UK Credit Score and Debt: The Complete Guide

UK credit scoring is shaped by the data the three credit reference agencies hold and the lending decisions made against them by FCA-authorised firms. The system is regulated by the Consumer Credit Act 1974, the FCA's CONC sourcebook, the Data Protection Act 2018, and the Pre-Action Protocol for Debt Claims (PAP) operative from October 2017.

This guide covers how the score is built, how to access and correct credit files, the consumer protections under CCA and CONC, and the formal debt solutions available when borrowing has run beyond manageable levels: Debt Management Plan, IVA, DRO, Bankruptcy, and the Breathing Space Moratorium.

The three credit reference agencies

UK lenders typically report consumer credit data to one or more of three CRAs: Experian, Equifax and TransUnion. Each maintains its own file on each consumer. The files often differ - a lender may report to Experian but not the others, so a single CRA's report is incomplete. Most lenders use one or two CRAs for any given lending decision.

The CRAs' role is statutory under the Data Protection Act 2018 and UK GDPR. Each must provide a free statutory credit report on request under Article 15. Their commercial offerings (paid subscriptions for ongoing monitoring) are separate from the statutory free access.

The data held includes: open and closed credit accounts (cards, loans, mortgages, mobile contracts), payment history (on time / late / missed), default markers (where applicable), County Court Judgments (where registered), IVA, DRO, Bankruptcy markers, electoral roll registration, and previous addresses.

Worked example: a borrower applies for a mortgage. The lender's underwriter pulls reports from Experian and TransUnion. The Experian file shows a 12-month-old default on a mobile contract; TransUnion does not. The underwriter scores against both and may take the worse position into account. Borrowers should check all three CRAs to see the full picture lenders may consider.

How credit scores are calculated

Each CRA produces its own score using its own proprietary model. Experian uses a 0-999 scale; Equifax uses 0-1000; TransUnion uses 0-710. The numerical scores are useful as relative indicators of credit health but do not directly determine lending decisions; lenders use the underlying data plus their own scorecard.

Main factors: payment history (around 35% weight on most scorecards), credit utilisation (around 30%), length of credit history (around 15%), recent applications (around 10%), credit mix (around 10%). The exact weights vary by CRA and by lender's own scorecard.

Behaviours that raise score over time: pay all bills on time, keep credit card utilisation below 30% of limit, maintain electoral roll registration, avoid frequent hard credit applications, build a mix of credit types over years. Behaviours that hurt: late or missed payments, default markers, high utilisation, frequent applications, lack of electoral roll match.

Edge case: a thin credit file (new to UK, recently 18, recently returned from abroad) can score low because of lack of data rather than negative data. Credit-builder cards designed to start a credit history can lift the score from 'thin' to 'fair' within 6-12 months of consistent use within 30% of limit paying in full each month.

Reading and correcting your credit file

Statutory free reports are available from each CRA at: experian.co.uk (under 'Free Experian Credit Report'), equifax.co.uk (statutory credit report option), transunion.co.uk (statutory report option). Each CRA must provide a free report under DPA 2018 within 30 days of request; processing is typically a few business days.

Errors on a credit file can be corrected by submitting evidence to the CRA. Common errors: closed accounts shown as open, payments shown as late when they were on time, accounts belonging to a similar-name borrower added in error, settled defaults shown as still owed. The CRA investigates and corrects within 28 days under DPA 2018.

Where the CRA disagrees with the correction, the borrower can add a Notice of Correction (200 words) to their file explaining their version. Lenders pulling the report see the notice but may or may not weight it in their decision.

Worked example: a borrower discovers a GBP 2,400 default from 2022 that they never recognised. Investigation reveals an identity theft incident. The borrower files a fraud report with the CRA (each has dedicated procedures), submits a police crime reference number, and the CRA removes the default within 28 days. Action Fraud's reference is the standard supporting document.

CCA protections: Section 75, Section 77, Section 140A

Section 75 of the Consumer Credit Act 1974 makes a credit card issuer jointly and severally liable for breach of contract or misrepresentation by the merchant where the purchase was between GBP 100 and GBP 30,000. The protection covers undelivered goods, defective goods the merchant refuses to remedy, merchant insolvency, and misrepresentation. The full purchase price is recoverable, not just the credit card portion.

Section 77 (and the parallel section 78 for running-account credit) gives the borrower the right to request a copy of the original credit agreement and statement of account. Where the creditor cannot produce a properly-executed agreement, the debt may be unenforceable in court without further evidence. This is the basis of historical 'unenforceable debt' claims, though courts have refined the standard since Wilson v First County Trust.

Section 140A allows the court to reopen a credit agreement on grounds of 'unfair relationship' between borrower and creditor. The court can rewrite terms, order refund of payments, or set aside the debt. Successful claims typically involve egregious conduct by the creditor: PPI mis-selling, excessive interest on a default, undisclosed commissions.

Worked example: a borrower buys GBP 1,200 of furniture on a credit card. The retailer goes into administration before delivery. Section 75 entitles the borrower to claim the full GBP 1,200 from the credit card issuer. The issuer pays out, then recovers from the administrator's estate (often partially). The borrower is made whole; the credit card issuer carries the residual loss.

Breathing Space: 60-day moratorium

The Debt Respite Scheme (Breathing Space) under the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 provides legal protection from creditor enforcement for 60 days during which interest, fees and enforcement action are paused. The scheme started 4 May 2021.

The standard Breathing Space is granted by an FCA-authorised debt adviser following a single assessment. Mental Health Crisis Breathing Space extends for the duration of the crisis treatment plus 30 days, accessed through a mental health professional rather than a debt adviser. Both pause interest and enforcement on qualifying debts.

During the 60 days the borrower must engage with the adviser to agree a sustainable debt plan: DMP, IVA, DRO, Bankruptcy, or in some cases informal arrangements with creditors. The scheme is administered through the Insolvency Service; creditors are notified through a central register.

Practical action: borrowers facing imminent enforcement (CCJ hearings, bailiff visits, possession actions) can use Breathing Space to pause action while a plan is built. The 60 days runs from initial registration; only one standard Breathing Space per 12-month period is available, so timing matters.

Formal debt solutions: DMP, IVA, DRO, Bankruptcy

Debt Management Plan (DMP) is an informal arrangement with creditors to pay off debt over a longer period at affordable monthly amounts. Free DMPs are available from StepChange, National Debtline and other CONC 8-recognised charities. Interest and fees are often frozen by creditors though not legally required. The DMP runs until debts are cleared, typically 5-15 years for moderate debt loads.

Individual Voluntary Arrangement (IVA) is a formal legal arrangement supervised by an Insolvency Practitioner, lasting typically 5-6 years. The borrower pays a set monthly amount; at the end remaining debt is written off if the IVA was completed. IVAs are typically appropriate for debts above GBP 7,000 with regular income. The IP charges fees (deducted from payments) and the IVA is registered publicly.

Debt Relief Order (DRO) is a fast-track insolvency for low-income borrowers with debts up to GBP 50,000 (raised from GBP 30,000 from June 2024) and assets under GBP 2,000. The DRO lasts 12 months, during which creditors cannot enforce. After 12 months, debts are written off. DROs cost GBP 90 (a fee that has been waived in many cases from 2024).

Bankruptcy is the formal insolvency route for higher-debt situations. The borrower (or a creditor) applies to make the borrower bankrupt; assets above modest allowances are sold to pay creditors; remaining debts are discharged after 12 months in most cases. Bankruptcy carries significant restrictions: directorship, certain professions, and credit access for years afterward. Application fee GBP 680.

Pre-Action Protocol for Debt Claims

The Pre-Action Protocol for Debt Claims (PAP) effective 1 October 2017 requires creditors to follow specific steps before issuing court proceedings against a private individual. The protocol applies to business-to-individual debt claims and is part of the Civil Procedure Rules.

Key requirements: a Letter of Claim with prescribed information including the debt balance, history, options for response, and 30-day window to reply. An Information Sheet about debt and the Reply Form helping the borrower respond. A 30-day response period before any further action.

Non-compliance with PAP can result in costs sanctions against the creditor or stay of proceedings until compliance is achieved. The protocol gives borrowers a structured window to seek advice, dispute the debt, or arrange payment without immediate court action.

Worked example: a creditor sends a PAP Letter of Claim for GBP 3,400. The borrower completes the Reply Form within 30 days indicating they dispute the amount and request documents under Section 78. The creditor must provide the documents and pause proceedings until properly responded. The 30-day window plus document-production time provides 60-90 days of useful breathing space.

Free advice routes under CONC 8

FCA's CONC 8 requires regulated lenders to provide a route to free debt advice for customers in difficulty. The accepted advice providers are statutory-recognised charities and government-funded services: StepChange Debt Charity, National Debtline, Citizens Advice, Money Helper (MoneyHelper), and the Money and Pensions Service (MaPS).

Advice is free and confidential. The advisers assess the borrower's full position (income, expenses, debts, assets), recommend a solution path (informal agreement, DMP, DRO, IVA, Bankruptcy), and can assist with the formal application or negotiation with creditors. Most engage with the borrower over multiple phone or online sessions to build the plan.

Avoid commercial debt management companies. These typically charge fees that reduce the effective payment to creditors and may not act in the borrower's best interest. The free advice from CONC 8-recognised providers produces the same legal outcomes (DMP, IVA, DRO, Bankruptcy) without the commercial markup.

Practical action: where debts are causing stress or arrears are accumulating, contacting StepChange (0800 138 1111) or National Debtline (0808 808 4000) early in the process produces the best outcomes. Early engagement maintains more options than waiting until enforcement is imminent.

Frequently asked questions

How do I check my UK credit score for free?

Statutory free reports under DPA 2018 / UK GDPR Article 15 from each of the three CRAs: experian.co.uk, equifax.co.uk, transunion.co.uk. Each must provide a free report within 30 days of request. Commercial subscriptions (paid monitoring services) are separate. The reports show the data lenders see; checking all three reveals the full picture since CRA files often differ. Notice of Correction (200 words) can be added to dispute information the CRA will not remove.

How long does a default stay on my credit file?

Six years from the default date, after which the default automatically falls off. The six-year period applies regardless of whether the debt has been paid; settled defaults remain visible for the same period but are flagged as 'settled' which lenders weight differently from active defaults. CCJs follow the same six-year retention from judgment date. Older adverse markers stop affecting new lending decisions once they fall off.

What's Section 75 of the Consumer Credit Act?

Section 75 makes the credit card issuer jointly and severally liable for breach of contract or misrepresentation by the merchant where the purchase was GBP 100 to GBP 30,000. The borrower can claim the full purchase price from the issuer where the merchant has failed (undelivered goods, defective goods, insolvency). The protection applies to credit cards only, not debit cards. Charge cards (American Express, Diners Club) are also covered as they sit within the CCA framework.

How does Breathing Space work?

The Debt Respite Scheme provides 60 days of legal protection from creditor enforcement under the 2020 Regulations. A debt adviser at an FCA-authorised provider (or a mental health professional for the Mental Health Crisis variant) registers the borrower; interest and enforcement pause on qualifying debts. The borrower works with the adviser to agree a sustainable plan during the 60 days. Only one standard Breathing Space per 12 months.

Should I use a debt management company?

Use a free CONC 8-recognised charity (StepChange, National Debtline, Citizens Advice, MoneyHelper) rather than a commercial debt management company. The free services provide the same legal outcomes (DMP, IVA, DRO, Bankruptcy) without taking a share of payments. Commercial DMC fees can reduce the effective payment to creditors and lengthen the debt resolution. Free advice is confidential and impartial.

What's the difference between DMP, IVA, DRO and Bankruptcy?

DMP is an informal repayment plan typically over 5-15 years. IVA is a formal legal arrangement supervised by an Insolvency Practitioner over 5-6 years, ending in writeoff of remaining debt. DRO is a fast-track insolvency for low-income borrowers with debts up to GBP 50,000 and assets under GBP 2,000, with 12-month writeoff. Bankruptcy is the formal insolvency for higher-debt situations, with 12-month restriction period and asset realisation. The right option depends on debt level, income stability, asset position, and life circumstances.