What goes into a credit score
The FICO model — the most widely used in the US — breaks down credit scoring into five components. Payment history is by far the most important, reflecting whether you pay bills on time. Credit utilisation (how much of your available credit you're using) is the second-biggest factor. Length of credit history rewards long-standing accounts. Credit mix considers whether you have diverse types of credit (mortgage, cards, loans). New credit accounts for recent applications and hard enquiries.
Credit utilisation: the quick-win factor
The second-largest factor — credit utilisation — is also one of the most controllable. It measures how much of your total available credit you're currently using. If you have £10,000 of available credit and are using £6,000, your utilisation is 60% — which will drag your score significantly. The general rule: keep utilisation below 30%, ideally below 10%. This can be improved quickly by paying down balances or requesting a credit limit increase (without spending more).
What damages your score most
A single missed payment can drop your score by 60–110 points. Defaults, county court judgements (CCJs in the UK), and bankruptcy have severe, long-lasting impacts — a CCJ stays on your file for six years. Applying for multiple credit products in a short period creates multiple "hard enquiries" which temporarily reduce your score. Closing old credit card accounts (which reduces your average account age and available credit) can also hurt.
How to check your score (for free)
In the UK: Experian, Equifax, and TransUnion all offer free credit reports. ClearScore (powered by Equifax) and Credit Karma (TransUnion) provide ongoing free monitoring. In the US: AnnualCreditReport.com provides free annual reports from all three major bureaux; many credit cards now display FICO scores for free. Checking your own score is a "soft enquiry" and does not affect it.
"Your credit score is the grade your financial history earns you — and unlike school grades, you can always retake the class."
What this means for you
A strong credit score is worth real money over a lifetime. On a £300,000 mortgage over 25 years, the difference between an "exceptional" rate (say 4.0%) and a "fair" rate (say 5.5%) is approximately £80,000 in total interest. The actions are simple: always pay at minimum the minimum payment on time, keep credit card balances low, don't apply for lots of credit at once, and let accounts age. These habits, maintained consistently, produce an excellent score within 12–24 months.