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Credit Scores – What are they and can I access mine?

An individual’s credit score is a numerical expression that represents that individual’s creditworthiness. It is based on information from those with whom you have or have had debt.

Banks, credit card companies, landlords, insurance companies, mobile phone companies and others that you wish to have a financial relationship with use credit scores to determine who qualifies for a loan, what the credit limit should be and at what interest rate.

In other words, the better the credit score the better the chance of having credit extended and the lower the possible interest rate will be. These are particularly important during our current economic climate with banks and other lenders having limited funds and therefore ensuring that credit is only extended to those that they are confident can repay that credit.

However, it is difficult to know in advance whether your credit score is sufficiently high to gain credit with a particular lender. To add to the frustration, the lender is not obliged to reveal the minimum credit score required for acceptance nor the reasons for any refusal. Hence most quoted loan rates are called representative meaning that the actual final APR is determined by your actual creditworthiness. To make matters even worse, refused credit can impact negatively on your credit score.

In the UK the big two providers of credit scores are Equifax and Experian. Signing up to receive regular updates on your credit score and advice on how to increase your score are available from both of these companies but will cost £8.99 a month with Equifax or £14.99 with Experian although both do offer a free 30 day trial.

There are free options available. Callcredit offer a free for life credit score and reports through their Noddle service. If your account remains passive for too long, however, they may cancel your membership.

Credit Sesame provides an Experian equivalency score for free. This is sustained by receiving commission from recommended products that you take up. The free credit score updates are useful but you may be better off using an independent broker or financial advisor before taking up their financial suggestions.