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What is a good credit score?

If you’re finding yourself confused about what a ‘good’ credit score is, you’re not alone. Figuring that out is not an exact science. The reason is that there are a number of credit scoring agencies, and each has its own methodology and scoring system.

But knowing what constitutes a good score is important. Your credit score is a figure that is used by lenders to assess your creditworthiness. A higher score could mean that you find it easier to obtain credit, and that you are offered lower interest rates than other people when applying for loans and credit cards.

Read on to find out what the main credit scoring agencies define as a good score, as well as what affects your own score and how you can improve it.

What is a good credit score?

Following regulatory changes in May 2018, it is free to obtain your own credit score from a credit scoring agency. This can be done by directly contacting the credit scoring agencies, such as Experian and Equifax. Their websites provide details on how to do this. You can take advantage of this free score once per year, though you can check on your score more often by paying a small fee.

Once you have your credit score, determining what a good score is depends on the agency. Here’s a quick breakdown looking at the three primary rating agencies:

  • Experian defines a credit score as being ‘good’ when it is above 881 out of the maximum 999
  • At Equifax a score of 420 or more out of 700 is deemed to be ‘good’
  • Finally, TransUnion uses a scoring range from 0 to 710 and provides a credit rating between 1 and 5. A rating of four or five (usually a score between 604 and 710) here should be seen as ‘good’ as TransUnion tells us that when you reach four ‘you’re more likely to be accepted when applying for credit, and are in a position to choose between different credit providers who view you as a low risk’.

Clearly, the higher the number, the better the credit score. Consumers with better credit scores will generally find it easier to obtain credit cards and mortgages, and may be offered more favourable interest rates than consumers who have weaker credit scores.

What affects your credit score?

As highlighted, each credit scoring agency has its own methodology that is used when calculating your credit score. Therefore, it is entirely feasible that your credit score will differ in terms of strength between the various leading credit scoring agencies.

However, what’s common between all the credit agencies is that they’re trying to gauge your future likelihood of not paying back your debt. As such, they’re all focused on a number of core factors that they believe provide insight into this. For example, they will take into account your past repayment history on loans, as well as how affordable any future debt could be given your financial situation and income level. They are also likely to consider the frequency of recent applications for credit, as well as the length of your credit history.

An easy way to think about this is to assume that actions that you take that make it look less likely that you’ll default — like keeping credit cards fully paid off, or at least consistently making your monthly payments on time — are likely to improve your credit score. Meanwhile, anything that makes you look like you’re wobbling on the edge of default — like missing payments or carrying large debts for a long period of time — are likely to drag your score down.

How to improve your credit score

Improving your credit score can be a worthwhile move. Consumers who have a good or excellent rating may find that they are offered more favourable financial terms on debt more frequently.

In order to improve your score, it is worth checking that you are up to date on any existing loan repayments. You may also wish to ensure that you are well within any existing credit card limits. Closing down old credit card accounts that are no longer in use may help to organise your financial situation, although closing accounts with high limits can potentially harm your credit score if you have high balances on other credit cards. The reason for that is that agencies look at the total utilisation of your credit, and the closer you are to maxing out your available credit, the worse your financial situation looks to the folks rating credit worthiness.

If applicable, cutting financial ties with a previous partner could be a good idea. Your credit rating may be linked to theirs, so a ‘notice of disassociation’ may be worth adding to your file with credit scoring agencies. To do so, contact the three major agencies (Experian, Equifax and TransUnion) directly through the details provided on their websites.

Since credit scoring agencies generally only make updates monthly, any improvement to your score from positive actions is unlikely to be instantaneous. Which makes it a good idea to not put off getting started!


So the bad news is that we can’t boil a ‘good’ credit score down to a single number that works across all situations and agencies. However, by understanding a bit about the differences between Experian, Equifax and TransUnion, and the scoring ranges that each view as ‘good’, you can end up with a relatively good idea of whether your score is sitting pretty… or needs some work.

And although it can take time to improve your credit score, doing so may help you to pay less interest on debt in the long run. Therefore, taking steps to improve your credit score, if needed, is usually a worthwhile move.

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