Paying your rent punctually may soon enhance your eligibility for acquiring a credit card or mortgage, as Experian plans to revamp its credit scoring system to consider more positive financial behaviors in people’s daily lives.
Apart from rent payments, the new model will also acknowledge efforts like reducing overdraft usage, steering clear of credit card cash advances, and making timely payments on phone contracts.
Tenants will need to opt-in for their rental payments to count towards their credit score, with missed payments having a detrimental impact.
Experian will introduce an expanded scoring range from 0–999 to 0–1,250, eliminating the categories “poor” and “very poor,” as well as the color red, in favor of new bands named Excellent, Very Good, Good, Fair, and Low.
The changes are anticipated to cause over 40% of individuals to shift score bands due to the extended range. However, Experian assures that eligibility for credit products such as mortgages, loans, and credit cards will remain unaffected.
The new scoring system will be fully implemented by the end of the year after starting in November. It’s important to note that there is no universal credit score in the UK, with Experian, Equifax, and TransUnion each employing their own scoring methods.
Different credit scores across agencies are common, as lenders typically consider a combination of credit ratings and other factors like income when evaluating loan applications.
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 your credit report and providing practical ways to enhance your score for better financial opportunities in the future.”
