Credit scoring guide
What's on this page
Learn about credit scoring Open in new window
Understanding credit decisions Open in new window
What affects your credit score Open in new window
How to improve your score Open in new window
Credit score myths Open in new window
Frequently asked questions Open in new window
Check my credit score Open in new window
Credit score available to existing NatWest customers once opted in through the app if aged 18+ with a UK address, and available to non NatWest customers aged 18+ with a UK, Channel Island or Isle of Man address following a successful registration. All data provided by TransUnion. App available to customers aged 11+ with a compatible iOS or Android device and a UK or international mobile number from specific countries.
Learn about credit scoring
What is a credit score?
Banks and other lenders use a credit score to decide how likely you are to pay them back. Your score is based on how well you manage your finances. A bit like a financial footprint that shows if you’ve missed any bills for example. The higher your credit score the better your chances of getting a loan, credit card or mortgage. A higher score might also make it easier to borrow more money and maybe get a better interest rate. Credit scores are just one factor used in making the decision to lend money. Lenders may also look at your income and outgoings too for example.
How is it calculated?
Before you can borrow money, banks and other lenders normally undertake a credit score assessment including information from one or more of the three credit reference agencies (CRAs) in the UK – TransUnion, Experian, Equifax. Each lender/agency calculates your score a little differently but they all look at the same kinds of things to work out if your score meets their lending requirements.
Understanding credit decisions
If you’ve been turned down after applying to borrow money, there may be a few reasons why. For example, your credit score may be too low or your income and outgoings may make paying back any lending difficult.
For more information on our credit decisions, how to make an appeal and useful resources that can help you to review your financial circ*mstances visit our credit decisions page.
Visit the credit decisions page Open in new window
What affects my credit score?
Lots of things impact your score and it's not just financial things either.
Financial things
Like...
- how much money you owe lenders
- any missed or late payments
- defaulting or breaking the terms of credit agreements
- going over your credit limit
- how often you withdraw cash using your credit card
- applying for credit too often in a short space of time.
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Non financial things
Like if...
- you’re on the electoral roll
- you move house a lot
- you’ve got a joint account with someone with a bad credit record
- there are any errors on your credit history file.
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How to improve your score
Do
Get on the electoral roll
Get on the electoral roll
You need to be on the electoral register to vote, but it also confirms your name, address and how easy you’ll be to reach. If your name’s not there, your credit application could be delayed – or you might be turned down.
The longer you’ve been on the electoral register, at a steady address and contactable, the better. The gov.uk website has all the information you will need on how to get on the electoral register.
Review any accounts you don't use
Review any accounts you don't use
Before closing any accounts you should think about how many accounts you have, what they charge, what they are used for and the impact they might have on your credit score. Closing accounts could save you money in fees or reduce the risk of fraud on those accounts. It can only demonstrate you have been able to manage and close accounts without any payment problems.
However closing certain accounts might bring your score down. Having some older accounts and a long established relationship with a provider shows stability. Also having accounts that show you don’t need to use all of your available credit limits can have a positive impact on your credit score.
Check your credit report
Check your credit report
Get a copy of your credit report and review what’s on it. If you don’t recognise some information – or it’s inaccurate – let the credit reference agency that provided the report know straight away. You can raise a dispute against something you don’t agree with or add a notice of correction that explains any special circ*mstances around credit issues.
Consider eligibility checkers
Consider using eligibility checkers before applying
Before you apply for credit, check if the product you’re interested in offers an eligibility checker. Also known as a soft credit search, these quick online forms let you find out if you’re likely to be accepted without impacting your credit score.
Don't
Miss payments
Don't miss payments
Always try to make at least the minimum payments – on time – for any money you've borrowed. Missing or late payments (even on a phone bill) can go on your credit report and harm your chances of getting credit in the future.
An easy way to help pay bills on time is by setting up a Direct Debit.
Apply for credit too many times
Don't make too many applications
Lots of credit searches in a short space of time can affect your score so try to space out applications to borrow money. Even for things like car insurance and phone contracts.
Go over agreed limits
Don't go over agreed limits
A credit card can actually help to increase your credit score when used in the right way. Making sure that you make all your repayments on time and staying well within your credit limit (not using the maximum amount every month) will actually show lenders that you are reliable. Over time, this will help to improve your score. However, do be careful as mismanagement of your credit card can lead to a drop in your credit score too.
Want to explore your borrowing options?
If you’re looking to borrow money, we know it can be difficult deciding which type of borrowing best suits your needs. So, we’ve summarised the options for you to easily compare and contrast.
Compare ways to borrow Open in new window
Credit score myths
Myth 1
I only need to worry about credit scores if I am borrowing money.
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I only need to worry about my credit score if I am buying a house or applying for borrowing
Regularly checking your credit score keeps you informed of your financial health and let’s you see what lenders look at when you do apply for borrowing.
Checking your score regularly can also help you ensure that the information there is up to date and correct.
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Myth 2
There is a single, universal credit score.
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There's a universal credit score
There is no universal credit score as different credit reference agencies and lenders may assign you different scores based on the data they have, as well as their own individual factors.
One thing that is universal is the benefit of having a good understanding of how credit scores work and what your score is.
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Myth 3
I can’t get any borrowing with a bad credit score.
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I can’t get any borrowing with a bad credit score
A low credit score doesn’t always mean you can’t get your intended source of borrowing. It might mean that you have to adjust the amount you want to borrow or the interest rate you receive.
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Myth 4
Being near my credit limit doesn't have an impact as I pay it all off each month.
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Being near my credit limit doesn't have an impact as I pay it all off each month.
Your total credit utilisation shows how much credit is available to you and having high utilisation can negatively impact your scores.
Using our free credit score tool can show you how lenders view your existing credit utilisation.
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Myth 5
The less I borrow the better my score will be.
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The less I borrow the better my score will be
Credit scores allow lenders to make informed financial decisions when looking at your applications for borrowing. So if you have never borrowed money before lenders have less to make a decision on.
Finding the right balance in borrowing can help you increase your score, as long as it's managed responsibly.
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Myth 6
Checking my report will hurt my score.
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Checking my report will hurt my score
Applying for borrowing will impact your score as this leaves a ‘hard search’ on your credit report, but simply checking your credit score will not impact it. Checking your credit score regularly is a positive financial behaviour though it doesn’t positively impact your score.
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Credit score FAQs
You can request a copy of the information a credit reference agency holds on your file. You’ll need to give them your title, name, date of birth and address. You can find further details in a leaflet from the Information Commissioner's Office called Credit Explained.
If alternative formats are required please contact the credit reference agency providing your score to discuss this.
The three main credit reference agencies (CRA)– Experian, Equifax and TransUnion – have different scales to measure credit scores. For example; 700 may be considered "poor" on one CRA but "excellent" with another.
You can get a free, independent score from each credit reference agency which tells you the band you’re in.
There’s no universal minimum credit score needed to get things like a loan or mortgage as different providers have different lending criteria. But your credit rating must be considered good enough by your provider.
It can take some time to recover from a missed payment.
Try to make your repayments on time and recover accounts you’ve missed payments on. You could speak to your lender or a debt charity for support to help make your repayments. If you’re a NatWest customer and struggling financially, see what support we can offer you.
If you have a credit card or arranged overdraft, using all or most of your limit can suggest you’re financially stretched which could have a negative effect on your credit score. One way to avoid that is to avoid using all of your available limit.
While higher credit limits can help improve your credit score you should only apply for borrowing that you need and manage any borrowing responsibly.
A soft credit search is a search of your credit report by lenders when you request a quote for credit or use an eligibility checker tool. Soft searches do not have an impact on your credit score, and only you will be able to see if any lenders have performed a soft search on your report.
A hard credit search is made on your credit report when you make a full application for borrowing and these are saved on your credit report and they can boost or lower your score. Hard searches are also visible to other lenders on your credit report.
Large, unexplained chnages in your score could be an indication of fruad. Keeping an eye on your score is a great way to keep on top of your financial health.
Visit our security centre to learn what to look out for and how to protect yourself from fraud.
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