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What is a good credit score?
Despite what you may think, there’s no such thing as a good credit score.
Every lender judges you differently, and they base their decision on different things. That’s why it’s impossible to tell you a good score to aim for before you apply for credit. And, that’s also why your credit score won’t be the same on Experian as it is on Equifax.
Lenders score you differently
The thing is, each of the credit reference agencies (Experian, Equifax and Callcredit) give you a different credit score. This is because they each have completely different scales by which they judge you.
This is the same as how lenders view your credit history.
When you apply for credit – whether a loan, credit card or mortgage – the lender will make a decision based on your past track record of managing credit. Each lender will look for different things when you apply, so exactly what the “score” given to you by a credit reference agency is doesn’t really matter.
As the lender will score you based on their own criteria, you really don’t need to pay much attention to the score you’re given when you check your credit history. It’s merely there to help guide you, and to show if you’re improving over time.
So what does a good credit history look like?
But while there’s no such thing as a “universal credit score”, checking your credit score can sometimes be useful if you know it’s not the be-all-and-end-all. It’s a good way to track if you’re improving month after month - but always remember the score itself likely won’t be used by lenders.
Instead, you should look for any negatives you have on your report, and where you could improve on them.
Some of the credit reference agencies will tell you where you could improve, and they should all point you in the direction of where you might have gone wrong in the past.
To guide you, someone with a good credit history might have qualities like:
- No missed payments (especially recently)
- No defaults or CCJs
- Up-to-date personal details
- Being signed up to the electoral roll
- A credit card with a high credit limit (that they never exceed)
- Having no unused credit or store cards
- Owning more than one line of credit (maybe two credit cards and a loan, for example)
For the most part, these are all good qualities to have if you want your credit history to be in tiptop shape.
Of course, when it comes to having a high credit limit or having more than one line of credit, these are areas you may wish to work on once you’re more confident borrowing again.
You can improve your credit history without doing this, so if you’re worried you might not be ready to borrow larger amounts, hold off on this until you are and you have the room in your budget to do so. Once you do, these areas can help improve your credit history further.
If your credit history ticks all of the boxes covered in that list, the chances are you’re well on your way to proving yourself a responsible borrower. And you don’t need a score to tell you that!