A Beginners Guide to Credit

Like a lot of people reading this, I had credit card debt. This is a mistake I will never make again and it doesn’t take a lot to understand credit history and why it can effect your life. This is a beginners guide to understanding credit scoring and how to get the most out of it.

Credit scoring is an indication of your behaviour and if you’re going to pay the credit back. If you have no credit history or bad credit then companies are less likely to approve you for a credit card / mortgage etc. There are companies that will still lend to you, but they may offer you deals with higher fees and risks. So the more you can do to get a improved credit score then the better offers will be available to you.

When you apply for something with credit such a mortgage then a ‘credit check’ is carried out which is the company looking at you credit history to see what they can offer you.

There’s not one singular credit score that all companies use – each lender scores your differently.

Why should you care about it

Your credit score effects these mail financial areas: Mortgages, credit cards, loans, utility bills, mobile phones contract car insurance and home insurance. This means that every time you apply for one of these, you’ll wish you had good credit in order to get the most from these deals.

At the moment, as some of you know, I’m saving to buy a house. Once I’ve finished saving, I’ll be applying for a mortgage. Caring about my credit rating now means than I can put things in place so that when I apply for my mortgage, I get the best rates I can. Had I not done this, I may only be offered deals that aren’t very good for me.


How to check your credit score

Equifax, Experian, and Callcredit are the three UK credit reference agencies and all lenders use at least one agency when assessing your file. You can make accounts and check your credit score. I’ve personally only used the first two but can vouch it’s easy enough. Their data comes from four main sources:

Electoral roll information

Your address and residency details.

Court records

They can see any county court judgments (CCJs), decrees, IVAs, bankruptcies and other court debt orders.

Linked data

They can see other lenders you’ve applied to, other address’s you’re linked to or other people you have a financial bond with – like a spouse.

Account data

Banks and utility companies share details of your account behaviour with the most common one called ‘default data’ which shows when you’re in default.


What to do once you know your credit score?

Check for errors as these companies contain enormous amounts of data on you and errors can happen and ruin applications so go through them line by line.

No Credit History

  • Get on the the electoral roll by registering to vote
  • If you’re not eligible to vote, send proof of residency to Equifax, Experian, and Callcredit

Bad Credit History

  • Make sure you’re on the electoral roll.
  • If you’re not eligible to vote, send proof of residency to Equifax, Experian, and Callcredit
  • Cancel unused credit and store cards
  • Separate your finances from anyone who has poor history
  • Separate your finances from your ex’s. Close and joint bank accounts and write to the credit reference agencies and ask for a notice of disassociation
  • Check address’s for old accounts as incorrect information can cause errors.
  • Get a credit rebuild card which you use and pay off every month.
  • Never withdraw cash on your credit card
  • Sign up to the free Rental Exchange scheme
  • Stop using payday lenders as some have openly said they simply reject anyone who has had a payday loan, as it’s an example of poor money management.
  • Reduce your debt as much as possible

Good Credit History

  • As weird as it sounds, your score can be too good. If you always pay off your credit cards in time and for some companies looking to make money from you – you are less than ideal.

If you’re rejected…

If you are rejected, you can always try with a different company as you’re scored differently however too many applications and rejections on your file can make you seem desperate for credit. After a rejection, it is possible to check your credit file for errors and dispute them.

Never pay for a credit repair company. They are using illegal methods or tactics you can use yourself for free.

Next time you apply, remember stability is everything so if you’ve paid back every loan, are employed and own your home, you’re already more likely to be readily accepted for credit. Also, weirdly, putting a landline number on an application form improves your chances. Be consistant across your applications so always put the same number and job otherwise it may flag up.


In conclusion, you have to learn to play the credit game in order to improve your score. It can seem laborious but before you moan, remember – they have no obligation to lend you anything. Bank don’t have to offer mortgages and credit companies don’t have to give you a card to use.

Unfortunately, we have to play by their rules if we want their rewards.

Leave a comment below and follow more money and lifestyle articles here.

4 thoughts on “A Beginners Guide to Credit

  1. “send proof of residency to Experian…” I don’t think they will do anything with that at all!

    “As weird as it sounds, your score can be too good. If you always pay off your credit cards in time and for some companies looking to make money from you – you are less than ideal.” This is a myth. – I bet you can’t come up with any example of it .

    1. Hi Sara
      The source material for the article was from here: https://www.moneysavingexpert.com/loans/credit-rating-credit-score

      References:
      ”If you aren’t eligible to vote in the UK so can’t be on the electoral roll (mainly non-Commonwealth and non-EU foreign nationals), send all three credit reference agencies proof of residency (utility bills, a UK driving licence, etc) and ask them to add a note to verify this. This should help you get credit.”

      ”Credit card companies may reject you for always repaying cards in full.

      You might feel like a dream punter, but for credit card companies you’re a nightmare. If they spot this trend, you could be rejected. The most profitable customers are those perpetually in debt, never defaulting, but always meeting the minimum repayment.

      Pay off in full every month, don’t use your cards enough, or always shift debt to 0% cards, and if they can spot you (it isn’t always that easy), a few may reject you.”

      Thank you

  2. That “note” for proof of residency is just a simple Notice of Correction – you can do this for a variety of reasons and you have to be aware that adding a Note like this may slow down any credit application as it means your record has to be manually checked, not go through a computer process. See https://debtcamel.co.uk/notice-correction-credit-record/.

    Yes in theory a few lenders may prefer you not to repay in full but most won’t and your credit score will be higher if you do repay in full.

    1. Thanks! I know there’s a lot more information out there – which I could have gone into – but I wanted to write something a young adult or something with no knowledge of credit could read and understand. I’ll be doing a follow up one with further information with a push they read this one first if they haven’t dealt with credit before. Thanks for your comments!

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