A credit score is a numerical expression based on a level analysis of a person’s credit files, to represent the creditworthiness of that person.
If you have little understanding as to what your credit score means and what is the average credit score in the UK, then you won’t be alone. So many financial institutions recommend that you get a copy of your credit file giving you an idea as to your current credit score before you consider applying for a loan.
This is great as long as you are able to work out what is a great credit score and what could do with some work. It will also depend which company you turn to for your credit report, because the scales are different.
Experian Credit Score
If you turn to Experian for your credit score then you will need to understand their scoring system.
- 0 – 560 very poor
- 561 – 720 poor
- 721 – 880 fair
- 881-960 good
- 961 – 999 excellent
What is easy to see, is a wide range of numbers and working out what your credit score is in relation to a good score and an average score, is less complicated. The average score is 783, this indicates to a lender that you are still at risk of defaulting on the loan, but it is possible to get further credit at this rate; the interest charged might reflect the risk and offered credit at a high interest rate.
Even if you have a credit score in the 900’s there is no guarantee that you will be successful in a loan application. It is vital that a credit company looks at the affordability, a great credit score doesn’t mean that you are able to take on credit and afford that credit.
Equifax Credit Score
Another major credit reporting company is Equifax; this company’s structure on their credit scale is different. Knowing the companies different credit scoring scales is not going a factor in most people’s lives, but if you are looking to take on more credit, having a basic understanding of where you fit into the scale is important.
It can give you the information prior to an application and this can allow you to judge the situation. If you have a low credit score then the chances of gaining more credit is slim, having a mark on your credit score when you apply for credit and being rejected is going to take time before it’s removal. Knowing in advance, what your credit score is and making an informed decision before you apply for credit is, the better option.
Equifax scoring system is a little different and the scale is:
- 0 – 299 very poor
- 300 – 349 poor
- 350 – 399 fair
- 400 – 474 good
- 475 – 600 Excellent
The same applies with Equifax as Experian; a high credit score doesn’t necessarily mean that if you apply for credit and your score is close to 600 there is no guarantee of acceptance.
The average score in the UK with Equifax is in the 400’s; this shows the difference in the systems. However, the companies use the same information, they just have different scoring systems and knowing where you are on either scale is important especially if you are looking to take out more credit in the future.