Credit Score Basics > How the Experian credit score works in the UK

How the Experian credit score works in the UK

Wollit Team5 minute read · Updated 1st July 2024

The Experian credit score in the UK is a number calculated by Experian that is meant to give an indication of how companies, and especially lenders, view your creditworthiness.

What is the difference between my Experian credit report and my Experian credit score?

The Experian credit report is a detailed file showing your financial history. It includes information about your credit accounts, payment history, and public records like bankruptcies or court judgments. Lenders look at it when you make a credit application, and use the data on it to decide if you are risky or not.

The Experian credit score, however, is simply a three-digit number, calculated based on the information on your Experian credit report, that is simply meant to show how reliable you are at borrowing and repaying money. It ranges from “very poor” to “excellent” and is used by lenders to quickly check your eligibility for their products.

In other words, when you go through a credit card eligibility calculator or apply for a mortgage in principle, it’s your credit score that matters. When you actually apply for the credit card or for the mortgage, it’s your credit report that lenders look at.

What does my Experian credit score mean?

The Experian credit score ranges from 0 to 999, with 999 being the best possible score. If you want to understand what your credit score actually means, the best answer comes from Experian.

Here is how Experian defines each of its credit score bands:

• Excellent (credit score between 961 and 999): You should get the best credit cards, loans and mortgages, and on the best terms. This is not a guarantee, though.
• Good (881-960): You should get most credit cards, loans, and mortgages but you might not get the very best deals.
• Fair (721-880): You might get OK interest rates but your credit limits may not be very high.
• Poor (561-720): You might be accepted for credit cards, loans, and mortgages but you’ll have fewer options andthey may have higher interest rates.
• Very Poor (0-560): You're most likely going to be refused by most lenders. The only exception? “Bad credit” lenders, but be careful – they charge very high interest rates for the extra risk.

You should also keep in mind a few things about these numbers:

• Equifax and TransUnion, the other two main credit reference agencies in the UK, have their own range and calculate your credit score differently. This is why you might see that you have a different credit score with Experian than with Equifax or TransUnion. Don’t worry, this is normal.
• Your credit score is based only on your credit report, which itself is mostly based on your credit history. This means that the main things that affect your credit score are going to be related to your debts and how you repay them. Getting a raise at work won’t improve your credit rating (although it might help to get larger loans).
• Your credit score is also not set in stone, and it will change over time. So if you have a poor credit score now, you can improve it quite a bit with some time and good financial habits.

Also, checking your Experian credit score is completely free and won't harm your credit. All you have to do is sign up for a free Experian account. Once you’ve signed up, your credit score will be updated every 30 days – Experian will also email you to let you know if your score has gone up or down.

Which factors affect my Experian credit score?

The factors that affect your Experian credit score include pretty much everything related to your financial behaviour and credit history.

Here are the main ones:

1. Payment history: This is a significant factor, accounting for 35% of your credit score. It reflects whether you have paid all your bills and debts on time.
2. Credit utilisation: The amount of credit you use compared to your credit limit accounts for another 30% of your score. Experian recommends you keep your credit utilization under 25% to be safe. For example, if you have a credit card with a limit of £1,000, you should aim to not have a balance larger than £250 within a month.
3. Length of credit history: How long you’ve had various credit accounts impacts your score, with longer generally being considered as better.
4. Credit mix: Having a mix of different types of credit, such as credit cards, mortgages, and loans, can also influence your score. Lenders like to see that you can manage multiple kinds of debt.
5. New credit: Opening multiple new credit accounts in a short period can lower your score, as it may suggest that you’re suddenly struggling and using debt to make ends meet.
6. Adverse events: This includes major events that can harm your credit score, including missing payments, defaulting on accounts, going bankrupt, or being taken to court and ordered to pay.

One more thing that’s unrelated to your credit history which is somehow included on your credit report and can influence your credit score is your address history.

Registering to vote at your current address and updating that registration every time you move is very helpful for verifying your identity. As a result, CRAs like Experian give “bonus points” for keeping your electoral registration up to date.

Which factors don’t affect my Experian credit score?

The rule is that whatever is not included in your credit report doesn't influence your credit score. This means that your criminal record, medical record, employment history, or how much money you have can’t improve or hurt your score at all.

Equally, some things can be included in your credit report that won’t influence your credit score.

The first example is Notices of Correction.

These are 200-word notes that you can include in your credit file to explain why certain adverse events happened. Lenders might understand, for example, if you missed a payment because of job loss or health problems. However, adding one won’t improve your credit score – it’s just a bit of context for the lenders.

The second example is rental payments.

Experian allows people to report their regular rent payments and to include these on their credit reports. However, this is not included yet in the credit score calculations. Experian is still looking to see how lenders actually use this data. For now, it’s probably best to report your rent using an app like Wollit and make the most of it – especially if you pay it on time.

There is also a category of payments that are not included in your credit report but can actually influence your credit score.

This is only possible with Experian through one of their services called Experian Boost. This is a free service in the UK that can instantly increase your credit score by looking at your regular payments, like Council tax, ISA contributions, and even Netflix subscriptions.

These payments are not actually recorded in your credit report, even if you sign up for Experian Boost. What happens is that Experian calculates a “boosted” score, which lenders can see alongside your regular score. We don’t know how much impact this has or how many lenders actually care – but it’s free and probably doesn’t hurt.

How do I improve my Experian credit score?

The best way to improve your Experian credit score is to work on your credit history, which is what matters most for your Experian credit report – what your score is calculated on.

Here are ten tips to help you improve your score:

1. Register to vote at your current address, and don’t move too often.
2. Make all your payments on time and in full.
3. Aim to use less than 25% of your available credit limit.
4. Try to have multiple kinds of credit, such as credit cards and loans.
5. Avoid going through an adverse event, and talk to your lenders if you can’t repay a debt or make a payment on time. They might be able to help you avoid bankruptcy or a CCJ.
6. Keep old credit accounts open and active if possible.
7. Monitor your Experian credit report regularly, and dispute any errors you find.
8. Avoid making multiple credit applications in a short period. Experian recommends not having more than two “hard credit checks” in six months.
9. Give Experian Boost a try: it’s free and it can help you make some of your bills and subscriptions count, too.
10. Finally, build a long credit history.

This final tip is the most important since your credit history is one of the deciding factors in your credit score. Luckily, there are now many apps that can help you build and improve credit.

One such app is Wollit.

Wollit is an app available both on Android and iOS, and it works by reporting a fixed-fee monthly subscription as a loan repayment to all three credit reference agencies, including Experian. This helps you build a history of timely debt repayments, which is the main thing that credit agencies care about.

On top of this, Wollit can also report your monthly rent payment to Experian. This can add another line in your credit report that shows lenders you pay your bills on time, and can also help you prepare for the day when Experian will also include rent payment history in its credit score.

• Credit Reference Agencies