Credit scores, explained  

Understand your credit score - from how it's calculated, what can affect it and how to check yours.


What is a credit score?


Your credit history is the complete record of your borrowing and repayments. It includes information about credit cards utility bills, and even your mortgage


Any time you apply for a financial product or service, your prospective lender will check your credit history with at least one of three major credit bureaus – Equifax, Experian or TransUnion. These companies build up a picture of your credit worthiness by analysing bills you’ve paid, loans taken out and credit cards you use. That history is then used to give you a personal credit score, which lenders will be able to see when deciding on your applications for new products.


Your credit score is an important factor that’s taken into account when creditors review loan, account and credit card applications. When a lender looks at your credit score they’re trying to get a picture of how reliable you are when it comes to paying your bills and repaying debt. This information helps all lenders decide whether or not to take you on as a customer.

How is a credit score calculated?


Credit bureaus collect financial information to calculate your credit score. Bureaus are sent information on how much money you borrow, whether you pay bills on time, and what percentage of outstanding debt you repay. Each of these pieces of information contributes to an overall credit score.

What affects a credit score?


Your credit score can go up or down for many different reasons – from your credit history and payment habits to how often you make credit enquiries. Failure to make monthly payments, for example, could not only result in being charged penalty fees but may also have a negative impact on your credit score.


However, the more ‘positive’ activities recorded in your credit report, the less impact poor credit performance in the past will have. That’s why it’s important to pick the right card for your personal spending habits.


For example, a charge card that requires you to pay the balance in full every month can be a good way of bolstering your credit score, as long as you stay on top of repayments.

What is a good credit score?


There are three main credit reference agencies in the UK, each with its own scoring system that ranges from ‘very poor’ to ‘excellent’. The following ‘fair’, ‘good’ and ‘excellent’ figures are from Finder.


Experian – 0-999

Fair – 721-880

Good – 881-960

Excellent – 961-999


Equifax – 0-700

Fair – 380-419

Good – 420-465

Excellent – 466-700


TransUnion – 0-710

Fair – 566-603

Good – 604-627

Excellent – 628-710


But remember, there’s no magic number. Different companies will look for different things when reviewing a credit application.  

How to check your credit score


You can check your credit score directly with Experian, Equifax and TransUnion.


Find out if you are eligible for an American Express® Card today.

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