Q

What’s a good credit score?

A

950 is a good score. As is 690. Come to think of it, 4 is quite good too. Confusing? Allow us to explain.

As you might have already intuited, there’s a major impediment to arriving at one answer to a seemingly elementary question of what constitutes a good credit score: there happen to be three credit competing reference agencies in the UK employing three different numerical scales. Experian uses a scale of 0-999, Equifax has one that ranges from 0-700 and Callcredit (a.k.a. Noddle) has developed its own system that ranges from 1-5. And since not all creditors report to all agencies, one agency may judge you excellent while another considers you merely “good.” Apart from this inconsistency, the other issue that makes credit scores most problematic is that lenders each have their own credit scoring system that are quite distinct from any of the three big reporting agencies, systems that are by design quite opaque to consumers.

For this reason, any score will be only moderately predictive of how you’ll fare with any given lender. For this reason, you should strive to get yourself categorized as “excellent” by the agencies, and therefore a good bet that you’ll repay your debts. Equifax considers any score over 466 to be “excellent.” The magic threshold for excellence at Experian is 961. Callcredit considers only the number 5 to be “excellent.” Numbers below these will fall into the official “good” designation, and while they may still qualify you for a loan for a home or a car, the interest rate that lenders offer those in the “good” category may not look all that good at all, since you’re considered a somewhat more risky bet to repay your loan.

The most reliable method for achieving pan agency excellence is maintaining a long track record of paying your bills on time, but we probably didn’t even have to tell you that! Less obvious methods to improve your standing include: making sure you’re registered on electoral roles at your current address, scanning your credit report periodically in order to catch any errors that might damage your score, and sending the agencies what’s called a “notice of correction,” a 200 or fewer word explanation for missed payments owing to, for example, illness or redundancy, a statement that will become a permanent addition to your credit reports.

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