Good credit scores

What is a good credit score?

Your credit score gives you an idea of how companies may view you when you apply for credit.

A higher score means lenders see you as lower risk. So, a good score will be good news if you’re hoping to get a new credit card, apply for a loan, or even a mortgage. Whatever you need credit for, making sure your score’s good, or even better excellent, means you’re more likely to be accepted, and offered better rates. Here, we’ll take a look at what a good credit score is, how it’s calculated, and what factors make it ‘good’.

No ‘magic’ number

There’s no ‘magic’ number when it comes to your score. Different companies will be looking for different things in potential customers, so while you may be one lender’s cup of tea, you may not tick all the boxes for another. We provide a score from between 0-1250 and consider a ‘good’ score to be anywhere between 861 and 1000, with ‘fair’ or average between 641 and 860. Before you apply for credit, it’s a really good idea to check your free Experian Credit Score, so you can make more informed choices when it comes to applying for credit.

How is a credit score calculated?

Whenever you apply for credit, lenders will look at information from your credit report, application form, plus any information they hold on you (if you’re an existing customer). All this data is then used to calculate your credit score. Every lender has a different way of calculating it, largely because they all have access to different information but they also have different lending criteria.

Generally, the higher your score, the better your chances of being accepted for credit, at the best rates.

Credit reference agencies (also known as CRAs) like ourselves, calculate a version of your credit score. How each CRA calculates this varies but there are certain factors they all consider, including - how much you owe, how often you apply for credit, and whether your payments are made on time. You can read more about the factors that influence your score in our guide to what affects your score.

How can you get a good credit score?

There are plenty of things you can do to help improve your score, but it can take time and patience, and some will-power too.

Ways to improve your score:

• Register on the electoral roll at your current address. This helps companies confirm your identity.
• Build up your credit history. If you have little or no credit history it can be difficult for companies to score you, which can result in a lower score. Thankfully, there are some relatively simple steps you can take in order to build up your credit history.
• Pay your accounts on time and in full each month. This shows lenders you’re a safe bet and can handle credit responsibly.
• Keep your credit utilisation low. This is the percentage of your credit limit you actually use. For example, if you have a limit of £3000 and you’ve used £1500 of it, your credit utilisation is 50%. A lower percentage is usually seen in a positive light and should help your score go up. To help improve your Experian Credit Score, try to keep your credit utilisation at 25%.
• Sign up to Experian Boost and see if you could raise your score instantly. By securely connecting your current account to your Experian account, you can show us how well you manage your money. We’ll look for examples of your responsible financial behaviour, such as paying your Netflix, Spotify and Council Tax on time, and paying into savings or investment accounts.

Once you’ve got your score where you want it to be, here’s our tips on how to keep it healthy:

• Limit the number of credit applications you make. Don’t be tempted to make too many in a short space of time as this can make lenders view you as overly reliant on credit, and a higher risk. Each application you make will record a hard search on your credit report. Companies can see this, so it’s a good idea to space any applications out.
• Close unused accounts. If the amount of credit available to you is too high, lenders may think you won’t be able to handle any more.
• Keep up with your payments. Delinquent and defaulted accounts will harm your score. Accounts are labelled delinquent when you’re late on payments, and defaulted accounts are when your relationship with the company has broken down due to several missed payments.
• Only borrow what you know you can afford. If you get into trouble with debt that leads to CCJs, IVAs or even bankruptcy, these will stay on your credit report for up to six years and will damage your score.
• Keep an eye out for fraudsters. Their activity could hurt your score badly. So, try to check your credit report - free on the Experian App - for any suspicious signs.