Understanding what might help or hurt your credit score is key to keeping your finances healthy. Knowing the factors that can influence it can help you stay in control and build good habits over time.

A credit score is like a guide for lenders. It gives them a better idea of how reliable you are at borrowing money and paying it back. Credit scores are calculated by credit reference agencies (like Experian, Equifax, and TransUnion) and they all have slightly different ways of scoring. However, there are common factors that go into calculating credit scores. If you manage these factors well, you have a better chance of keeping a high score.

9 factors that can impact your credit score

1. Credit history

Your credit history is basically how long you have been borrowing money. It includes how old your credit accounts are and whether you have borrowed money before. If you have never taken out credit (like a credit card or loan), you might have little or no credit history.

How credit history can help your credit score: A longer credit history is usually better. Having the same accounts for a long time shows that you can manage credit responsibly.

How credit history can hurt your credit score: A short credit history (or none at all) can make your score lower. This means there is less proof to lenders that you can borrow and pay back on time. This usually affects people who are new to credit or young, because they don't have a track record yet. You might start with a lower score, which you can improve over time.

2. Payment history (paying on time)

Payment history means the record of whether you pay your bills on time. How you manage your payments is one of the most important parts of your credit score.

Common recurring payments that could impact your credit score:

• Mortgages
• Paying Rent
• Car finance
• Credit card bills
• Loans (longer-term loans and payday loans)
• Recurring bills (household bills, mobile phones, streaming services, store cards)
• Buy now, pay later services (BNPL)

How payment history can help your credit score: Paying on time is one of the best ways to build a healthy credit score. It shows lenders you manage money responsibly and make regular, reliable payments.

How payment history can hurt your credit score: If you miss payments or pay late, it can hurt your credit score. These late or missed payments stay on your credit report for several years. They also signal to lenders that you may have trouble managing money. Any missed payment on a credit agreement (like a mortgage, credit card, loan, or phone bill) is reported to credit agencies and will show up on your report.

3. How much you owe (credit balance)

This factor is often called credit utilisation. It looks at how much money you owe on all your accounts and how much of your available credit you are using. For example, how close are you to the limit on your credit card or overdraft?

How credit balance can help your credit score: Only using a small part of your credit limit shows lenders you're not relying too much on borrowing. It also means you likely use credit responsibly and pay off your balances regularly. Paying your balance in full each month looks better than only paying the minimum.

How credit balance can hurt your credit score: If your balances are high and you are near your credit limits, it can be a warning sign. It shows lenders that you might depend a lot on borrowing. They could become reluctant to lend you more because they worry about your ability to pay it back.

4. The types of credit you use (credit mix)

Your credit mix is the variety of credit accounts you have. For example, credit cards, personal loans, mortgages, car finance, and store credit are different types of credit.

How credit mix can help your credit score: Using different types of credit responsibly shows lenders that you can handle various kinds of payments. This can make them more confident in you and may help raise your credit score.

How credit mix can hurt your credit score: It's not bad if you only have one type of credit, but it also doesn't give your score an extra boost. You won't get the small benefit that comes from showing you can manage multiple types of accounts.

5. Opening / closing credit or debit accounts (hard searches)

When you apply for new credit (like a loan or credit card), the lender usually does a hard credit search. This leaves an inquiry (a record) on your credit report. If your report shows many new applications, it can affect your score and will be visible to lenders.

How you can help your credit score: Only apply for credit when you need it, and try to space out your applications. Opening new accounts can help build your credit history and the diversity of your credit mix, but do it slowly and responsibly.

Where you have older accounts, this can be a benefit as you will have more credit history attached to that account.

How opening / closing accounts can hurt your credit score: Applying for too much credit in a short time can cause your score to drop temporarily with each hard search. If lenders see that you opened several new accounts or applied many times, they might think you're having money problems. Each hard search stays on your credit report for some time, so lenders will know about them.

Closing old accounts can also impact your credit score by making your credit mix look less diverse, or lowering your average account age. A history of positive payments on an account is something you should maintain rather than always favouring new accounts.

Did You Know: You can use ‘soft search' tools or eligibility checkers (such as our Quickcheckopens in a new tab tool) as these won’t impact your credit score and will often give you a yes or no answer before you apply. Many of these tools will make it clear if you can use them without affecting your credit score.

6. Overdraft usage

You might not realise it, but an overdraft on your bank account is a form of credit. It lets you spend more money than you have in your account. There are two types of overdrafts: an arranged overdraft (when you have agreed a limit with your bank) and an unarranged overdraft (when you spend over your limit without agreement).

How you can help your credit score: Try not to rely too much on your overdraft. If you have an arranged overdraft, only use a small amount and pay it back quickly. In that case, you likely won’t see a negative effect on your credit score.

How overdrafts can hurt your credit score: Regularly using your overdraft up to its limit (or going into an unarranged overdraft) can suggest to lenders that you're relying heavily on credit. Banks may report heavy overdraft use, which will show up on your credit report. Lenders will see this, and it could concern them.

7. Being on the electoral register

Being on the electoral register / electoral roll simply means you have registered to vote at your current address. It shows your name and address are officially on record. This helps credit reference agencies confirm your identity.

How registering to vote can help your credit score: Signing up to vote is free and easy, and it links your name to your address. This can make it easier to get credit. Lenders like to see stability, and being on the electoral register can prevent delays in processing your credit applications.

How not being on the electoral register can hurt your credit score: Not being on the electoral register won't directly lower your credit score, but it can cause problems. If lenders can't verify your identity easily, your applications might be delayed. Often, lenders have to ask for more proof of who you are if you're not on the electoral register.

8. Public records (bankruptcy, CCJs, etc.)

Public records such as bankruptcies or County Court Judgements (CCJs) can have a serious impact on your credit score. These stay on your report for six years and show lenders that you've had difficulty repaying debts in the past.

Examples of public records that affect your score include:

• Default: This happens when you fail to pay back money for so long that the lender closes your account and marks it as defaulted.
• CCJ (County Court Judgment): This is a court order in the UK against you for unpaid debt (when a lender takes you to court for not paying).
• Bankruptcy (or an IVA): These are legal processes where you declare you cannot repay your debts. These actions severely damage your credit.

9. Financial associations (joint accounts)

A financial association is a link between your credit score and someone else's. A common credit score misconceptionopens in a new tab is that being married or living with someone means that your credit scores are linked; that isn’t the case, and somebody else's credit score can only impact you when you are financially associated through something like a joint account, loan or mortgage.

How financial associations can help your credit score: Someone else's good credit won't boost your score. The main thing you can do is choose carefully who you link your finances with. Only share accounts with people who manage their payments well, so their habits don't hurt your credit score.

How financial associations can hurt your credit score: If you are linked to someone with bad credit, it can hurt your chances of getting approved for new credit. Lenders may check the credit history of anyone you're financially tied to. If that person has money problems, the lender might worry about your finances too. This could make them less willing to lend to you.

Credit scores can be rebuilt with time, patience and good habits

The important thing to remember is that your credit score is not permanent. If your score has dropped for any reason, you can improve it again over time. Good credit scores are built by practising good financial habits consistently.

Make sure to check your credit score and report regularly. This way, you can make sure all information is correct and see what might be affecting your score. You can check your credit score and report for free using our CreditWiseopens in a new tab service.

Find out more about your credit score

This blog is designed to act as a helpful starting point for understanding your credit score. Follow the links to find out more:

• Credit scores explainedopens in a new tab - Your guide to your credit score
• How to build your credit score with a credit cardopens in a new tab - Understand how you can use a credit card to improve your credit score
• Credit score mythsopens in a new tab - Debunking common credit score myths to help you focus on what matters
• For the latest information on credit scores and reports from the UK's three main Credit Reference Agencies, check out these guides provided by Experianopens in a new tab, TransUnionopens in a new tab and Equifaxopens in a new tab.