What is a good credit score?

When is your credit rating good or bad? And what does it mean?

I’ve got four different credit scores. 999, 906, 636 and 505. Is one better than the other? You’d assume that since 999 is highest, that’s my best one. And the lowest at 505 needs some work.

But all are actually classed as “excellent”. And the 906 and 505 are from the exact same data – but with different ranges.

So it’s clear that it’s not a simple case of saying the higher the number is better!

In this article I’ll help you get an idea of how good your score actually is, and how the different classifications of bands could impact your changes of borrowing money and applying for credit.

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The problems with credit score ranges

The main issue with credit scores is there isn’t just one. In fact there are three different companies providing scores, and they don’t all use the same data about your finances.

Another problem with credit scores is they’re calculated in completely different ways. You can’t really use a number to say if it’s good or bad without the wider context such as the range that number is taken from. Some are out of around 999, others out closer to 700.

And, to complicate it even more, the companies you apply to don’t actually use these scores! They access the data behind the scores from the credit reference agencies alongside any information you provide. They also look for different things depending what you’re applying for.

So clearly it’s not always so obvious what a good score is and know whether you’re going to be accepted for whatever credit youre applying for.

What credit scores are excellent, good, fair and poor?

Here’s how the three different credit reference agencies class each score, as well as their own ranges.

Experian

Experian is the biggest of the agencies. They score out of 999.

Experian credit score ranges

• Excellent 961-999
• Good 881-960
• Fair 721-880
• Poor 561-720
• Very poor 0-560

Equifax

Equifax recently changed the range from 1-700 to 1-1,000.

Equifax credit score ranges

• Excellent 811+
• Very Good 671-810
• Good 531-670
• Fair 439-530
• Poor 0-438

However, if you are checking your score for free through Clear Credit you’ll still see the old range. Clearscore told the DebtCamel website.

“We have plans to move to a score out of 1000 later in the year. It has always been our mission to make the world of credit clearer, calmer and easier to understand, and this move will hopefully make things a lot clearer for the consumer.”

If you’re seeing the score out of 700 the range is as follows:

Equifax credit score ranges on ClearScore

• Excellent 467+
• Good 420-466
• Fair 367-419
• Poor 279-366
• Very poor 0-278

Transunion

TransUnion, which you can access for free through Credit Karma, scores out of 710.

Transunion credit score ranges

• Excellent 628+
• Good 604-627
• Fair 566-603
• Needs work 1-565

What’s an average credit score in the UK?

Not all the credit reference agencies share this, but ClearScore, using the old Equifax system says at the time of writing that the UK average credit score is 414. This puts it in the “Fair” band, though right at the top.

Experian offers a map where you can break down scores by regions (and age too if you want). For London the average credit score is 887, which ranks as the bottom end of Good. For North Somerset, it’s 823, halfway through Fair.

How important is a credit score?

The most important thing to say here is credit scores don’t actually mean anything definitively. They’re an indicator of how good or bad your credit report is (I’ve explained more in this article about credit reports).

But this isn’t the only information lenders take into account. Extra details you provide, such as your salary, could help or hinder your chances of acceptance. In fact, they won’t even see this score, and will create their own version of it based on their own criteria, the info on your credit report and the extra details they have.

Really the number itself is pretty meaningless, except to measure your progress when trying to improve it. If you see it go up you know you’re doing the right things.

If you see it dip then it could be a sign you need to take some actions – though it’ll always fall a little after a new application and will right itself after a while.

What do the different credit score ranges mean?

Really it’s probably better to look at the category your credit score sites in. Broadly scoring in the different ranges from excellent down to very poor is likely to mean the following:

What an excellent credit score means

Across the agencies “excellent” suggests you’ll probably get accepted for most types of credit and be offered the best rates and deals. But there’s no guarantee and you could still get rejected when you apply.

What a good credit score means

A “good” credit score indicates you will usually be accepted for credit, though you might not get the best deals.

What a fair credit score means

An “average” or “fair” score means there is still a decent chance you’ll get accepted but you won’t get the best deals or rates. For example, you might get a lower credit limit or a shorter 0% period. It’s even more important to use soft checks, particularly on credit card applications, to find out who will accept you.

What a poor credit score means

If your score is classed as “poor” or “needs work” – and it’s likely you’ll be seen as high risk to lend to therefore far less likely to be accepted when applying for credit.

What a very poor credit score means

Right at the bottom, being classed as “very poor” is a sign you will probably get rejected. This could be because you have some black marks on your credit report – such as bankruptcy – or maybe just a very limited credit history.

How to check your credit score

Good news! You don’t need to pay to check your score, or more importantly, your credit report. I’ve written more detail on the free credit report sites here.