Credit Score Basics: What It Is and Why It Matters

A credit score is a three‑digit number that shows lenders how risky you are to borrow money. The higher the score, the easier it is to get a loan, a credit card, or even a rental agreement. Most UK lenders use scores from 0 to 999, and a score above 700 is usually considered good.

Every time you apply for credit, the lender checks your score. That check, called a hard inquiry, can drop your score a little, but paying on time and keeping balances low will push it back up quickly. Think of your credit score as a GPA for money – it reflects how well you handle debt.

How Credit Scores Affect Car Financing

When you walk into a dealership, the finance team will pull your credit report. A higher score can mean a lower interest rate on a car loan, which saves you cash over the life of the loan. For example, a 2025 Toyota financing guide shows that borrowers with scores above 660 often qualify for the lowest rates, while those below 600 may face higher fees or be denied.

If your score is borderline, you can still get approved by putting down a larger deposit or choosing a shorter loan term. Both tactics lower the lender’s risk and can bring the interest rate down to a more affordable level.

Quick Actions to Raise Your Score

1. Pay bills on time – late payments are the biggest factor that drags a score down. Set up automatic payments or reminders to stay on track.

2. Keep credit utilisation low – aim to use less than 30% of your available credit. If your limit is £5,000, try to keep the balance under £1,500.

3. Check for errors – request a free copy of your credit report and dispute any mistakes. A wrong missed payment can cost you dozens of points.

4. Limit new applications – each hard inquiry can shave a few points. Only apply for credit when you really need it.

5. Build a mix of credit types – having both a credit card and a small personal loan can show lenders you can manage different obligations, but don’t open accounts just for the sake of variety.

Following these steps can add 20‑50 points in a few months, especially if you’ve been missing payments or carrying high balances.

Remember, credit scores don’t change overnight. Consistent, responsible behaviour is the key to steady improvement.

Use the tips above the next time you shop for a car, apply for a credit card, or need a mortgage. A better score means lower rates, more choices, and less stress about money.