Paying your rent punctually may soon enhance your eligibility for acquiring a credit card or mortgage, as per Experian’s revamped credit scoring model. The new system will now consider more positive financial behaviors exhibited in daily life, such as reducing overdraft usage, avoiding credit card cash advances, and making consistent payments on phone contracts.
Tenants will need to opt in for their rental payments to be factored into the scoring system. Missed payments could adversely impact your credit score. The scoring scale will expand from 0–999 to 0–1,250, eliminating the categories “poor” and “very poor,” as well as the color red. The new bands will be named Excellent, Very Good, Good, Fair, and Low.
More than 40% of individuals are projected to shift to a different score band due to the extended scoring range. Despite these changes, Experian assures that eligibility for credit products like mortgages, loans, and credit cards will remain unchanged.
Experian will provide guidance and recommendations to assist individuals in improving their credit scores if they fall into a lower band. The updated scoring system will be gradually implemented starting in November and fully implemented by year-end. It’s important to note that there is no universal credit score in the UK, as each of the three main agencies – Experian, Equifax, and TransUnion – employs its own scoring system, resulting in varying credit scores across these entities.
Edu Castro, Managing Director of Experian Consumer Services, UK & Ireland, stated, “Our new Experian Credit Score aligns with the evolving financial management habits of individuals. It now reflects a broader range of everyday financial practices that are significant, offering a clearer insight into the information on your credit report. This personalized approach aims to provide individuals with a better understanding of their financial status and practical methods to enhance their credit score, thereby unlocking improved borrowing opportunities in the future.”