What is a 'good' credit score?
Understanding what makes a credit score "good" is pretty important for anyone looking to build or maintain a strong financial profile. A good credit score can open doors to better financial products, lower interest rates, and better financial opportunities. But what exactly is considered a good credit score? In this guide, we will explain what a good credit score is, how it is calculated, and how you can achieve one!
What is a credit score?
A credit score is a three-digit number that represents your creditworthiness. In the UK, credit scores are calculated by three major credit reference agencies:
Experian: Scores range from 0 to 999.
Equifax: Scores range from 0 to 1,000.
TransUnion: Scores range from 0 to 710.
Lenders use these scores to assess how likely you are to repay borrowed money on time. Your credit score is influenced by several factors, including your payment history, credit utilisation, length of credit history, types of credit, and recent credit applications.
What is considered a good credit score?
A good credit score varies depending on the credit reference agency. Here’s how they define good credit:
Experian: 881 - 960 (Good), 961 - 999 (Excellent)
Equifax: 531 - 670 (Good), 671 - 810 (Excellent)
TransUnion: 604 - 627 (Good), 628 - 710 (Excellent)
If your score falls within the "good" range, you are likely to be considered a reliable borrower by most UK lenders, making it easier for you to qualify for loans, credit cards, mortgages, and other financial products at favourable terms.
Why does a good credit score matter?
Having a good credit score in the UK can significantly impact your financial life:
Better loan terms - access to lower interest rates on personal loans and credit cards.
Higher credit limits - lenders may be willing to offer you larger amounts of credit.
Easier approval for rentals - letting agents and landlords prefer tenants with good credit.
Competitive insurance rates - some insurers in the UK use credit scores to determine premiums.
Access to pay monthly arrangements with utilities (gas and electricity) companies, and mobile phone contract providers
How do you achieve a good credit score?
If your credit score is below the "good" range, here are some steps you can take to improve it:
Register on the electoral roll - being registered to vote at your current address can boost your score.
Pay your bills on time - your payment history is the most significant factor affecting your score.
Reduce your credit utilisation - aim to use less than 30% of your available credit limit.
Avoid unnecessary credit applications - each application can temporarily lower your score.
Regularly monitor your credit report - check for errors with all three credit reference agencies (Experian, Equifax, and TransUnion).
So, how do you maintain a good credit score?
Once you achieve a good credit score, it can be difficult to maintain it. Here are our top tips:
Keep your balances low and avoid maxing out your credit card
Continue making on-time payments on your credit card. These consistent payments will keep your credit score high.
Limit new credit applications and only apply for new credit when necessary.
Monitor your credit regularly and use a credit monitoring service to keep track of your score.
A good credit score is a valuable financial asset that is often forgotten. It can make borrowing cheaper, provide access to better financial products, and give you greater financial flexibility. By following the tips in this guide, you can work towards achieving and maintaining a good credit score, ensuring a healthier financial future.
This blog is for informational purposes only and does not constitute financial advice. Please speak to a qualified financial adviser before making financial decisions.