Credit score: what’s your magic number?

Have you ever checked your credit score? If you have at any stage applied for a personal loan, a mortgage or a hire purchase, rest assured someone has looked at your ‘magic’ number. Even utility companies, landlords and employers might look at your credit score before engaging with you. This score might affect more areas than you think.

This is how the credit score works. Bank, insurers and businesses like Vodafone or Spark feed information to big credit reporting bureaus. The bureaus calculate your credit score based on your payment history for credit cards, mortgages, car finance and hire purchases. Other payments like electricity, gas and phone accounts might also be on your report. Credit reporting bureaus might also look at things like what types of loans you have, how long you've had them for and if you’ve recently applied for new credit.

From all the information gathered, you are given a score - which is a number between zero and 1,000. The higher the number, the more credit-worthy you are considered. A number above 600 is considered a good score.

Why is it important for a mortgage application?

Your credit score affects your ability to get a mortgage for obvious reasons. If you have defaulted on payments before, it might indicate to lenders that you can’t meet your financial commitments.

Your credit score might, in some cases, also influence the price or fee you pay for a loan. For example, a lender could decide to give a person with a low credit score a loan but charge an extra fee for the risk they are taking on. This is particularly relevant for personal loans.

​Recent changes to legislation

Until recently, if you inquired for a loan with different providers this would be noted on your file. There was an assumption that the numerous inquiries related to people desperately searching for credit to fend off insolvency.

New changes to legislation that took place on October 1st, mean that the number of inquiries will no longer affect your credit score. People can freely shop around for better deals.

Another important change to legislation is that information on missed payments recorded in people's credit files can be no more than four years old, replacing the previous limit of five years.

Your credit score also now reflects when you make your payments on time as opposed to previously when it only reflected your missed payments. 

​Keeping a high score

The most important thing you can do to keep a good credit score is to never default on payments.

You can also make sure that any errors, that might arise from administrative mistakes, are challenged with the lender or company. Keep in mind that any defaults will stay on your file for 4 years, so if something was added by mistake make the effort and have it corrected.

If you’ve never missed a payment, you can assume you have a clean score. However, you can always request a free copy from the following credit reporting bureaus: CentrixEquifax or Illion. Keep in mind that if you want the information returned quickly, you’ll have to pay a fee.

If getting a new home loan is on your radar in the near future, it pays to check what your credit score is, especially if you think there might be defaults on your file. A low credit score doesn’t mean you won’t be able to get a loan, it might mean that you need to look at non-traditional lenders. We can help with that - click here to contact us. 


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