What's a good credit score in the UK and what's bad?

So, how do you know what credit score is good or bad?

• How are credit scores calculated in the UK?
• What is a good UK credit score?
• What's a bad credit score?
• How do I improve my credit score?
• How can I check my credit score?

How are credit scores calculated in the UK? 

A credit score is a number that estimates how likely you are to pay back credit on time. It is based on your credit history or report, which is essentially a track record of your finances. Quite simply, the higher number, the more likely your application will be accepted. Credit scores in the UK are calculated by three main credit reference agencies or CRAs, which are: Equifax, Experian and TransUnion (previously called Call Credit).

Two important things to remember:

1. Credit scores are measured differently by each CRA. Your score will look different for Equifax, Experian and TransUnion, even if the information they have on you is the same.
   
   
2. Credit scores provided by CRAs are viewed or interpreted differently by lenders. Further, while lenders may use the information provided by CRAs, they will also perform other assessment checks and use their information to calculate their scores. A lenders' scoring system will also change according to the products they provide. So even if you are considered to be a suitable credit applicant for one lender, you might not be accepted by another; and the same applies to different credit products even if it's from the same lender.

What is a good UK credit score?

Each credit reference agency uses a different credit score range. All start from zero, which is the lowest score. A perfect or highest credit score for Experian is 999, Equifax 1,000 and TransUnion 710. 

According to the three main credit reference agencies, a good credit score is:

• Experian spans from 881 to 960
• Equifax spans from 531 to 810
• TransUnion spans from 604 to 627

Did you know? Equifax has changed their credit score range from zero to 1,000, ranging from poor to excellent. Previously the maximum score was 700, and categories ranged from very poor to excellent.

Please remember that credit scores or ratings should be used as a guide to give you a good idea of your "creditworthiness". It is not a guarantee. It's not your score that decides the result of your credit application; it's the lender. As mentioned previously, even if a lender uses information provided by a CRA, the lender will use its own calculations to decide your score.

What's a bad credit score?

Although each CRA uses a different score scale and range, they use similar criteria to measure scores. So if you have a bad credit score with one CRA, it is likely to be similar to another.

A bad or poor credit score according to:

• Experian ranges from 0 to 720
• Equifax ranges from 0 to 438
• TransUnion ranges from 0 to 565 

A bad credit score will limit your chances of being accepted because providers will see you as a high-risk borrower. Some products cater for poor credit scores, such as bad credit loans. But, when you are accepted for these, you may find that you don't always get a good deal; you may be charged higher interest rates or offered a low credit limit. The good news is credit scores can be improved.

How do I improve my credit score?

Lenders are particularly looking for reliability and minimal risk. You can do a lot to improve your credit score and reliability, even if you have a bad financial history or no financial history at all. But, it does take time and discipline; you may have to change some of your spending habits.

Here are five steps to improve your credit rating:

1. Get on the electoral roll
   Ensure you are on the electoral roll for your current address; you can find out more and register here (this is a free service). Being on the electoral roll with a current address will help lenders check and confirm your identity.
   
   
2. Build your credit history
   Lenders can not decide if you are a reliable payer if there is no record of you paying back debt in the past. You can build your credit history by opening a current account. If you have an overdraft, keep well above it. You could also consider getting a credit card whether it’s with your bank or another provider, or you can apply for a specialised credit card to build credit. Other small forms of credit, such as mobile contracts, can help build a positive credit file too.
   
   
3. Never miss a payment
   Whether it’s a personal loan repayment or an electrical bill, late or missed payments will show on your credit report and will damage your financial reputation. Lenders will see you as someone who could miss payments and potentially as someone who is struggling financially or financially unstable. If you are struggling, speak to your lender as soon as possible. Even if changing your payment terms affects your credit history, it is better than defaulting or getting a county court judgment against you.
   
   
4. Control your credit usage
   When offered credit, it's essential to stay well within your limits and control your credit usage - this is often referred to as credit utilisation. Credit utilisation is the amount of revolving credit you've used versus the amount of credit actually available to you and is normally shown as a percentage (revolving credit includes products like credit cards and overdrafts). For example, if you have two credit cards with a combined limit of £2,000, and you've used £500, your credit utilisation is 25%. Generally, an ideal credit utilisation level is below 30%.
   
   
5. Check your credit report regularly
   Review your credit report regularly, ensure the information such as your address is up to date, and correct any errors. Also, be sure to unlink yourself financially where appropriate (for example, you and your partner had a joint account and have now separated). Identity theft and online financial scams are on the rise. Keep an eye out for suspicious signs such as applications not made by you and outstanding payments for services you never signed up to. 

Want to know more? Check out our guide: Improve Your Credit Score: 10 Simple Steps for more information and tips.

How can I check my credit score? 

There are several ways you can check your credit report, one of which is a statutory credit report, and it's free. CRAs are obliged to supply you with a version of your credit report if you request it at no cost. However, a statutory credit report will not be the same as the detailed reports provided for a monthly fee. For example, it will not include features such as your score, monitoring services and alerts. However, it will give some insight into the information in your credit file.

You can also check your credit report file regularly by paying a subscription or a monthly fee. Some come with a free trial period for new customers. You also have some completely free options, for example, ClearScore (which uses Equifax). You can compare credit report providers and fees on the MustCompare Credit Reports Comparison page. 

In summary

When it comes to credit scores in the UK, understanding a good and a bad score is not always straightforward. The range or scale for credit scores depends on the credit reference agency. A good score will mean you are likely to be accepted for credit, and you may even get a better deal, but it is not a guarantee. It's the lender who decides. If you have a poor credit history, you can improve your score to make yourself more attractive to lenders by showing that you are reliable and financially responsible. For example, not missing payments when due and controlling your credit usage. Finally, make it a habit to regularly check and monitor your credit report and score.

Need help? Check out our Credit Report comparison page and FAQs.