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Credit Score Mythbuster: Do You Really Only Have 1 Credit Score?

How many credit scores we actually have is hotly debated, and in a recent CredAbility quiz, 43% of participants said they thought we all only have one credit score each. But, are they right? In this instalment of our Credit Score Mythbuster series, we’re answering that question and, you guessed it, busting a few myths wide open as we go.

You don’t just have one universal credit score

Myth: busted. You don’t have just one credit score.

We’ll explain. You probably know that there are main three credit reference agencies in the UK. Equifax, who we’ve partnered with here at CredAbility, TransUnion, and Experian. Each of them works out your credit score based the information from your credit report. These calculations are generally based on what they know lenders do and don’t like to see in their potential customers, and of the things they don’t, what the real deal breakers are. But, each credit reference agency uses their own methodology and calculations to work out your credit score, and they may also each have access to slightly different information about you. For example, you may have an account with a lender who provides credit report updates to Equifax, but not to TransUnion, which means information about that account will be included when Equifax calculate your credit score, but TransUnion don’t even know it exists, so they can’t factor it into their calculations. This all means you can, and probably do, have at least three different credit scores: one for each credit reference agency.

But, there’s more!

Lenders work out their own credit scores for you, too

Another common myth that people believe is that lenders will use one of the credit scores available from a credit reference agency to decide whether they should approve you when you apply to them. In that CredAbility quiz we mentioned earlier, almost 80% of participants believed this was the case. But, it is a myth. Lenders all have their own unique rules on who they will and won’t accept an application from. So, it makes sense that they also all have their own unique credit scoring systems that tell them how well a person matches their rules. They won’t share their scores with you though; they’re kind of their secret sauce.

Because no two lenders will use the same scoring system, this means that you could have an infinite number of different credit scores! 

Does your credit score still matter?

Even though lenders don’t use the credit scores you get to see, they can still be helpful. But it’s important to remember to take it for what it is: an impression of how your credit history generally stacks up, and not the actual score that decides if you get approved for credit or not.

How to use your credit score

Your credit score gives you a useful way to sum up your credit history at a glance. What your score is can give you an idea of how much choice you’re likely to have if you looked for a credit card, loan, or other credit. A high score indicates that there’s plenty in your credit history that lenders like to see, so the higher your score, the more different types of credit and lenders you’ll likely have to choose from, and you could have more freedom to choose how much you want to borrow. Higher scores also mean you’re more likely to be eligible for lower interest rates. If you have a low score, that doesn’t mean you won’t be able to borrow at all. Rather, your choices could just be more limited – a low score indicates that fewer lenders may approve you based on what’s in your credit history, you might not be able to borrow very much, and the interest rates you’re offered may seem high.

Changes to your score – up or down – can be a sign that something in the detail of your report has changed that could affect how lenders might view your credit history. Seeing a change in your score might, then, prompt you to look more closely at your full report that month to see what’s changed.

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