Good credit scores unlock various financial benefits, such as easier access to loans, better credit card rates or mortgage terms, and more.
To learn what is a good credit score in the UK and how to improve it quickly, read our brief yet informative guide below.
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Your credit score, or rating, is a three-or four-digit number indicative of your trustworthiness as a money borrower as it reveals information about your past financial dealings, such as your success in paying off your debts on time.
While a higher credit score boosts your chances of securing different types of loans at better terms, for example – buying a car, a lower credit rating may prevent you from applying successfully for certain financial products due to the risk of timely repayment.
In the UK, Equifax, Experian, and TransUnion are the main agencies in charge of producing your credit score. However, since these organisations use different credit rating systems and loan information, your credit rating may vary depending on who issues it.
The fair, good, and excellent credit score range values of all three agencies are listed below:
Note: While your credit score is unavailable to the public, certain types of organisations may be able to access it with a court order, such as banks, creditors, utility companies, and more.
All major credit rating institutions use the same criteria and financial data offered by lenders and other finance-related businesses when issuing your credit report and calculating your credit score. Essentially, your financial history impacts your credit rating via several factors:
Note: Contrary to popular belief, factors like checking out your credit score, the scores of friends and families living at the same address, and incidents from your distant past do not affect your current credit score.
To improve a poor or fair credit score in the UK, take certain sensible steps, including but not limited to the following:
Note: Credit scores can take some time to improve (up to several months). Until then, stay vigilant with your finances and complete the steps above regularly.
Hopefully, this article clarified the importance of maintaining a good credit score and the methods to improve it when needed. Ultimately, UK citizens with a good credit rating will have better success in everything from getting a phone contract to buying a house.
Fair credit scores are adjacent to the lower half of the credit-scoring scale, so you are advised to follow the steps outlined above to improve your credit rating.
The average credit score in the UK varies depending on which credit rating agency issued your report and consequently calculated your score. As of now, Equifax estimates an average of 383, Experian—759, and TransUnion—547.
Again, it depends on the credit reference agencies and their credit score ranges. Generally, a credit score of 500 is considered poor to fair, which results in difficulties obtaining credit.
If you are in the market for a house and wonder what is a good credit score in the UK to secure financing with good terms and rates, note that your luck will depend on the loaning agencies with which you apply. That said, request a loan at several institutions and compare their offers. Before diving into a mortgage, take caution and know that property debt is the major debt among households.
My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.