Paying your rent punctually may soon enhance your eligibility for acquiring a credit card or mortgage, as per Experian’s revamped credit score approach. The updated model by Experian will consider more positive financial behaviors demonstrated in daily life, such as reducing overdraft usage, avoiding credit card cash advances, and maintaining regular phone contract payments.
To have rental payments factored into their scores, tenants will need to opt in, with missed payments having a detrimental impact. The new scoring system will now range from 0 to 1,250, replacing the previous 0–999 scale, and will eliminate the categories “poor” and “very poor” in favor of bands named Excellent, Very Good, Good, Fair, and Low.
Following the expanded scoring, over 40% of individuals are expected to shift to a different score band. However, Experian assures that eligibility for credit products like mortgages and loans will not be affected by the changes. The new scoring system will be fully implemented for all customers by the year-end, offering personalized advice to improve credit scores, particularly for those in lower bands.
It is crucial to note the absence of a universal credit score in the UK, with Experian, Equifax, and TransUnion each utilizing distinct scoring systems. Consequently, credit scores may vary across these agencies, and lenders typically consider a combination of credit reports and other financial information when assessing loan applications.
Edu Castro, Managing Director of Experian Consumer Services, UK & Ireland, emphasized the evolution of financial management behaviors, stating that the new Experian Credit Score now reflects a broader spectrum of significant financial activities, providing individuals with a clearer understanding of their credit report and tailored strategies for enhancing financial prospects.