Your credit score is the magic number that helps lenders decide whether or not to approve your mortgage, loan or credit card application.
Typically, the higher the number, the better your borrowing prospects. But the scoring shake-up at TransUnion, one of the UK’s three biggest credit reporting agencies, may shock you the next time you log on.
Previously, TransUnion’s maximum score was 710, but later this month it will begin expanding the range, scoring you out of 999.
And while the change means tens of thousands of people will be promoted to a higher grade (the bars are color-coded like traffic lights, with “excellent” at the top and “very poor” at the bottom), others will be demoted and find themselves sliding down a notch.
The good news, however, is that even if your “score band” changes, the basic information stored on your credit file will remain the same, and that’s what lenders use to decide the outcome of an application, so credit decisions and approvals won’t be affected, the company says.
In the UK there is no ‘universal credit score’ that is used by lenders or credit reporting agencies (CRAs). Each CRA has its own system: the other two main ones in the UK are Equifax and Experian. With Equifax, your credit score ranges from 0 to 1,000, while with Experian, your credit score ranges from 0 to 1,250.
What’s my score?
This number is calculated based on your credit history. That is, it is an indicator of how likely you are to pay off your debts on time.
Before you can take on any debt – including for other purposes – banks, mobile phone companies and other businesses will check your creditworthiness with any of the three CRAs. They all use slightly different models, but rely on similar data, such as your bill payment history, to calculate your score. Those in the upper ranges are considered safer prospects by lenders, as your rating also affects the amount you can borrow and the interest rate charged.
What does TransUnion do?
Previously, its highest score was 710, but this month it will begin rolling out a new system that will grade you on a scale of 0 to 999.
TransUnion says the overhaul gives consumers “a clearer, more detailed view of their credit health.”
He claims it’s “more than a new number range” because it combines how consumers use credit over time with a “moment-in-the-moment view to provide a more sophisticated picture of how consumers manage credit on a daily basis.”
The new estimate is based on more data, including how account balances have changed over time and how credit cards are used.
The company has also changed some terms. The bottom two bands were formerly called “poor” and “very bad” but have been renamed “low” and “very low”.
TransUnion reports that most people (58%) will remain in the same point group, while 36% will be moved to a higher group and 6% will move to a lower group.
TransUnion’s Madhu Kejriwal says its new assessment is “clearer, more transparent, more informative and better aligned with how lenders view consumers today.”
The new system is being implemented in stages from the end of September to June 2027. As a result, some consumers may see two different numbers for a short time, depending on the app or vendor they use and when it adopts the new model.
Even if your score ends up worse, TransUnion says nothing on your basic credit report will change—just the number you see.
TransUnion states: “Individual credit history information provided to organizations will remain unchanged.
“As a result, having different scores during the transition will not and will not influence lenders’ decisions on loan applications.”
Tom Eyre, chief executive of lending platform Loqbox, says changes to scoring systems are not a cause for concern. “If the new model puts someone in a lower category, it doesn’t mean they become less creditworthy overnight. Their behavior and history remain the same. What has changed is how the credit rating agency calculates or presents their score.”
Eyre adds: “It is much more important to understand what is in your report and what shapes it, rather than any specific group or number, as these are the pieces of information that credit providers actually look at, along with their own criteria, when making a decision.”
What about Experian and Equifax?
Last year, Experian changed its rating system, increasing the top end of the range from 999 to 1,250 and taking into account items such as rent for the first time.
Equifax changed its score range from 0-700 to 0-1000 in 2021 and doesn’t appear to be planning another change anytime soon.
Experian says its new system “better reflects more important everyday financial actions, such as paying rent or reducing overdraft usage.”
after promoting the newsletter
It also gives people “a more personalized view of how they’re doing financially and more practical ways to improve their performance,” the company says.
Experian also got rid of the “poor” and “very bad” labels, as well as the use of the color red. Its bands are now called “excellent”, “very good”, “good”, “fair” and “poor”.
According to Experian, after the change, 42% of people saw their ratings improve, the same number saw a decrease, and 14% saw no change.
What if my score drops?
Small changes are not unusual – they can be caused by things like the fact that you’ve used a little more than your credit card’s credit limit – and a small drop is unlikely to affect your ability to borrow money.
Also remember that a “low” or “very low” score does not block access to credit. However, this may make it more difficult to obtain, and the available options may have a higher interest rate.
Experian’s John Webb says there’s generally “no need to worry” about small changes.
“Your credit score may change regularly as information in your credit report is updated,” he adds.
It’s worth keeping an eye on where you’re going: There are plenty of free and paid ways to check your account – many major banks include this feature in their apps.
Eyre says each agency calculates its own score based on the information it has, but “it’s the credit file that gives you detailed information such as your accounts, payments and searches.”
He explains: “Every credit reporting agency is required by law to provide you with a free official credit report, and services like ClearScore, Credit Karma and the Experian app will show you a score and often basic credit information for free, although you may have to pay to access some additional features.”
A sharp drop in your credit score is a red flag and you should investigate. This could be something as simple as closing an account after paying off an old credit card bill, or something more serious like a missed payment or identity fraud.
How can I improve my credit rating?
Start by checking the accuracy of the information in your credit report.
You’ll need to check all three credit reporting agencies, as Loqbox chief executive Tom Eyre says none of them give you the full picture. “Not all of them contain the same information about an individual because lenders and other service providers may report to one, two, or all three—and some lenders rely on a specific agency to evaluate applications.”
Experian’s guide to improving your credit score advises using 30% of your credit card limit, registering on the electoral roll (this helps lenders verify your identity), avoiding new credit applications unless necessary, and staying up to date with minimum payments.
Craig Tebbutt of Equifax says it’s important to “pay off your loan in full on time. Missed payments show up on your credit report. Paying back your debt in full and on time shows lenders that you are capable of managing your finances, which supports your overall credit health.”
Tebbutt says if you already have a lot of credit – such as multiple credit cards or a large overdraft – lenders may take this into account.
Also consider closing accounts you don’t use.
You should also “be careful when applying for credit,” Tebbutt says. “Every time you formally apply for credit, a ‘hard search’ is conducted on your credit report. Try to space out your applications and only apply for the credit you need.”
Finally, review your financial connections: If you have a joint bank account or mortgage with someone, you are “financially connected” to that person. If their credit history is not very good, it may affect your own application.