our 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.
Borrowing and credit use
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, which is 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.
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.
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. It often ends up higher than before, because you’re proving you can manage different types of credit responsibly.
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 look higher.
- Lose an active account type, which can narrow your credit mix.
- Shorten your average account age.
- Stop receiving ongoing positive updates from that account.
Example: you close the only credit card you have, which you’ve held for eight years. Your available credit drops, your utilisation rises, and your score may dip slightly.
Mortgages, loans and other borrowing
Taking out new borrowing, such as a mortgage, personal loan, car finance agreement or hire purchase agreement, can affect your score.
Why it matters: new borrowing changes your credit mix and increases the total amount you owe. It’s normal to see a temporary change when an account is opened.
Example: you take out a car loan or mortgage. Your score may dip initially but can improve over time if you make your payments consistently and on time.
Repayment history
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 financially.
Example: you forget to pay your phone bill one month. Your score dips but can improve again once you make consistent payments.
Accounts in arrears
If you miss or delay payments, your account can show as being in arrears.
Why it matters: lenders see this as a sign that you’re struggling to manage your finances.
Example: you miss a few credit card payments and catch up later. Your score drops in the short term, but steady repayments can help rebuild it.
Paying off a credit card before the due date
It might sound surprising, but paying your card off before your statement is generated can sometimes mean your activity isn’t fully reflected on your credit report.
Why it matters: lenders share information with credit reference agencies when your statement is produced. If your balance is already £0, it can look like you’re not using the account.
Example: your statement is produced on the 10th of each month and your payment is due on the 30th. If you clear the balance on the 5th, your report may show no activity for that month.
Paying off accounts early
Paying off debt is always positive, but clearing and closing an account very quickly can sometimes affect your score.
Why it matters: lenders like to see a history of managing credit over time. A very short account history provides less information about your borrowing behaviour.
Example: you take out a 12-month loan and repay it after three months. While you’ve done the right thing financially, lenders have less repayment history to assess.
Credit applications and public records
Hard searches
Hard searches appear when you formally apply for credit, such as a credit card, loan, mortgage or mobile contract.
Why it matters: several applications within a short period can suggest you’re heavily reliant on credit or having difficulty being approved.
Tip:
- Use eligibility checks or soft searches where available.
- Space out applications when possible.
- Small score changes after a hard search are normal and usually temporary.
Debt collector searches
These happen when an agency checks your report while collecting or tracing a debt.
Why it matters: they can indicate previous or ongoing debt issues.
Defaults and repossessions
A default means a lender has closed your account after missed payments. A repossession means they’ve taken back an asset used as security.
Why it matters: both are serious indicators of repayment difficulties and can remain on your credit report for six years.
Legal actions
This includes events such as bankruptcy, County Court Judgments (CCJs), Individual Voluntary Arrangements (IVAs) and Debt Relief Orders (DROs).
Why it matters: these are formal debt solutions that indicate significant financial difficulty and can have a major impact on your credit score.
Personal information
Electoral roll
Being registered on the electoral roll helps lenders confirm your identity and address.
Why it matters: lenders see this as a sign of stability and can use it to verify your details.
Changing address
Changing address doesn’t affect your score directly.
Why it matters: problems can occur when different organisations hold different addresses for you, making it harder to verify your identity.
Example: you’ve moved home but some accounts still show your previous address, creating inconsistencies across your credit report.