Are you in the process of building up your score or looking for ways to improve it? Knowing what a good credit score looks like is a great place to start. While there is some consensus among the credit reporting agencies (CRAs) in terms of the credit score ranges, there are also slight differences.
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What the three CRAs consider a good credit score
There are three big players in the credit reporting sphere and if you’ve participated in financial contracts, chances are good that you’ve heard of them.
Equifax
Equifax enjoys a large global footprint and is the go-to for businesses that wish to request credit profiles for businesses and individuals. The ratings are broken up into these levels:
- Fair: 580 to 669
- Good: 670 to 739
- Very Good: 740 to 799
- Excellent: 800+
Experian
Experian is one of the most-used CRAs. Its rating levels are:
- Very Poor: 0 to 560
- Poor: 561 to 720
- Fair: 721 to 880
- Good: 881 to 960
- Excellent: 961 to 999
TransUnion
TransUnion is one of the most informative CRAs in terms of client education through its Credit Education programme. Its ratings are broken down as follows:
- Very Poor: 0 to 550
- Poor: 551 to 565
- Fair: 566 to 603
- Good: 604 to 627
- Excellent: 628 to 710
How lenders use your credit score
Lenders want to know that you’re in good financial shape to service your commitments, whether it’s a loan application or a long-term agreement such as a lease. Your credit score is one of the ways they use to determine that.
A full credit report can tell creditors what accounts you have and how well you service those accounts. It also tells them how long you’ve had the accounts and your credit utilisation.
Not all lenders use the same CRAs, meaning it’s important to ensure your credit report is accurate with at least the three major ones.
Just remember, a low credit score doesn’t automatically disqualify you from getting credit. However, it might make the credit you’re offered a bit more pricey. If your score isn’t as good as it could be, see our review of the best cards for bad credit.
Ways to quickly build your credit score
While this might not be an obvious score builder, getting on the electoral roll can boost your score by as much as 60 points.
Another way you can improve your score is by having two or three active accounts. These accounts need to be paid on time and credit utilisation shouldn’t be more than 30%.
Why it’s important to have a good credit score
A good credit score is about more than just having access to a wider range of credit products. It can affect daily lifestyle choices such as where you work and live too.
Your credit becomes cheaper
A good credit score puts you in a better position to negotiate a lower APR. This is especially helpful for long-term credit products such as mortgages, as it can result in savings of tens of thousands of pounds over the loan term.
It can improve your job hunting
Certain roles require you to have a good credit score, especially finance roles.
Some long-term contracts require a good score
Whether it’s a lease agreement for that swanky pad in town or a mobile phone contract, you’ll need a passable credit score. Other institutions that may perform a credit check include insurance agencies, private schools and gyms.
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