10 Common myths about credit scores in the UK

A good credit score can give you access to better personal loan deals, credit cards with rewards, and more. And yet, according to a YouGov survey conducted in 2021, 69% of UK adults don’t know their credit score. To make matters worse, there are a lot of myths around credit reports and scores.

Here are some of the most common misconceptions about credit scores in the UK:

• Myth 1: Checking your credit report regularly will hurt your score
• Myth 2: No credit history is better than a bad credit score
• Myth 3: The more you earn, the higher your credit score
• Myth 4: You have only one credit score
• Myth 5: Buy Now Pay Later borrowing does not show on my credit report
• Myth 6: A bad credit score stays with you forever
• Myth 7: Being in a relationship impacts your credit score
• Myth 8: You cannot check your credit report for free
• Myth 9: Moving address will damage your credit score
• Myth 10: There’s a credit blacklist that lenders use

Myth 1: Checking your credit report regularly will hurt your score

A common myth is checking your credit report frequently will negatively impact your credit score. However, it’s quite the opposite. Regularly monitoring your credit report and score will help you identify any errors that need to be fixed and help you see what you can improve. It may also help you pick up suspicious activity and fraud, for example, someone trying to take out a loan in your name.

Checking your credit report will give you an idea of what lenders can see. So, reviewing your report and score before applying for credit may be particularly useful to ensure you’re in a good position to do so.

Checking your credit report will result in a soft search or soft check. Soft credit checks and hard credit checks are different, only you can see a soft search. Hard searches are visible to others, including lenders. Hard checks will likely show when you have completed a credit application or when a lender has performed a search on your report.

TIP: Avoid making multiple credit applications that show as a hard search. Many hard searches within a short time can hurt your credit report, and some lenders may see this as a sign you are desperate or in financial difficulties.

Myth 2: No credit history is better than a bad credit score

Whether you have a bad credit score or no credit history, borrowing money is equally hard. Lenders prefer to avoid taking risks and will want to check how likely you are to repay what they lend. So, if you have no financial history of credit, you will have no proven track record of paying back what you borrowed, and you will be viewed as a risk.

Myth 3: The more you earn, the higher your credit score

There is no direct connection between your income levels and your credit score. Your credit report does not show income, job details and bank balances. However, when applying for credit, it’s very likely a lender will ask for your income and expenses to ensure you can afford the repayments and they are lending responsibly.

Other information that does not appear on your report includes:

• Student loans
• Savings and bank account transactions (except for credit repayments)
• Property ownership and other similar investments
• Marital status and relationships
• Medical history
• Parking or driving fines
• Employment history

Myth 4: You have only one credit score

In a survey by Sainsbury’s Bank in 2022, more than half of those surveyed thought they had one credit score. There are three major credit bureaux in the UK (Equifax, Experian and TransUnion), and each has its own metrics and criteria for working out credit scores.

Your score will look different depending on which bureau you get your score. So it’s worth keeping an eye on all three.

Myth 5: Buy Now Pay Later borrowing does not show on my credit report

Until recently, Buy Now Pay Later borrowing was not included on credit reports. This is beginning to change. For example, Buy Now Pay Later (BNPL) provider Klarna started reporting all its Pay in 30 or Pay in 3 borrowing schemes to Experian and TransUnion in June 2022. Laybuy has done the same, and Zilch will follow soon. 

Additionally, Experian and TransUnion have started showing details of short-term BNPL transactions on their reports. However, BNPL information is not used to calculate credit scores - at least for now.

Myth 6: A bad credit score stays with you forever

Although it may take time, you can improve your credit score with the right actions - no matter how bad it may seem. For example, if you have missed a payment, try to counteract it by showing good borrowing behaviour and ensuring you pay on time in the future. Or if there is incorrect information on your report, ask to have it corrected.

Myth 7: Being in a relationship impacts your credit score

Marital status and personal relationships do not show on your credit report or affect your credit score. However, your credit report can be linked if you’ve applied for joint credit together in the past, for example, a mortgage. Or if you’ve acted as a guarantor or have a joint account. In such a case, other people’s finances can also affect your credit rating.

TIP:  Keep the details on your credit report up-to-date and accurate; remove any old connections and persons no longer financially linked to you by asking for a financial disassociation.

Myth 8: You cannot check your credit report for free

Some credit reporting services may charge a monthly fee. However, there are three ways to view your credit report at no cost:

1. Statutory credit report
   This is a free, basic version of your credit report that credit bureaus must provide you when you request it. While this option may not provide all the details that other credit reports show, such as a credit score, it is free, and you can see information on your credit file.
   
   
2. Set up a free credit report trial
   Many UK credit rating agencies allow you to access your full credit report for a trial period. This can vary from two weeks to a month, after which a monthly charge unless you cancel the service.
   
   
3. Get a free credit report
   Some providers offer continuous free credit reporting services. These include services like CreditKarma and ClearScore.

You can compare free and paid credit reporting services on MustCompare.

Myth 9: Moving address will damage your credit score

Changes to your address do not significantly impact your score. What can hurt your score is incomplete or out-of-date information. So, if you’re moving house, ensure registering on the electoral roll is on top of your change of address checklist. Credit reporting agencies use sources like the electoral roll to validate your details.

Additionally, update lenders and other financial services you use about the changes. And correct any missing or inaccurate information on your credit report.

Myth 10: There’s a credit blacklist that lenders use

There is no such thing as a credit blacklist in the UK. Each lender has its own lending requirements and checks. For example, you may find borrowing from a short term lender easier than taking out a personal loan.

A direct lender will look at your credit report, application form details, disposable income and other information. Even if you have a poor credit history, it does not mean a lender will reject your application. However, you may offered a lower credit limit and higher interest rates.

In summary

While there may be many myths about credit scores in the UK, the truth is you can access your credit report information. And it is not just locked away exclusively for lenders or banks. When accessing your credit report, ensure all the details are up to date, you’re on the electoral roll and remove any old connections that are no longer financially linked to you.

More importantly, if you have a bad credit score, there are steps you can take over time to improve it. It’s not permanent, and there is no blacklist. It’s worth the effort, as improving your credit score can give you access to better deals, such as lower interest rates.

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