23 Jul 2021
by Sue Chapple FCICM

What is a credit score? Credit advice for people in their 20’s

For people in their early twenties, maintaining a credit score may not seem like a priority. But doing so is vital to help future lending prospects.

Credit scores can be confusing, but the Chartered Institute of Credit Management (CICM), the world’s largest recognised professional body for the credit management community, is here to help, by explaining not only what a credit score is, but how to keep your score in a healthy place.

What is a Credit Score?

In its simplest form a credit score is a numerical representation that traditionally has used a scoring scale between 300 and 850 to indicate how likely a consumer is to repay any money they have borrowed in a timely manner. The score represents a risk level that lenders use in order to assess someone’s eligibility for a loan. The lower the score, the greater the risk someone won’t repay, causing lenders to reject applications or lend with a higher interest rate.

The score itself is a result of several factors such as previous credit (including credit cards, phone bills or utilities), the level of debt and the number of bank accounts a person holds. However, whilst most banks and lenders will lend against your credit score, there are several credit referencing agencies that lenders can use and each one differs.

In general, most agencies use a similar measurement system, and most scores can now be managed through apps or web portals such as Experian Boost and Credit Karma. However, sticking to a few, simple practices can help boost a credit score.

How to build your Credit Score

Pay on time

Whether it’s an outstanding bill, a phone contract or car finance, consistent on-time payments will boost your credit score reassuring lenders. It will take, on average, six months of on-time payments to see a noticeable difference in your score.

Build credit

Cash may be king but paying for everything with physical currency is similar to going off the grid. Where you can afford to, set up direct debts such as a gym membership, phone contracts or utility bills. These payments will then be logged against your credit rating, improving your score.

Credit cards

If you have access to a credit card it can be an effective way to boost a score, however, it can cause debt issues. To best utilise a credit card, use it for small, everyday items such as coffee, fuel or weekly groceries and pay it off at the end of every month. If you do decide to stop using your credit card, try not to close the account as having an open credit line will still help your score.

Limit credit searches

Every time you apply for a credit product, the lender will do a ‘hard search’ on your credit rating. A hard search, unlike a soft search, can have a negative impact on your credit score if several take place in a short period of time.

To a lender, it insinuates you are trying to lend from every bank possible, therefore having a detrimental effect. Whilst the most important thing is to ensure financial security, maintaining a consistent credit score from a young age will make life easier in the future.

In fact, there are now several free tools that will allow you to find out in advance whether you’ll be approved for a credit product or even whether your score will allow you to get credit on the best available terms. Being conscious of your credit score means that a new car, that new house or even those dream holidays are all possible with responsible borrowing and a good credit rating. And as with everything else, a fluctuating credit score can have an impact on overall eligibility.


Credit scores are the cornerstone of the lending market and have a really important place in people’s future prospects. Having a good credit score helps borrowers in securing a mortgage or even something as simple as a mobile phone plan, things that can make everyday life easier for younger people. We would always recommend learning how to manage your score and how best to maintain a positive credit rating.

Good scores can take time to build but maintaining regular payments will help demonstrate you are a good ‘risk’ and help you gain access to future credit on more favourable terms.