# Credit cards & loans > Borrowing · Published 16 February 2026 · Last updated 21 May 2026 Canonical HTML: https://moneyguide.org.uk/credit/ Markdown mirror: https://moneyguide.org.uk/credit/guide.md ## Quick answer Used carefully, credit cards can be a cheap short-term borrowing tool — and one of the strongest consumer-rights tools under UK law. Used carefully, credit cards can be a cheap short-term borrowing tool — and one of the strongest consumer-rights tools under UK law. Used badly, they're some of the most expensive debt in the country. This hub is educational information only: Money Guide is not a financial adviser and does not earn commission on credit cards. ## Key facts - There's no single UK credit score — Experian, Equifax and TransUnion each calculate their own from the data lenders report. - Section 75 of the Consumer Credit Act makes your card issuer jointly liable for purchases between £100 and £30,000 — the strongest consumer protection in UK law. - Credit utilisation (how much of your limit you use) is one of the biggest single drivers of your score — keep it below 30% to look responsible. - Hard searches stay on your file for 12 months; soft searches (eligibility checkers) are invisible to other lenders. - Statutory credit reports must be free under UK law — you never need to pay for one. Request them direct from Experian, Equifax and TransUnion, or through authorised free access services. - Most adverse markers (missed payments, defaults) drop off your file after 6 years; CCJs after 6 years if unsatisfied, or as soon as paid in full within 1 month. ## How UK credit scoring works There is no single 'UK credit score'. The three credit reference agencies — Experian, Equifax and TransUnion — each calculate their own scores using data lenders report to them. The score is a summary; lenders see the underlying report, not the headline number. Check your file free with each agency at least once a year. Errors are common and easy to dispute. Building a thin file from nothing usually takes about six months of on-time activity. ## Soft search vs hard search Eligibility checkers use a soft search — invisible to other lenders and harmless to your score. Actually applying for a product triggers a hard search, which sits on your file for 12 months. Don't make multiple hard applications in a short period. ## Types of credit card Pick the card type that matches the job you need it to do — not the one with the flashiest welcome offer. - **0% balance transfer** — Move existing card debt and pay no interest for a fixed window (commonly 12–30 months). A small one-off transfer fee usually applies. - **0% purchase** — Spread the cost of a planned big purchase. Set a direct debit to clear the balance before the 0% period ends. - **Cashback / rewards** — Only worth it if you clear the balance in full every month — otherwise interest dwarfs the reward. - **Credit-builder** — Higher APR, lower limit. Designed for people with a thin or damaged file. Used responsibly for six to twelve months, can transform your eligibility. ## Section 75 protection Under Section 75 of the Consumer Credit Act 1974, your card issuer is jointly liable with the retailer for anything you buy on a credit card costing between £100 and £30,000 — even if you only put the deposit on the card. This is the strongest consumer protection in UK law and is one of the best reasons to put large purchases on a credit card. ## Personal loans Better than a credit card for fixed amounts over £3,000 you'll repay over 1–5 years, because you lock in the rate and the monthly payment. Always check the representative APR is real (the lender must offer it to at least 51% of accepted applicants), and avoid loans with payment protection insurance added by default. ## Credit utilisation: the lever most people miss Credit utilisation is the share of your available credit you're using at the point the lender reports to the credit reference agencies (usually monthly). High utilisation — over 50% on a single card, or over 30% across all your cards — looks risky even if you clear it in full each month. Two easy fixes: pay your balance down before the statement date (not just before the due date), and ask for a credit-limit increase you don't intend to use. Both reduce reported utilisation without you spending or borrowing differently. ## 0% balance transfers, done properly A balance transfer card can shift expensive debt to a 0% interest period of typically 12–30 months in exchange for a one-off fee (usually 2–4% of the balance). Used well, it can save hundreds in interest; used badly, it just resets the clock on debt you can't repay. Three rules: (1) divide the balance by the months in the 0% window and pay that as a fixed direct debit so it's clear when the deal ends; (2) don't spend on the card unless it also has a 0% on purchases — spending and balance transfers usually accrue interest separately; (3) don't apply for several balance transfer cards at once — each application is a hard search. ## Checking and fixing your credit file By law each of the three credit reference agencies must provide your statutory credit report free — request direct from Experian, Equifax and TransUnion, or through their authorised free access services. Check at least once a year. The agencies must investigate any item you dispute within 28 days. Add a Notice of Correction (up to 200 words) to explain an unusual entry that's accurate but misleading. If a lender refuses to amend an error, escalate to the Financial Ombudsman. ## Buy Now Pay Later (BNPL) Klarna, Clearpay, PayPal Pay in 3 and similar services let you split a purchase into instalments at 0% interest. From 2026, the FCA will regulate BNPL: providers must run affordability checks, missed payments will be reported to credit reference agencies, and disputes will be covered by the Financial Ombudsman. Treat BNPL like any other credit: read the terms, set up direct debits to avoid missed payments, and remember that several small parallel agreements are still credit — and from 2026 will affect your score like any other borrowing. ## Frequently asked questions ### Does checking my credit file hurt my score? No. Checking your own file is a 'consumer enquiry' and is invisible to lenders. ### Can I be refused credit because I've never borrowed? Yes. Lenders need data to assess you. A small credit-builder card or a mobile phone contract paid on time for six months is usually enough to start building a file. ### What is APR vs interest rate? APR (Annual Percentage Rate) includes interest plus any mandatory fees, expressed as a yearly cost. It's the legally required comparison figure — always compare APR to APR, not headline interest to APR. ### How long do defaults and missed payments stay on my file? Missed payments are visible for 6 years from the date they were missed; defaults for 6 years from the date of default (regardless of whether you later pay the debt). A CCJ stays for 6 years if unsatisfied — but is removed entirely if you pay it within 1 month of judgment. ### Will being on the electoral roll improve my score? It helps. The electoral roll is one of the most-used identity checks lenders make; being on it speeds up applications and reduces the chance of being declined on data-quality grounds. Register at gov.uk/register-to-vote — it's free and takes 5 minutes. ### Should I close old credit cards I don't use? Usually not. Closing reduces your total available credit and can push up your utilisation ratio on the cards you keep. The age of your accounts also helps your score. Keep them open and use one small recurring direct debit (e.g. a streaming subscription) on each to keep the issuer from closing the card for inactivity. ### What's the difference between Klarna and a credit card for the same purchase? Klarna and other BNPL services split a single purchase into instalments at 0% if you pay on time — but historically without credit checks, FCA regulation, Section 75 protection or Ombudsman cover. From 2026 the FCA will regulate BNPL, narrowing this gap. A credit card paid in full each month is interest-free, builds your credit file and gives you Section 75 protection on purchases £100–£30,000. ## Related guides - [/debt-help/](https://moneyguide.org.uk/debt-help/) - [/banking/](https://moneyguide.org.uk/banking/) - [/mortgages/](https://moneyguide.org.uk/mortgages/) --- Independent UK money guidance from [Money Guide](https://moneyguide.org.uk). Money Guide is not a financial adviser and does not currently earn commission on credit cards. This guide is educational information only — always check the issuer's own terms, eligibility checkers and fees before applying. 18+, subject to status. Credit is a commitment: only borrow what you can repay in full each month, because interest charges erase every reward on this page.