Lesson 7: Understanding Credit - Cheat Sheet
Credit Score Factors and Weights
Factor | Weight | Impact |
Payment history | 35% | Late payments stay on file for 6 years |
Credit utilization | 30% | Keep below 30% of available credit |
Credit history length | 15% | Longer history is better |
Credit mix | 10% | Different types of credit show responsibility |
New credit applications | 10% | Multiple applications in short period hurt score |
UK Credit Score Ranges
Agency | Poor | Fair | Good | Excellent |
Experian | 0-560 | 561-720 | 721-880 | 881-999 |
Equifax | 0-379 | 380-419 | 420-465 | 466-700 |
TransUnion | 0-550 | 551-565 | 566-603 | 604-710 |
- Note: Each agency uses different scales and scoring models
Free Credit Report Access
Service | Credit Agency | Features |
ClearScore | Equifax | Free monthly updates, credit card eligibility |
Credit Club | Experian | Free monthly updates, loan eligibility |
Credit Karma | TransUnion | Free weekly updates, personalized recommendations |
Statutory Credit Report | All three | Basic report, free once every 30 days |
Credit Building Strategies by Timeline
Timeline | Strategies |
1-3 months | Register on electoral roll, check for errors on reports, break financial associations |
3-6 months | Stay below 30% utilization, set up direct debits, avoid multiple applications |
6-12 months | Never miss payments, reduce overall debt levels, use credit builder card responsibly |
1+ years | Maintain diverse credit mix, gradually increase available credit, demonstrate stability |
Credit Card Types Comparison
Card Type | Best For | Typical APR | Key Features |
Rewards | Those who pay in full | 20-24% | Points, cashback, or miles |
0% Purchase | Spreading cost of large purchases | 18-22% | 0% interest for 12-24 months on purchases |
Balance Transfer | Consolidating card debt | 18-22% | 0% interest for 12-24 months on transferred balances |
Travel | Spending abroad | 19-23% | No foreign transaction fees |
Credit Builder | Limited/damaged credit | 29-59% | Higher approval rates, lower limits |
Credit Card Fee Comparison
Fee Type | Typical Cost | How to Avoid |
Annual fee | £0-£200+ | Choose no-fee cards unless benefits outweigh cost |
Late payment | £12 | Set up automatic payments |
Cash withdrawal | 3-5% (min £3) | Never use credit cards for cash |
Balance transfer | 1-5% | Look for no-fee balance transfer offers |
Foreign transaction | 2.75-3.99% | Use specialist travel cards abroad |
Over-limit | £12 | Set up balance alerts |
Rules for Responsible Credit Card Use
- Pay in full every month to avoid interest
- Set up direct debit for at least the minimum payment
- Stay below 30% utilization of your credit limit
- Check statements regularly for unauthorized transactions
- Choose cards based on how you’ll use them
- Never use for cash withdrawals
- Be strategic with balance transfers
Credit Protection Measures
- Check credit reports at least quarterly
- Set up fraud alerts with credit reference agencies
- Consider credit freezes if not actively applying for credit
- Use strong, unique passwords for financial accounts
- Be wary of phishing attempts via email, phone, or text
- Shred financial documents before disposal
- Use secure connections for online banking and shopping
- Monitor bank and credit card statements for unauthorized transactions