There are several things that can affect your credit score and some are listed below.
Legal action is likely to lower your credit score as you might seem less likely to repay any credit you borrow. After 2 years these might have less of an impact on your credit score.
If your debt levels are quite high, this can make it look like you are overly reliant on borrowing, which could cause your score to drop.
Missing payments could cause your score to fall as it throws doubt on your ability to pay off future debt on time as agreed.
If there’s a change to your balance, your lenders will notice that you’ve changed your spending behaviour which might cause your score to drop.
Opening a new credit account can cause an initial drop in your credit score. This is because there may be an enquiry added to your report, and this new account will lower the average age of your credit agreements.
As you build your account history and prove that you can handle credit responsibly, this will likely have a positive impact on your credit score over time.
If you’ve recently closed an account, your score can change as your rate of credit utilisation changes. This might lower the variety of credit accounts you have, as well as their average age. Likewise, if an account drops off your report, you could lose that account's positive contribution to your score.
An enquiry shows up on your credit report when a lender checks your file. This is a background check carried out when you apply for credit, or sometimes when you apply for a new job or you’re renting - this is perfectly normal.
Try to avoid having too many credit enquiries on your report in a short amount of time. This can lower your score as it suggests you’re reliant on credit and might struggle to pay it all back.
You can also take a look at our article for more information.