Credit Score Basics > How does the Equifax credit score work?

How does the Equifax credit score work?

Wollit Team3 minute read · Updated 30th June 2024

Equifax is one of the three leading credit reference agencies in the UK, alongside Experian and TransUnion. This means that it’s very likely you’ll need a good Equifax credit score at some point in your life. Here is what it means, how to check yours, and how to improve it.

What does a credit score mean?

A credit score is a number that represents how creditworthy you are. Credit score agencies like Equifax calculate credit scores based on the information on your credit report. Because in the UK, there are three leading credit reference agencies, you have not one but three credit scores: an Equifax one, an Experian one, and a TransUnion one.

A higher score indicates lower credit risk, so lenders are more likely to accept loan applications from people who score in the "good" or "excellent" bands.

Many things can influence a credit score:

• Your payment history
• How much debt do you have
• Length of credit history
• How many kinds of credit do you have
• And how many recent loan applications you've made.

Since all of these things are included in your credit report, you should check your credit report regularly to make sure there are no errors that might hurt your credit score.

What does my Equifax credit score mean?

The Equifax credit score ranges from 0 to 1,000, with a higher score indicating a lower credit risk.

Equifax splits its credit score range into five bands:

• 811-1,000: Excellent,
• 671-810: Very good,
• 531-670: Good,
• 439-530: Fair,
• 0-438: Poor.

On its website, Equifax explains how to read your score if it falls into one of these bands:

• Excellent credit score: you'll have an easier time being approved for new credit.
• Very good credit score: lenders are likely to approve your application.
• Good credit score: Lenders may think twice before offering you new credit, and if approved, you may face higher interest rates.
• Fair credit score: lenders may be reluctant to offer you new lines of credit.
• Poor credit score: you're considered high risk, and lenders are unlikely to approve your application.

In other words, if you want to increase your loan approval chances, you should aim to improve your credit score so it's at least in the very good credit score band. At the same time, if your credit score is fair or poor, you should probably not apply for a new loan and take some time to improve your credit history and score.

How does Equifax calculate my credit score?

The Equifax credit score is calculated entirely based on the information in your Equifax credit report. The things that are going to matter most for your credit score are:

• Your payment history - how reliably you have made payments on credit accounts;
• How much credit do you use compared to all the credit you have available;
• The length of your credit history;
• The types of credit accounts you have (for example, credit cards, loans, and mortgages);
• And how many recent applications or "hard" credit checks you have on your report.

Which lenders use the Equifax credit score?

Since Equifax is one of the world's oldest credit reference agencies, most banks and lenders work with it. This includes banks like Bank of Scotland, Barclaycard, Santander, and many others. On its website, you can find a complete list of all the lenders, banks, and other companies that work with Equifax.

How can I check my Equifax credit score?

There are only two ways in which you can check your Equifax credit score:

1. Sign up for the Equifax Credit Report & Score service. This paid subscription is free for the first 30 days and £14.95 per month after that. You can cancel at any time.
2. Or you can sign up to ClearScore, a service that gives you unlimited free access to your Equifax credit report and score. In return, it might earn a commission if and when you purchase a financial product (like a card or insurance) from one of its partners.

How can I increase my Equifax credit score?

Here are some key ways to improve your Equifax credit score in the UK:

1. Make payments on time: Payment history is one of the most critical factors in your Equifax credit score. Ensure you make all your credit card, loan, and other bill payments on time. Use Direct Debit wherever you can.
2. Keep credit card balances low: Try not to use more than 30% of your credit card limit. Other credit reference agencies, like Experian, recommend keeping them even lower, under 25%.
3. Increase the length of your credit history: Avoid closing older credit accounts, as this can shorten your credit history. You should also avoid opening too many new accounts, as this will reduce the average of your credit history.
4. Diversify your credit mix: Having a mix of different credit types, such as credit cards, loans, and mortgages, can also improve your Equifax score.
5. Limit hard credit checks: Don't apply for multiple new credit accounts in a short period, as this can temporarily hurt your Equifax score.

Finally, you can also consider downloading a credit-building app like Wollit. Wollit reports your monthly subscription as a loan repayment to all three credit reference agencies (including Equifax), potentially improving all three credit scores.

• Credit Reference Agencies