Do credit scores actually exist?
Written by
Friday 28th February 2025
When applying for a loan or credit, many people focus on their credit score as the be-all and end-all of their financial health. But what if we told you that credit scores, as you know them, don’t actually exist?
This was exactly the eye-opening revelation made by a well-known money saver on his ITV show. His statement - “It is just an indicator, it isn’t real. You don’t have a credit score.” - left many viewers surprised. So, what does this really mean for borrowers?
The truth about credit scores
While many websites offer a "credit score," the reality is that no official or universal number determines whether a lender will approve you. What these scores really represent is a rough estimate of how a lender may view your past behaviour (as far as what you’ve borrowed, and if you’ve paid debts off successfully).
Each lender, including Novuna Personal Finance, has its own criteria for assessing loan applications. We look at a range of factors to determine eligibility - not just the credit score provided by credit reference agencies. These agencies, such as Experian, Equifax, and TransUnion, create scores as a marketing tool to help consumers understand their creditworthiness, but they don’t dictate lending decisions.
What really matters in loan applications?
Since lenders don’t rely on a single credit score, what should you focus on to improve your chances of being approved for credit? The popular financial expert emphasised that it’s your credit report that truly matters. Here’s why:
- Lenders assess your full credit report - Instead of using a single number, lenders evaluate your borrowing history, outstanding debts, repayment behaviour, and ongoing financial stability.
- Different lenders use different criteria - Each lender has a unique scoring system, meaning you could be rejected by one provider but accepted by another.
- Errors can impact your eligibility - Even minor mistakes in your credit report, such as incorrect addresses or outdated account statuses, can lead to rejections.
How to Improve Your Creditworthiness
Before applying for a loan, it’s essential to review your credit report and ensure its accuracy. Here are a few key steps:
1. Check your credit report regularly - Obtain your report from all three major credit reference agencies: Experian, Equifax, and TransUnion.
2. Fix any errors - If you spot incorrect information, contact the relevant agency to have it corrected.
3. Demonstrate good financial habits - Paying bills on time, reducing outstanding debts, and managing credit responsibly can improve your chances of loan approval.
4. Limit multiple applications - Applying for several loans or credit cards in a short period of time can signal financial distress and reduce your likelihood of approval.
The Novuna Personal Finance Approach
At Novuna Personal Finance, we are committed to responsible lending. Our loan eligibility assessments consider various factors, including your income, existing financial commitments, and credit history. Our aim is to ensure that any loan we provide is affordable and suitable for you.
While credit scores may not be "real" in the way many people believe, understanding your financial position and managing your credit report effectively can go a long way in securing the best financial opportunities.
Want to take control of your credit future? Start by checking your credit report today and ensuring your financial health is in top shape before applying for a loan!
Written by
Anna Stacey is a skilled content writer based in Lincolnshire, specialising in the financial services industry. With over four years of experience in the digital landscape, she has an aptitude for crafting informative and engaging content that addresses a range of customer needs. Spanning diverse topics, from finance and lending to broader digital marketing trends, Anna is committed to delivering customer-centric content that not only educates but also empowers readers to make informed decisions.
