. Use eligibility checkers (soft searches) instead and avoid new credit in the six months before a mortgage.

Rolling debt. Balances that never go down, minimum payments only and cash withdrawals on a credit card all count against you.

Defaults and CCJs. The heavy hitters. Both stay for six years. A settled or satisfied one looks much better than an unpaid one and the older it is, the less it matters.

Usually not by itself. High-street lenders want clean recent history, but specialist lenders take defaults, CCJs and missed payments into account rather than rejecting them outright, often at a higher rate. Timing matters most: two years of clean conduct opens a lot of doors. This is exactly what a broker is for. Tell ours everything; nothing on your file will shock them.

• Register on the electoral roll at your current address
• Check all three credit reports and dispute anything wrong
• Set up direct debits for at least the minimum on every card and loan
• Get every card balance under 30% of its limit, then 25%
• Stop applying for new credit until after you have your mortgage
• Keep your oldest card open and use it for a small monthly bill
• Ask to be de-linked from an ex or old flatmate once joint accounts are closed
• Pay off or settle any default and ask for it to be marked satisfied
• Add a note of correction to your file if there is a story behind a blip
• Give it time: recent conduct counts most

• CCJ: county court judgement, a court order that you owe money
• Default: an account the lender closed because you fell behind
• Hard search: a full credit check that other lenders can see
• Soft search: an eligibility check that only you can see
• IVA: individual voluntary arrangement, a formal deal to repay debts
• Utilisation: the share of your credit limits you are using