Your credit score is not set in stone. It's a living, breathing thing, and your own credit rating changes along with your own financial behaviour.

The data and information held there summarises your credit history, so it can be worth reviewing it on a regular basis, and making sure it provides an accurate and up-to-date picture.

When you make an application for a loan, credit card, mortgage or other type of credit (such as a new utility contract or mobile-phone account), lenders calculate a credit score, weighing up all the relevant information they find on your application and on your credit report.

Why do they do this? So they can judge for themselves if they think you'll be a responsible borrower and likely to repay what you owe them.

Different lenders can score the same factors differently, using their own formulae based on their own factors - there really is no 'magic number'. The same lender may even, for example, score a mortgage application differently to a credit card.

Companies such as Experian can provide you with a guide to help you understand your credit report, and how the way you've managed the credit you've had in the past might affect applications you're making now. It can give you an indication of what kind of loan you might get.

The Experian Credit Score can help you understand how your credit history could be interpreted by lenders. It's a guide to help you understand your Experian credit report, and how past credit management can impact on future credit applications, and for you to monitor your progress as you get your finances in order before you apply. Repaying your debts should mean a higher score - and potentially better deals in the future.

Usually, a higher score means you're seen as lower risk - meaning you're more likely to get credit, and at better rates. For example, the highest credit score you can get through Experian, is 999. Getting your credit score up could open up the potential chance to get better loans - and at better rates.

How can I improve my credit score?

  1. Try to stay within your credit limits and pay your credit bills on time. Missed or late payments affect your credit score for 6 months after you've paid them. If a lender defaults your account, for example if there are persistent or serious late payments, this affects it for 6 years and can have a big impact on your score. Any late payments, regardless of the account being defaulted or not, will also remain visible on your credit report for at least 6 years.

  2. Credit scoring can also look at the average age of your accounts, awarding extra points for longstanding relationships, so try not to chop and change all of your accounts on a regular basis.

  3. Review your credit report regularly: make sure it's up to date, and that the information on it is accurate. If you do find anything that needs correcting, contact the relevant lender and ask for an amendment - your credit score provider can also raise a dispute on your behalf. Even small details like the way your name and address is recorded could have a significant impact.

  4. Don't resort to a scatter gun approach to credit applications, as each application is recorded on your credit report and if lenders see lots in a short period, they could think that you're desperate or suspect a fraud.

  5. Make sure you register to vote at your current address, as lenders use the electoral register to help confirm who you are and where you live.

Do you have too much credit?

If you have several credit cards and overdrafts it can be easy to lose track of just how much credit you have available to spend.

One of the major drawbacks of having access to a large amount of credit is that you may be tempted to spend more than you otherwise would, racking up debts that are expensive to pay off.

Whether on credit cards, overdrafts or loans, if you have access to too much credit compared to your income and ability to repay lenders may be less likely to approve you for financial products in the future.

Whenever you apply for credit a lender's biggest concern will be your ability to repay the borrowing on time. If you already have access to more credit than you could reasonably afford to repay on your current salary you'll be viewed as being a potentially risky candidate.

Add up the limits on all your credit cards, store cards and overdrafts, even if you're not spending on them any more, and you'll get the grand total of credit you currently have access to.

You should then consider how this compares to your income.

If you did spend up to your limits would you feasibly be able to afford all the monthly repayments? If it looks like an unmanageable figure you may want to consider having a financial sort out, cancelling financial products you no longer need or reducing excessive limits to match your requirements.

Paying your bills on time can help

If you are late with bill payments, this can damage your credit score. However, making payments on time can often improve your credit rating, including on the following:

  • Credit cards

  • Mortgages

  • Loans

  • Utility bills

  • Your mobile phone bill

This video explains how missing payments on your mobile phone bill can affect your credit score: