Your credit score is calculated based on what’s in your credit report, which is a track record of how you’ve handled credit in the past.
If your credit report shows you’ve handled credit well, paying on time and not missing payments, your credit score should be high. If your credit report shows you’ve made late payments, defaulted, or applied for lots of credit in a short space of time, your credit score could be lower.
When a credit reporting body calculates your score, they will take into account all of the information in your credit report and assess your overall level of risk.
This means individual factors may not have a direct impact on it, because it will depend on what else is going on in your report. (This is why we can’t tell you how many points you’ll lose for certain credit behaviours – because it will be different for everyone).
For example, if you miss a payment but usually manage your credit well, it won’t affect your score as much as if you have a history of managing your debt poorly.
On top of this, different factors will have a different level of impact on your score, depending on how they’re viewed by lenders and what else is going on in your report. For example, if you default on a debt it’s likely to be much more serious in the eyes of a lender than missing a payment. And even more so if you’ve got a poor credit history.
These factors can negatively impact your score:
- A large number of credit enquiries in a short space of time
- Defaults, missed payments, bankruptcy actions, court judgments
- Short term credit (e.g. payday lenders)
- Open accounts with debt collection agencies
These factors can positively impact your score:
- Good repayment history
- A stable address
- A low number of credit enquiries
- No negative entries on your credit report (e.g. defaults, missed payments, court judgments, bankruptcy)
See what’s affecting your credit score: