Credit scores explained

Who keeps your credit record

Credit bureaus such as TransUnion, Experian and XDS collect information from banks, retailers, cellphone companies and other credit providers. Your record shows the accounts you have, your limits and balances, whether you pay on time, recent applications for credit, and any judgments or debt review. Each bureau turns this into its own score, on its own scale, so your score can differ between bureaus.

What affects your score

• Paying on time: the biggest factor. Missed and late payments stay on your record and pull the score down.
• How much of your credit you use: using most of your credit card or overdraft limit suggests strain. Keeping balances well below the limit helps.
• Length of history: older accounts that have been run well count in your favour.
• New applications: applying for a lot of credit in a short time can lower your score for a while.
• Adverse listings: defaults, judgments, administration orders and debt review have a heavy effect.

Your free credit report

Under the National Credit Act you can get one free credit report a year from each registered credit bureau. Check it for accounts you do not recognise, which can be a sign of identity fraud, and for wrong information. If something is wrong, you can dispute it with the bureau, which must investigate and correct the record if the information cannot be confirmed.

How to improve your score

• Set up debit orders so payments are never late.
• Pay down revolving debt such as credit cards and overdrafts, starting with the most expensive.
• Do not close old, well-run accounts just because you no longer use them, unless they carry fees.
• Space out credit applications, and compare offers before you apply.
• If you have no credit history, a small, well-managed account such as a cellphone contract can start one.

There is no quick fix: scores improve as months of good behaviour build up.

Frequently asked questions

Does checking my own credit score lower it?

No. Checking your own report is a soft enquiry and does not affect your score. Applications for credit are what lenders see.

How long does a missed payment stay on my record?

Payment history is generally kept for two years, and judgments and some other listings for longer, according to the National Credit Regulations. Paying the arrears stops the damage growing.

Can someone remove bad listings for a fee?

Be very careful. Correct information cannot legally be removed early. Only wrong information can be disputed, and you can do that yourself for free.

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