If the best way to build a score is using credit consistently and repaying on time over a long period, then almost anything else has the potential to lower it.

How your credit score is decided#

Your credit score — the number the agencies or credit-checking services give you — is not the same thing as your credit report.

Your report holds private and public information about how you've managed credit. Your score is a number generated from that information, hinting at how easily you'll get credit.

Your report contains:

  • Electoral Roll records, including your full name and the address where you're registered to vote
  • Insolvency events like bankruptcy, IVAs or Sequestration
  • Judgments like County Court Judgments or Scottish Decrees
  • Notices of Correction, where you've added a note for fraud protection or to explain something
  • A month-by-month rundown of your credit accounts, their total credit limit, and the payments you've made
  • Late payments, including how long you've been in arrears and any defaulted debts
  • Financial associations — anyone you share an account or card with, and potentially anyone whose loan you guarantee
  • Aliases, if you've changed your name, used a different one for an account, or a creditor recorded a variation
  • Fraud warnings, alerting lenders you might be vulnerable to someone using your name illegally

Any change to that information — including entries simply getting older — can move your score in either direction.

Why your score is lower with a different company#

Your score will differ at each agency. There's no universal scorecard, and each receives information from a different combination of lenders.

If your score is lower at TransUnion than Equifax, it's likely down to differences in the data and how each factor is weighted. Your mortgage lender might report to both, while your credit card company works with only one.

You could count that as the first possible reason for a drop — you simply checked with a different service, and they scored the information they had.

Reporting errors and fraud#

1. Misreported payments#

Sometimes you pay on time and the lender makes a mistake reporting it, so it's recorded as late or missing.

This is where watching your bank statements and your credit report pays off. Both your lender and the agency are obliged to provide accurate information, and there's a process for reporting errors. Corrections should happen within one month of the error being confirmed.

2. Fraud and identity theft#

If someone uses your name to apply for credit — or even just applies — it can drop your score.

If you've been a victim, you can apply for a Notice of Correction explaining what happened. These notes have been devalued over the years through overuse as excuses for late payments, and lenders generally don't pay them much attention. Fraud is one of the exceptions where a notice genuinely helps.

Payment history#

To lenders, this is the most important section of your report, which makes it the right place to start checking.

What's recorded varies by lender, but generally includes credit cards, personal loans, mortgages, car finance, some utility bills, some mobile phone payments and some banking products.

3. You made a late payment#

Depending on your lender's rules, any missed payment — even one day late — can be reported. Late payments usually show within 4 to 6 weeks.

Even one can cause a noticeable drop. Partial payments, where you pay some but not all of what's owed that month, can also be recorded as late.

4. You went into arrears#

Arrears are consecutive missed payments across two months or more, recorded with number markers — 1 for one month, 2 for two, and so on — with an increasingly negative effect.

Occasional late payments are fairly common on credit histories. More than two months in arrears is where the impact becomes noticeable.

5. You're only making minimum repayments on arrears#

Even with regular repayments, your score can drop if you're in arrears and paying only the minimum, because the outstanding balance is still due.

There's a second cost too: minimum repayments keep your balance higher for longer, so you pay more interest overall.

6. You had a payment holiday#

A payment holiday is an arrangement to postpone repayments rather than miss them. Useful breathing room, but it can lower your score.

It depends entirely on how the lender reports it. A neutral marker won't hurt. Some lenders report it as an arrangement to pay, which is a negative marker similar to arrears or a default — and that can cause a significant drop. Mortgage holidays work the same way, and are worth checking before you agree one.

7. There's a serious negative marker on your report#

These negative payment markers indicate severe, long-term financial problems.

Creditors go through a lengthy process before adding them, so they rarely come as a surprise — which means they're unlikely to explain an unexpected drop.

There's a window before a default lands. If you receive a notice of default, you have 14 days to settle in full or agree a repayment schedule. Do that and you avoid the marker entirely — though the late payments leading up to it still show. The lender doesn't have to agree to a plan.

Paying off a CCJ or default marks it satisfied, but both can still significantly damage your score.

How you manage your credit accounts#

It's a balancing act: use enough credit to show you handle it responsibly, without using so much that lenders suspect you rely on it.

8. You applied for new credit#

Lenders run two kinds of search. Soft searches cover speculative applications and show public record information only. Hard searches accompany full applications and show everything held by the agencies that lender works with.

A lot of hard searches in a short window drops your score. Lenders may read it as financial difficulty and an urgent need for credit, or as repeated rejection.

Even two or three applications in a month can be enough.

9. You've started using more of your available credit#

Lenders watch your credit utilisation ratio. If your card limit is £1,500 and you put £1,000 on it, you've used two thirds — a CUR of 67%.

That's on the high side. Approaching your maximum suggests a risk you'll spend more than you can repay. Consistently getting close to your limit each month will bring your score down.

Keeping your CUR closer to 30–40% strikes the balance lenders want: responsible use, without much risk of missed payments.

Using too little counts against you as well. With no activity at all, lenders can't see evidence that you manage credit responsibly, and a thin file is its own obstacle. Even a small amount of use, repaid on time, builds the history they're looking for.

10. You closed a credit account#

Paying off a car loan or mortgage is a good outcome, but closing the account can cause a temporary dip. Three things happen at once:

  • You collect fewer positive payment markers. Old ones still count, but carry less weight than open accounts, so you have less fresh evidence.
  • Your CUR goes up. Cancel a credit card and you spread the same borrowing across fewer cards.
  • The average age of your accounts drops, especially if you replace an old account with a brand-new one.

There are still good reasons to close accounts you don't use. It reduces the risk of undetected fraud, and lowers your overall credit limit — an advantage before applying for new credit, since the lender needn't consider whether you could still repay if you started using that unused balance.

Expect a small, short-term hit. It should readjust quickly if you're still using credit and repaying consistently.

Watch for accounts you've forgotten. Old bank accounts are easy to lose track of, and some keep charging fees whether you use them or not. Forget one entirely and it can slide into arrears, which affects your score even over a small debt. Unmonitored accounts also carry a higher risk of fraud going unnoticed — so close what you don't need, clearing any outstanding fees first.

Changes to your personal details#

Lenders cross-reference your details against the Electoral Roll to confirm you are who you say you are.

Your Electoral Roll details should exactly match your application. Same spelling, middle name and title on both, address consistent with no small errors like 4 instead of 4a. If in doubt, format your address as it appears in the Royal Mail Postcode finder (opens external site), since that's what most companies use for matching.

If they don't align, the lender may not see your full credit history and could decline you outright simply because they can't verify your identity. Your score can drop for two reasons: you miss positive payment markers the agencies can't associate with your name, and you may make more applications — picking up more hard searches — because your limited history is holding you back.

11. You moved house and didn't update your address#

Every time you move, update your address with your lenders and on the Electoral Roll (opens external site) as soon as possible.

It also helps to remember your old addresses when applying. Lenders often check your last six years of address history.

12. You changed your name and didn't update your details#

Deed poll, marriage or divorce all bring admin. Update every creditor and the Electoral Roll, or the agencies won't find your complete credit history.

13. There's an admin error in your personal details#

A simple typo can cost you. Two things to watch:

  • A misspelt name or address, or wrong date of birth, could mean positive markers never reach your report
  • A typo could mean a lender associates someone else's late payment with your name

You have the right to have mistakes corrected. Contact your lender to start the process.

14. You lived abroad#

You can't take a credit score across borders — different countries use different agencies and systems.

If you had a high score in Newcastle, then spent two years in Toronto, your UK score may well have dropped because you weren't using UK accounts and your phone contract and credit card were tied elsewhere.

It's a particular problem beyond six years. Since your record only covers the last six years of payment history, you can return to the UK with no credit history at all, and a low or neutral score as a result.

What to do about it#

If you've just found out because an application was denied, don't panic. Hard searches are recorded, but the outcome isn't — future lenders can't see whether you were approved or refused.

The most important thing is maintaining your monthly repayments. Every month adds new positive markers and builds evidence you use credit responsibly.

It also helps to:

  • Remember the 30–40% CUR sweet spot.
  • Remove old financial associations. If you had a joint account with an old flatmate, end the association once it's closed. The link can't hurt your score directly, but lenders can see it and may factor in your associate's report.
  • Register to vote or update your details — it takes as little as five minutes (opens external site).
  • Check your personal details with every lender and correct mistakes.

How long recovery takes#

Several weeks, whether the new marker is positive or negative.

Lenders typically report monthly. Depending on where you are in that cycle, it takes two to six weeks for an agency to receive, process and add the information.

Electoral Roll information is notoriously slow. Depending on the time of year, it can take up to three months to show in your score.

The key things to remember#

  • Score drops come from reporting errors, payment history, account management or personal details.
  • Confirmed errors should be corrected within one month.
  • Even one late payment, or a partial payment, can register.
  • Arrears beyond two months start to bite; defaults, CCJs and bankruptcy bite hardest.
  • Payment holidays only hurt if reported as an arrangement to pay.
  • A notice of default gives you 14 days to settle or agree a plan and avoid the marker entirely.
  • Two or three applications in a month can be enough to drop your score.
  • Keep credit utilisation between 30% and 40% — using too little holds you back too.
  • Forgotten dormant accounts can accrue fees and slide into arrears.
  • Closing accounts causes a temporary dip through three separate mechanisms.
  • Six years abroad can leave you with no UK credit history at all.

Find out which one it was#

Compare all three agencies and see exactly what changed, and when. Get started

Published 29 April 2024. Written by Katie Callaghan. Reviewed by Harry Austin.