Punctual rent payments may soon enhance your prospects of securing a credit card or loan. Experian is revamping its credit scoring system to consider more positive financial habits displayed in daily life, such as timely rental payments, reducing overdraft usage, avoiding credit card cash advances, and consistent phone contract payments.
To include rental payments in the scoring, tenants must opt in, and any missed payments will adversely affect their score. The new scoring scale will expand from 0–999 to 0–1,250, eliminating the “poor” and “very poor” categories and the color red, now labeled as Excellent, Very Good, Good, Fair, and Low.
Over 40% of individuals are expected to shift score bands due to the extended scoring range, with 42% moving up a band and 14% remaining stable. However, eligibility for credit products like mortgages, loans, and credit cards will not be impacted by the changes.
Experian will provide guidance to improve credit scores for those in lower bands. The updated score will be implemented starting in November, reaching all customers by year-end. It is crucial to note that the UK lacks a universal credit score, as Experian, Equifax, and TransUnion each utilize unique scoring systems, leading to varying credit scores across agencies. Lenders often consider multiple factors, including credit ratings and income, when evaluating loan applications.
Edu Castro, Managing Director of Experian Consumer Services, UK & Ireland, emphasized the evolving nature of financial management and credit scoring. The new Experian Credit Score aims to better reflect everyday financial behaviors, offering individuals a personalized view of their financial health and actionable steps to enhance their creditworthiness, thereby unlocking better borrowing opportunities in the future.