What is a good credit score?
Jan 25, 2021
If you’re planning to apply for credit soon — like a loan, credit card or mortgage — your credit score might be on your mind. In this blog I’m going to look at what a good credit score is, and signpost you to where you can find some tips on how to improve yours.
But let’s get one thing straight first: Whatever your current score is, it’s nothing to be scared of. If it needs improvement, then that’s fine. We can help you start doing that today. If your score is already good then congratulations!
Wait, what is a credit score?
If credit scores are new to you then this video where I explain what a credit score is, and the difference between a credit score and a credit history, might be a helpful starting point.
Credit Reference Agencies
There are three main Credit Reference Agencies (CRAs) in the UK — Experian, Equifax and TransUnion — and each owns a different credit report on you. Further, they each have their own method for calculating your credit score. That’s one of the reasons your score will vary from agency to agency.
However, another reason your score might be different across your three credit reports is that each credit reference agency may have collected different data on you. How does this happen?
Firstly it could be because the data each collects (or doesn’t) has come from different sources. For example one lender might report to only one of the credit reference agencies but not to the others. This would be the case if you had a credit card from a company that reported to TransUnion, but not to Equifax or Experian for instance.
Or secondly, it could be because there are errors on one or more of your credit reports. Errors on your credit report can cost you money should you be offered high rates of interest on credit arrangements as a result. That’s why it’s important to check each of your credit reports thoroughly, and correct any mistakes you find. (Find out how to fix mistakes on your credit report here.)
So, what is a good credit score?
Unfortunately, there is no magic number that will guarantee you approval when it comes to credit scores.
Further, because different lenders may look for different things in their potential customers, and have very different attitudes to risk, you may be refused credit by one and accepted by another.
That said, credit scores are helpful indicators as to how healthy your credit history is, and therefore the likelihood of your application being accepted.
Good credit scores according to the three main Credit Reference Agencies
What does a good credit score mean?
A good credit score indicates that your credit history could help make you an attractive customer to lenders, and therefore your likelihood of being accepted for credit will be higher.
You should also be more likely to be offered better deals which makes borrowing money cheaper for you. So making sure your credit score is in good shape is a worthwhile endeavour!
What is my credit score?
After reading all of this you might be wondering ‘what is my credit score?!’. You can check now for free using the links below:
* Just to be super transparent if you sign up and follow this link although it’s free for you, LOQBOX may get a small referral fee from ClearScore. This helps us to continue to improve our service for our customers and keep LOQBOX free.
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