An account status of ‘0’ shows an up to date account. The borrower is able to pay their commitments on time. There are no arrears. 

If these are payday loans the score is likely to fall. Scoring systems reduce points for payday loans because they show a creditor of last resort. One loan is unlikely to make much difference, but multiple pay day loans over a short period reduce score. 

​2. Having lots of accounts 

Lots of up to date accounts is better. Borrowers managing multiple commitments with payments on different days shows organisational capability, commitment and ability to repay. 

But are credit card balances gradually increasing? That could be a sign that the borrower is using credit to make ends meet. 

​3. Utilising a small proportion of revolving credit balances

Revolving credit agreements include overdrafts and credit cards. Score increases if credit is available but unused. This suggests that a borrower uses such facilities to manage peaks in expenditure, rather than spending on items that they cannot really afford. 

If total limits are quite small, does another creditor think this applicant is a higher risk? £500 limits are typical of subprime lenders charging very high rates of interest. Borrowers at the limit of subprime credit cards are often in difficulty. 

​4. Re-registering on the electoral roll

It is a criminal offence not to register to vote. But rolling registration has made this harder. Voters must register each year. If they don’t they will drop off the register. The electoral roll is reported to all the credit bureau, even if the voter has opted out of the public register. It is used to help prove identity and it shows stability in residency.

When someone moves they are not removed from the register. The information held is time-sensitive. A few local authorities will update their files with the credit bureau on a regular basis. Most will only do this in December.

​5. Staying put; don’t move home, don’t move job

Creditors like stability. Knowing someone is staying where they live means it is easier to maintain contact with a debtor. The likelihood of them absconding is relatively small. A long residency is not exclusively the preserve of owner-occupiers but combined with home ownership it will increase the score. A long-time with one employer signifies that income is steady and will be sufficient to repay current commitments. 

Borrowers matching this profile will be seen as profitable credit prospects by lenders. Subjected to pre-approved credit offers, they could be over-indebted. It is worth looking at the Over indebtedness score (OI) and their total balances as a proportion of annual income. 

1. Missing payments

Occasional missed payments have a negative impact on score. Multiple and consecutive missed payments will have an adverse effect too. Statuses increasing from 1 (one missed payment) through 2 to 3 (three consecutive missed payments) show a worsening trend and will send score tumbling. 

​2. Having just taken out a loan

A new loan, just taken out, will reduce score in the short-term. The borrower has not yet shown they can afford this new commitment. The reduction in score can be significant. Someone buying their home with an in-principle mortgage offer could find that withdrawn if they suddenly take out a loan. 

​3. Hovering at or over credit card limits

Consistently at a credit card limit may show the borrower is struggling to pay bills. Credit cards can help people budget better by the peaks and troughs in their expenditure. Funding single big-ticket purchases, they also offer some consumer protection if a product or service not working. 

The FCA has recognised that being consistently at a limit is a serious consumer issue. In March 2018 new rules came into force. Lenders now must take steps to help customers who are making low repayments over a long period. The rules kick in when a customer has been in persistent debt over 18 months. Credit card customers in persistent debt pay around £2.50 in interest and charges for every £1 they repay.

​4. County Court Judgments 

It is rare for creditors to take a debtor to court. For a case to have progressed it is likely the debtor reneged on many agreements to repay. Perhaps they were a first payment defaulter. A CCJ has a six-year impact on a credit record and reduces score significantly. A debtor can remove the CCJ from their file if they repay within one month. They can pay the CCJ and obtain a letter of satisfaction to show its repaid. This has a moderately positive impact on credit score, but not enough to rectify the damage done because a CCJ was issued in the first place. 

​5. Being made insolvent.

This is a worst-case scenario for a credit score. Any form of insolvency (including a Debt Relief Order) will be on the account for at least six years. It shows a failure to repay multiple debts. Many lenders use policy rules to reject applications from recent bankrupts. Few rely on credit score alone. Bankruptcy is an important factor in scoring and can knock on elsewhere with multiple defaults being a result of insolvency. 

Next: Credit score reasons

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