If you’re planning to apply for credit soon — like taking out a loan, credit card or mortgage — your credit score might be on your mind. In this blog we’ll tell you how the credit reference agencies classify what counts as a good credit score.
Plus, we’ll point you in the direction of where to find tips on how to improve your credit score.
But let’s get one thing straight first
Whatever your current score is, it’s nothing to be scared of.
If you check your score and you’re lucky enough for it to already be ‘good’ or higher, then congratulations!
However, if you take a peek and you feel that it needs improvement (and that will apply to a lot of people, not just yourself), then that’s absolutely fine — we can help you to start doing that today.
What is a credit score?
If credit scores are new to you then our blog where we explain ‘what a credit score is, how it’s calculated and what affects it’ will help you.
Credit Reference Agencies
There are three main Credit Reference Agencies (CRAs) in the UK:
They are competing businesses and each agency has a different credit report for you — which is why you actually have three credit scores, not just one like most people believe.
In addition to this, they also have their own method for calculating your credit score (remember, they’re business competitors). So that is one of the reasons why your score will vary from agency to agency.
Another reason why your score may be different when comparing each of the three agency’s credit reports is that each CRA may have collected data on you from different sources.
How does this happen?
Credit reference agency reporting
The banks, utility providers, phone contract suppliers, or whichever companies you handle credit with, are regularly reporting your payments to Equifax, Experian and TransUnion.
But we don’t know which providers report to which credit reference agencies. Your electric bill may be reported to Equifax and TransUnion, but not Experian. Or your credit card payments may only be reported to Experian but not to the other two. It’s hard to keep up!
Errors on your credit reports
It could also happen when there are errors on one or more of your credit reports. This can cost you money, because you may be offered higher interest on credit agreements as a result (no thanks, right?).
That’s why it’s important to check each of your credit reports thoroughly and correct any mistakes you find. You can find out how to fix mistakes on your credit report here.
What is a good credit score?
When it comes to ‘good’ credit scores, there isn’t a magic number that will guarantee your approval for financial products. In the UK, the three main credit reference agencies decide what a good credit score range is to give you an idea of how a lender may view your application.
But even then, different lenders look for different things when they assess potential customers. Not to mention that lenders have varied attitudes towards ‘risk’. So you may be refused credit by one, and accepted by another.
That said, credit scores are helpful for showing you how healthy your credit report is looking, and they give you an idea of your general creditworthiness.
If you’re looking for what a good credit score is, Loqbox has collated Experian’s, Equifax’s and TransUnion’s credit score ranges in this handy table:
What does a good credit score mean?
A ‘good’ credit score indicates that from a lender's perspective you’re probably an attractive customer to lend money to based on your credit report. And this can improve the likelihood of you being accepted for credit.
It also means that you should be offered better deals and interest rates on the financial products you want! This makes your overall borrowing much cheaper for you in the long run, especially for long-term repayments like a mortgage (hello 25-30 years of paying interest, we see you). So making sure your credit score is in good shape is a worthwhile endeavour!
What is a bad credit score?
This is a common and valid question. Everyone wants to know where they sit on the scale. But Team Loqbox really hates the thought of someone feeling worried about having a ‘bad’ credit score.
There’s no number in the world that can justify you feeling bad about yourself — and besides, our credit scores are always fluctuating. That’s a totally normal part of having and using credit! Keep reading to understand what affects them.
What is an average credit score?
If you fall somewhere in between the extremes of having a ‘very poor’ or ‘excellent’ credit score (and let’s face it most of us do), then it’s time to be kind to ourselves, work hard and show patience.
Just remember that building your credit score has some serious financial rewards later on. When you are ready to apply for a mortgage, loan or credit card in the future, the higher your credit score the more likely it is for you to be offered £1,000s less in interest. We call that money-smart!
So keep at it — you’ve already got this far. Just a little more persistence is needed to get there. Check out this list of ‘what affects your credit score’ and ‘what you can do to improve it’.
What is my credit score?
After reading all of this you might be wondering ‘what is my credit score?’. You can check your credit scores for free and as often as you like without negatively affecting your credit report by using the following services:
ClearScore (uses Equifax data)*
Credit Club (uses Experian data)
Credit Karma (uses TransUnion data)
*For transparency: If you do decide to sign up to ClearScore using the link above, we’ll receive a small referral fee.
And after you’ve checked — if you’re keen to start improving your credit score then check out Loqbox for ways to build your credit history just by saving, spending or renting your home.
Build your financial future the easy way with Loqbox!