Paying your rent punctually may soon enhance your prospects of securing a credit card or mortgage, according to Experian. The credit score system at Experian is being revamped to incorporate more positive financial behaviors, such as reducing overdraft usage, avoiding credit card cash advances, and maintaining timely payments on phone contracts. To have rental payments factored into the credit score, tenants will need to opt in, with missed payments having a detrimental impact on the score.
Under the updated scoring model, the range will shift from 0–999 to 0–1,250, doing away with the “poor” and “very poor” categories and the color red. The new bands will now be labeled as Excellent, Very Good, Good, Fair, and Low.
Over 40% of individuals are anticipated to change score bands due to the expanded scoring system. However, Experian assured that eligibility for credit-related products like mortgages, loans, or credit cards will remain unaffected by the changes. Experian will provide guidance and suggestions for enhancing credit scores in lower bands.
The revised scoring system will be progressively implemented starting in November, reaching all clients by the year’s end. It is essential to note that there is no single universal credit score in the UK, as Experian, Equifax, and TransUnion each employ their unique scoring algorithms. Consequently, credit scores may vary across these agencies, and lenders typically consider a blend of credit ratings and other financial information when making lending decisions.
Edu Castro, Managing Director of Experian Consumer Services, UK & Ireland, highlighted, “The evolution of money management practices has prompted a transformation in our scoring system. Our new Experian Credit Score now captures more essential everyday financial behaviors, like rent payments or minimizing overdraft usage, providing a clearer insight into credit report details. This personalized approach helps individuals grasp their financial standing better and offers practical strategies to enhance their score, thereby unlocking improved borrowing opportunities in the future.”