Effect of money transfers on credit scores in the UK

Want to send money to a loved one? Worried about your credit score? Fear not.
Here’s everything you need to know about credit scores and money transfers – and if sending money will impact your credit rating.

What is a credit rating?

Let’s cover the basics. A credit rating or credit score represents your creditworthiness. It’s a measure of how likely you are to repay your debts on time and how well you manage your finances. Credit ratings usually take into account:
• Credit history
• Payment history
• Outstanding debts
• Public records
• Income and employment
People care about their credit rating because they’re used by lenders, banks, credit card companies, and other financial institutions to decide whether to approve loans and credit applications, and at what interest rate.

What is a good credit score?

Different credit reference agencies (CRAs) use different credit score scales. In the UK, there are three main CRAs: Experian, Equifax, and TransUnion. Experian credit scores range from 0-999, Equifax range from 0-1000, and TransUnion range from 0-710.
A higher credit score means that you’re a lower credit risk, so your applications are more likely to be approved and with more favourable terms.
What is considered a good credit score varies between CRAs. Experian considers a score of 721-880/999 as ‘good’, whereas Equifax considers 531-670/1000 to be ‘good’.

How to check your credit score

So, what is your credit score? You can do a credit score check to see your rating. You can check your credit rating through your bank, or directly with Experian, Equifax, and TransUnion.
Soft credit score checks won’t impact your rating.

Can money transfers affect your credit score?

Good news – credit scores and money transfers aren’t directly linked. In general, money transfers do not have an impact on your credit score. This is because credit scores are calculated based on information in your credit report, and money transfers are not included in this.
This means you can send money without worrying about your credit score. If you want to send a money transfer to loved ones abroad, this won’t affect your credit rating either.
It’s also fine to pay for a money transfer with your credit card. This will only have an impact on your credit score if you fail to pay off your credit card balance on time.

Money transfers vs balance transfers

It’s important not to confuse money transfers with balance transfers. Balance transfers can have an impact on your credit rating, while money transfers usually don’t.
Money transfers and balance transfers are both ways to move money from one account to another, but they have different purposes.
A money transfer is when you transfer money from one bank account to another, like sending money to a loved one.
On the other hand, a balance transfer is when you move the balance of one credit card to another credit card, typically with a lower interest rate. Balance transfers can save money on interest charges and pay off credit card debt faster.
Balance transfers can impact your credit score. Initially, applying for a balance transfer can lower your credit score. However, the better interest rates on your new credit card can improve your credit score over time.

How to improve my credit score

Checked your credit score and it needs some work? There are some things you can do to improve your credit rating:
• Pay your bills on time. Late payments can have a negative impact on your credit score.
• Keep your credit utilisation low. Don’t use all available credit – ideally less than 30%.
• Register to vote. Joining the electoral register can boost your credit score.
• Keep up with credit card payments.
• Close accounts you don’t use. But don’t close multiple credit accounts at once, as this can temporarily reduce your rating.
• Don’t change address. Try not to move address too much, as this can look like you lack stability.
• Build your credit history. If you’ve never borrowed money before, getting a credit card can help you build credit history.
to another.

Send a money transfer abroad

Now you know that making a money transfer won’t affect your credit score, you can send money with peace of mind. If you need to send money to loved ones abroad, Western Union makes it easy.
Send money online, with the Western Union app, or in-store at an agent location near you. Keep tabs on your money and track a transfer with your unique Money Transfer Control Number (MTCN).
You can even send your first online transfer for £0 fee.
Send money