Credit Score Impact on Financial Products in United Kingdom

Credit Score Impact in UK

Everyone should dedicate time to manage and increase the credit score at least twice a year. This score is most important for an individual applying for credit such as a mortgage, credit cards and loans. Not only this, credit score also plays a key role when applying for cell phone contracts, monthly car insurance, bank accounts and more. This article provides information on what the credit score is and how it affects the financial products that an individual applies in UK.

How financial institutions in UK make use of credit score

When you apply for credit in United Kingdom, every lender makes a prediction on the future behavior based on your past financial transactions especially the repayment done towards different credit types such as personal loan, credit card, mortgage loan, etc. So basically, every credit provider in the marketplace uses credit history to determine –

  1. Whether or not the applicant is credit worthy
  2. Credit amount that should be granted
  3. Interest rate, which may differ from other applicants

How to check credit score for free in UK?

You can check your credit score for free with the Credit Karma app or with Experian. Note that, both have a free and a paid version.

What factors affect your credit report?

The component in your credit report are called credit score factors. Some factors that definitely affect the credit scores are:

  • Total debt
  • Types of account
  • Number of late payment
  • Age of account
  • Number of credit applications
  • Frequency of applications
  • Number of timely payments done

But the world of credit scores is cluttered with misinformation and misunderstanding and takes advantage of the consumers’ fear. Lenders don’t want borrowers to understand it, and credit rating agencies want you to work in a certain way with an objective of selling additional products.

What personal information doesn’t show up on a credit report?

Your income. There is absolutely no information on the credit report about your earnings, what you do, or what type of employment contract you have.

How does credit score affect my finances?

Efficient management of credit behavior is extremely important as credit report indicates what financial product and rate an applicant will get. And most importantly, the advertised rate is different than the actual interest rate offered; which could be more or less depending on the applicants’ credit history. So a person with poor credit score might get an interest rate which is 30% higher than the interest rate offered to a person with a good/excellent credit score. This applies to all types of credit.

Bottom line is poor credit history individuals are at a loss in every way.

What financial products are affected by credit score in United Kingdom?

Here’s a quick summary of how credit scores affect the major financial areas.

  • Mortgages: A poor credit score increases your chances of mortgage application denial. If you plan to get a new mortgage, you should start managing your credit history at least a year in advance.
  • Credit cards: Credit score determines whether you’ll be accepted or rejected, credit line, whether you’ll receive promotional rates and the APR.
  • Personal Loans: Credit score determines approval and denial of the application.
  • Utilities: Your credit usage data sharing is also being extended to utility companies – water, gas, electricity. This is another reason why it is more important to have a good credit score. Or it could hurt your chances of applying for other credit; such as a loan, credit card or mortgage. Of course, paying it on time increases the chances of getting better deal and hence saving money.
  • Cell phones: If you’re getting a cell phone contract, you have credit score (usually because the company is spreading the cost of the phone over the contract, so to the company, it’s effectively a loan). If you are turned down, you will not get a contract and will have to keep paying as you go.
  • Car and home insurance: If you opt to pay monthly, in practice the insurer is lending you the money to pay up front, spreading the cost over the year and charging you a interest (which is often 15% + APR).


Hi, I am Nikesh Mehta, owner and writer of this site. I’m an analytics professional and also love writing on finance and related industry. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at [email protected].

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