This guide will help you understand your credit score, from how it’s calculated to some simple ways to manage it and increase your borrowing options.
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 CallCredit. These companies build up a picture of your credit worthiness by analysing bills you have paid, loans you take out and credit card you use.
That history is 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 measure when creditors decide whether to lend you money, let you open an account or take out a credit card. When a lender looks at your credit score they are looking to see 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.
The more financial information that credit bureaus collect, the more robust and reliable your credit score. Bureaus are sent information on how much 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.
Although most information stays on your credit report for a long time, there are still a number of ways to improve your score.
Your credit score can go up or down for many different reasons, not all of which are immediately obvious. Failure to make a monthly payment could not only result in being charged penalty fees but may also have a negative impact on your credit score.
However, the more ‘good’ activities are recorded in your credit report, the less impact poor credit performance in the past will have. That’s why it’s important to make sure you pick the right card to suit your own 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.
How To Choose A Credit Card Or Charge Card
When you’re choosing a Card it’s important to think of your spending habits.
Credit Cards allow you to spread the cost of your purchases as long as minimum regular payments are made. However, not paying your balance in full will mean you will pay interest charges on your spending.
Charge Cards, on the other hand, allow you to collect rewards on your spend but require you to pay the full balance every month.
American Express Cards are a secure way to spend, with all transactions protected by intelligent security software.
At American Express we’re proud to offer world class customer service, accessible globally 24/7.
Find out more about our selection of Cards and discover the one that suits your financial needs.
How Do Credit Cards & Charge Cards Work?
Has talk of interest, annual fees, rates and percentages left you feeling confused?
Our simple Credit and Charge Card Guides are a great place to start.
How Credit Cards and Charge Cards work
Where is American Express accepted
What Credit Card fees am I expected to pay
How to apply for a Credit Card