Experian credit scores change – how this could affect you


Experian credit scores change – how this could affect you

One of the three main credit reference agencies, Experian, has changed the way it calculates its credit scores – and there have been reports of some people’s scores changing overnight.

Experian’s credit score is the number it gives you to estimate how likely you are to be accepted for various forms of credit based on your history of borrowing. A higher number could mean you’ve got a better history of managing credit – but whether you’ll get accepted for credit depends on each lender’s individual criteria. We’ll take you through how Experian’s changes could affect your score and whether this will have an impact on your eligibility for credit.

What’s changed?

According to Experian, the reason the scores have changed is so that they better reflect individual lenders’ eligibility criteria. This should give you a more accurate indication of the state of your credit history, which could help if you’re trying to work out if you’ll be accepted for credit. Remember that lenders don’t actually see the score that Experian calculates, what they see if your credit history. Experian show you the score to give you an idea of how good (or not!) your credit history will look to lenders.

Don’t worry – the important factors like making your payments on time and in line with your credit agreements haven’t changed and they’ll still continue to have the same effect on your Experian credit score. Experian doesn’t make its credit score calculations public knowledge, but here are the main ways in which it says it’s changed:

  • High total credit balance – Experian says that some lenders are no longer looking as much at how much a person borrows in total. This could mean that if you have several loans and credit cards still to pay off, your credit score might increase from what it showed as before the change in calculations.
  • Late payments – lenders are now looking at late payments and missed payments more closely so these are now given a higher weighting in your credit score than they were before. Even if you’ve caught up with missed payments, these now have an effect on your credit score if they’ve happened within the last six years.
  • Balance trends – this means how much you now owe compared with what you owed this time last year. Experian says that most lenders don’t take this into account any more, so it doesn’t have an effect on your credit score.

Experian isn’t the only credit reference agency – find out how you could check your credit report for free with ClearScore and Noddle>

Will you be affected?

The important thing to remember is that lenders will never see your Experian credit score, as this isn’t something they look at when they’re deciding whether to let you borrow or not. They’re more interested in whether or not you can demonstrate that you’ve borrowed responsibly in the past, so this includes any CCJs, late, missed or partial payments, defaults or any other credit problems.

You can use your credit score as a gauge to work out how healthy your credit history is – for example, a score of 700 on Experian is obviously better than a score of 500. But it’s much more useful to take a look at your credit history as a whole and see if there are any problems that could cause lenders to reject you.

Find out how you could improve your credit score in three months with our blog>