When you apply for a borrowing product like a credit card or loan, lenders will consider a number of factors to decide whether they can lend to you responsibly, one of those factors is called a credit score.
If you also have a good payment history on all your accounts, have low outstanding debts and are able to afford your repayments, a good credit score means you're more likely to be seen as a lower credit risk.
Usually the higher your credit score the better and that means you're more likely to be offered credit. You're also more likely to be offered lower interest rates which makes borrowing cheaper and more likely to be offered higher credit limits.
Credit reference agencies are companies that hold important information on people's identity, address and personal financial history. These companies get some of their information from public records like the electoral register and from court records. They'll also have information from other lenders showing whether you made repayments on time.
Many lenders including Bank of Scotland offer eligibility checkers - ours is called One Check. This can help you find out what credit cards you may be eligible to apply for. Your answers to eligibility checker questions are not available to credit reference agencies and therefore they do not affect your credit score.
There are lots of things you can do that may improve your credit score over time. These include checking you're registered as a voter, making sure you pay your bills in time, clearing your debts and not regularly maxing out your credit card limits. You should also avoid applying for lots of credit cards or loans at the same time.
Your credit score is an important part of managing your borrowing so we hope you found this video helpful.
To find out more about credit scoring, please go to www.bankofscotland.co.uk/credit scoring
