Paying your rent punctually may soon increase your chances of qualifying for a credit card or mortgage. Experian is revising its credit scoring system to incorporate more positive financial behaviors demonstrated in everyday life. In addition to rental payments, good practices like minimizing overdraft usage, avoiding credit card cash advances, and making timely phone contract payments will be acknowledged.
Tenants will need to opt into including rental payments, as missed payments will negatively impact their score. The revamped scoring model will expand from 0–999 to 0–1,250, eliminating the “poor” and “very poor” categories and the color red. The new bands will now be labeled as Excellent, Very Good, Good, Fair, and Low.
Over 40% of individuals (44%) are poised to shift down a score band due to the expanded scoring range. However, Experian assures that eligibility for credit products like mortgages, loans, and credit cards will remain unaffected by the changes. Experian will provide guidance and tips to enhance credit scores for those in lower bands.
The updated score will be gradually implemented starting in November, reaching all customers by year-end. It is crucial to note that there is no universal credit score in the UK, with Experian, Equifax, and TransUnion each employing their unique scoring systems. Lenders typically consider multiple credit agencies and financial details, like income, when evaluating loan applications.
Edu Castro, Managing Director of Experian Consumer Services, UK & Ireland, remarked, “Our new Experian Credit Score better reflects more of the everyday financial behaviors that matter, offering a clearer understanding of your credit report and personalized insights for financial improvement.” This shift aims to provide individuals with a tailored view of their financial status and enhance borrowing opportunities in the future.