Credit Record

Your credit record, also known as your credit score or rating, is a number that banks use to figure out if a potential borrower is reliable or not. It’s a record of your financial history, from borrowing to credit to bills and more. Your credit record will fluctuate depending on your financial health – such as taking out a payday loan or paying a debt off. Your credit record can change significantly if you have a substantial change in your financial status, for example you take out a mortgage or stop repaying a loan.

How is my credit record calculated?

In the UK, the credit rating is calculated by consumer credit reference agencies. Here are a few you may recognise:

• Callcredit
• Equifax
• Experian

When you want to borrow money, lenders look at your credit score to decide if they want to lend to you. When we say borrow, we’re referring to lending products such as credit cards, a mortgage, buying products on finance etc. They use the score to not only approve you (or not) for their loaned money but also to work out what interest to charge you, if you are approved.

The UK government can also access your credit score when they decide if you should receive benefits. They also use it to follow up on unpaid taxes.

How can I improve my credit score?

Improving your credit record can take time, which is why it’s important to take it into account as early as possible. When you’re self-employed, it can be even more difficult to get approved for lending products – and this goes for products from mobile phone contracts to mortgages. Having a poor credit score can therefore restrict your chances even further.

Here are a few things you can do to improve your chances:

• Keep your accounts up to date, and use a certified accountant for your Self Assessment tax return – we can help with that!
• Make sure that you save all tax returns, bank statements, and any other proof of income
• You can also ask HMRC for your form called SA302: it shows your total income and tax due
• Do your tax return as early as possible every year
• Pay your bills by direct debit (provided you can afford them easily and won’t fall foul of late payments)