Paying your rent punctually may soon enhance your likelihood of obtaining a credit card or mortgage, according to Experian. The credit reporting agency is revamping its credit scoring system to factor in more positive financial habits exhibited in daily life. Apart from rent payments, favorable actions like decreasing overdraft usage, avoiding credit card cash advances, and making regular phone contract payments will also be acknowledged.
To have rental payments considered in the new model, tenants will need to opt in, while missed payments will have a detrimental impact on their score. The scoring range will be extended from 0–999 to 0–1,250, eliminating the “poor” and “very poor” categories and the color red. The new bands will be named Excellent, Very Good, Good, Fair, and Low.
Following the changes, over 40% of individuals are projected to move down a score band due to the expanded scale. However, Experian assures that one’s ability to acquire credit, such as mortgages and loans, will remain unaffected. The agency will provide guidance to individuals in lower score bands on improving their credit standing.
The updated scoring system will be gradually implemented starting in November, with full customer coverage expected by year-end. Notably, there is no universal credit score in the UK, as Experian, Equifax, and TransUnion each employ distinct scoring methods, resulting in varying credit scores. Lenders typically consider multiple credit agencies and additional factors like income when assessing creditworthiness.
Edu Castro, Managing Director of Experian Consumer Services, UK & Ireland, stated, “Our new Experian Credit Score better reflects more of the everyday financial behaviors that matter, offering a clearer understanding of the information on your credit report and providing practical ways to enhance your score for improved borrowing opportunities.”