Paying your rent punctually may soon enhance your eligibility for obtaining a credit card or mortgage, as per Experian’s upcoming credit score system changes. The new model will consider a broader range of positive financial behaviors exhibited in daily life.
Apart from rent payments, individuals will also receive credit for minimizing overdraft usage, refraining from credit card cash advances, and maintaining regular phone contract payments. Tenants must actively opt in for rental payments to be factored in, with any missed payments adversely affecting their credit score.
The revised scoring range will expand from 0–999 to 0–1,250, eliminating the “poor” and “very poor” categories and the color red. The new classifications will now be Excellent, Very Good, Good, Fair, and Low.
Over 40% of individuals are anticipated to shift to a different score band due to the expanded scoring system. However, Experian assures that eligibility for credit products like mortgages, loans, or credit cards will remain unaffected by the changes.
Experian plans to provide guidance and recommendations to help individuals enhance their credit scores if they fall into a lower band. The updated scoring system will be gradually implemented starting in November and will be fully rolled out to all customers by year-end.
It is essential to note that there is no universal credit score in the UK, with Experian, Equifax, and TransUnion each utilizing their own scoring methods. Lenders typically consider a blend of credit agency reports and additional data, such as income, to assess applicants for financial services.
Edu Castro, Managing Director of Experian Consumer Services, UK & Ireland, stated, “Our new Experian Credit Score mirrors contemporary money management practices, offering a comprehensive view of individuals’ financial behaviors and providing actionable steps to enhance their credit standing for future borrowing opportunities.”
