A credit score is a summary of a credit report, produced by a model, and there are many models producing different numbers from the same underlying data.
This describes how these systems generally work. Specific circumstances vary and anybody with a particular concern should be talking to the relevant bureau or a regulated adviser.
The score is not the record
The distinction that matters most.
Credit reference agencies hold a report — accounts, payment history, searches, public records, address history.
A score is calculated from that report by a model, and different models weight the same information differently.
Lenders frequently use their own scoring models rather than a bureau's, incorporating information the bureau does not hold, such as your relationship with them and their own risk appetite.
Which means the number you see is an indication rather than the number a lender will use, and it is why applications are sometimes declined despite a good consumer-facing score.
What generally goes into it
The broad categories, which are reasonably consistent across models.
Payment history, which is generally the largest factor. Missed and late payments are recorded and weigh heavily.
Amounts owed relative to available credit, which is the utilisation measure discussed separately.
Length of credit history, where longer is generally better and closing old accounts can shorten the average.
Credit mix, meaning the variety of account types.
And recent applications, since a cluster of searches in a short period is generally read as a signal.
What is not in it
Frequently assumed and generally absent.
Income, savings and assets are not held by credit reference agencies in most systems, though lenders collect them separately.
Checking your own report is a soft search and does not affect the score, which is a persistent misconception.
Most utility and rental payments have historically been absent, although several schemes now allow rent to be reported voluntarily.
And employment status is generally not on the report, though lenders ask for it.
Hard and soft searches
The distinction worth understanding before applying for anything.
A soft search is a check that does not affect the score and is visible only to you. Eligibility checkers and your own report checks are soft.
A hard search is recorded when you formally apply and is visible to other lenders.
Multiple hard searches in a short period generally weigh against an application, on the reasoning that it suggests difficulty obtaining credit.
Which is why eligibility checkers exist and why using them before applying is the sensible sequence.
How long things stay
Retention periods are defined and vary by jurisdiction and by item type.
Adverse information generally remains for a defined number of years, commonly around six, after which it drops off automatically.
Closed accounts in good standing frequently remain for a similar period and count positively toward history length.
Which means adverse information is not permanent, and it also means it cannot be removed early except where it is inaccurate.
Correcting errors
The process that exists and is underused.
Consumers have a right to access their report and to dispute inaccurate entries, which the agency must investigate.
Errors are more common than people assume, and studies of report accuracy have found meaningful error rates.
Which makes checking all the reports held about you — since agencies hold different data — a worthwhile exercise before any significant application.
A notice of correction can be added where a dispute is unresolved, explaining circumstances to anybody reading the file.
The credit repair caution
Worth stating plainly.
Accurate adverse information cannot be removed by anybody, and services promising to do so are generally selling something that cannot be delivered.
What can be done — disputing genuine errors, adding a correction notice, addressing the underlying accounts — can be done by the individual at no cost.
Regulators in several jurisdictions have taken action against credit repair operations on exactly this basis.
Checking your own report
Worth doing periodically and it is free in most jurisdictions.
Statutory access rights entitle individuals to obtain their report, and several agencies provide ongoing free access.
What to look for is unfamiliar accounts, which can indicate fraud, incorrect addresses, and accounts recorded as open that were closed.
Checking all agencies rather than one matters, since they hold different data and lenders report to different combinations of them.
An unfamiliar account is worth acting on immediately, since identity fraud is considerably easier to address early.
Financial associations
A feature that surprises people and has real effects.
Holding a joint account or a joint credit agreement creates a recorded link between two people, and each person's file may then be considered when the other applies.
The association persists after an account is closed until it is formally removed, which requires a request to the agency.
Which means a former partner's credit behaviour can affect applications years after any financial connection ended, and the removal is not automatic.
Checking for and removing obsolete associations is a specific and worthwhile step for anybody whose circumstances have changed.