What can impact my score?
Your credit score moves up and down based on what’s showing in your credit report. Some changes are small and temporary, others last longer - but they all help lenders build a picture of how you manage borrowing. Here’s a breakdown of what can affect your score and why.
Accounts in arrears
If you miss or delay payments, your account can show as “in arrears”.
Why it matters: lenders see this as a sign you’re struggling to manage your finances.
Example: you miss a few credit card payments and catch up later - your score drops short term, but steady repayments can rebuild it.
Credit card cash withdrawals
Cash advances or cash-like transactions (like buying foreign currency or topping up a holiday card) can look risky.
Why it matters: lenders can’t see what the cash was used for, so they treat it as higher risk behaviour.
Example: you withdraw £200 from your credit card while abroad - it’s recorded as a cash withdrawal, may carry higher interest, and can slightly dent your score.
Credit use (or utilisation)
This is how much of your available credit you’re using across your credit cards and revolving accounts.
Why it matters: lenders look for a balance - not too much, not too little. If you’re using most of your limit, it can suggest you rely heavily on borrowing. If you’re barely using any at all, lenders don’t have enough activity to see how you manage credit day-to-day.
Example: if your total credit limit is £1,000 and you owe £900, that’s 90% utilisation — quite high and could lower your score. But if you never use your card at all, lenders can’t see your repayment behaviour. Using somewhere between 10% and 70% of your available credit, and paying it back regularly, shows you can borrow responsibly and stay in control.
Paying off a credit card before the due date
It might sound surprising, but paying your card off too early - before your statement is even generated - can sometimes mean your good behaviour isn’t fully reflected in your credit report.
Why it matters: your lender shares your balance with the credit reference agencies at the point your monthly statement is created. If your balance is £0 by then, it can look like you’re not using credit at all - which gives lenders less to assess. Using a little and paying it off by the due date (after your statement) shows healthy, responsible use.
Example: your statement is produced on the 10th of each month, and your payment due date is the 30th. If you clear your balance on the 5th, the report may show £0 - meaning no activity for that month. Paying after the 10th but before the 30th shows you borrowed and repaid responsibly, which can help your score.
Tip: it’s always best to pay your balance in full and on time - just make sure it’s after your statement date, not before it. That way, your good credit use gets recorded and rewarded.
Paying off accounts too early
Paying off debt is always positive - but closing an account straight after paying it off can sometimes cause your score to dip temporarily.
Why it matters: lenders want to see how you handle credit over time. If you pay off a loan or card too early and close it, there’s less evidence showing your repayment behaviour. A healthy credit report shows regular, on-time payments - not just cleared balances.
Example: you take out a 12-month loan and clear it after three months. While it’s great that you’ve repaid it early, your report now shows a very short account history, which offers lenders less proof of long-term reliability.
Tip: if you can afford to pay something off early, that’s still brilliant - but consider keeping at least one active credit account open (like a card you use occasionally and pay in full each month). It helps show you can manage ongoing credit responsibly.
Debt collector searches
These happen when an agency checks your report while collecting or tracing a debt.
Why it matters: other lenders can see these searches, and they suggest past or ongoing debt issues.
Example: a missed loan payment is passed to a debt collection company who performs a hard search to confirm your details.
Defaults and repossessions
A default means a lender has closed your account after missed payments. A repossession means they’ve taken back something used as security (like a car or house).
Why it matters: both are major signs you’ve struggled to repay, so they have a strong negative impact and stay on your file for six years.
Example: your car finance is unpaid for several months and the car is repossessed — this will stay visible to lenders for years.
Electoral roll
Being registered helps confirm who you are and where you live.
Why it matters: lenders see this as a sign of stability and identity proof.
Example: you move house but forget to update your electoral roll. Lenders can’t verify your address as easily, which can lower your score slightly.
Hard searches
Hard searches appear when you formally apply for credit — like a credit card, loan, mortgage, or sometimes a mobile contract. Each hard search shows lenders that you’ve applied for credit recently. That’s totally normal — everyone has them — but several in a short space of time can make it look like you’re relying on credit or having trouble getting approved.
If you’ve got a short credit history or very few accounts, each new search can make a bigger difference to your score because there’s less existing data to balance things out. For people with a longer, mixed history, the effect is usually smaller.
Tip:
• Use eligibility checks or “soft searches” first - they don’t affect your score.
• Space out applications when you can, especially if you’re new to credit.
• Remember, a small drop after a hard search is normal and temporary - it’s your report adjusting, not a sign of trouble.
Legal actions (bankruptcy, CCJ, IVA or DRO)
These show that you’ve needed formal help to manage or settle debts.
Why it matters: they’re serious indicators of risk to lenders.
Example: you’re given a County Court Judgment (CCJ) for unpaid debt — it stays on your report for six years even after it’s paid.
Missed payments
If you don’t make the agreed payment by the due date, it’s marked as missed.
Why it matters: missed payments show you haven’t met the terms of your agreement and may be struggling.
Example: you forget to pay your phone bill one month — your score dips, but will improve again once you make consistent payments.
Mortgages
Mortgages are big commitments, so they can shift your score when opened or closed. Why it matters: opening one adds new, long-term debt, while paying it off removes a long positive account.
Example: your score drops slightly when you first take a mortgage but rises steadily as you make reliable repayments.
Secured and unsecured loans
These include things like car finance, personal loans or hire purchase.
Why it matters: taking out new borrowing changes your credit mix and increases the total amount you owe.
Example: you take out a car loan — your score dips briefly but improves again if you pay on time each month.
Changing address
Changing address doesn’t hurt your score directly — it’s the mismatched information that can cause issues.
Why it matters: lenders need to verify who you are, and mismatched addresses make that harder.
Example: you move home but some of your accounts still show your old address — lenders might flag this as an inconsistency.
Opening a new account
New accounts bring new information — and that can shift your score for a little while.
Why it matters: When you open a new credit product, a few things happen at once:
• A hard search appears on your report, which other lenders can see.
• You take on new borrowing, which increases your overall debt for now.
• Your average account age drops slightly, as the system now includes a brand-new account.
These changes can make your score dip in the short term — especially if you’ve got a limited credit history. For people with longer, well-established credit files, the effect tends to be much smaller.
Example: If you’ve only had one credit card before and open a new loan, your score might fall a bit at first. But as long as you make payments on time (and in full where possible), it usually bounces back quickly — and often ends up higher than before because you’re proving you can manage different types of credit responsibly.
A small dip after opening something new is completely normal. Keep using the account sensibly, make your repayments on time, and your score should recover within a few months — then keep climbing as your positive history grows.
Closing an account
Closing a card, loan, or other credit product changes your overall credit picture — even when you’ve managed it well. When you close an account, you:
- Reduce your available credit, which can make your utilisation (the percentage of credit you’re using) look higher.
- Lose an active account type — if it’s your only credit card, loan, or mortgage, your credit mix becomes narrower, which can have a bigger impact.
- Shorten your credit history — closing an older account reduces your average account age.
- Stop ongoing positive updates — closed accounts still contribute to your score, but not as much as open, active ones do.
You close the only credit card you have, which you’ve held for eight years. It’s no longer adding monthly positive data to your report, and your available credit limit drops — so your utilisation percentage rises and your score may dip a little.
The bigger picture
Your credit score reacts to change — both good and bad. Don’t worry about small drops; they’re normal and often temporary.
The best way to keep it healthy? Pay on time, use credit within your means, and let your positive habits build history.