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Experian, one of the UK’s main credit agencies, has announced changes to its scoring system that will now include rental payments in credit scores. This overhaul aims to reflect more everyday financial behaviors that matter, such as paying rent or reducing overdraft use. The maximum credit score under the new system will increase from 999 to 1250, with updated scoring band names like Excellent, Very Good, Good, Fair, and Low.
Customers in the low band will receive instructions on how to improve their score, emphasizing the importance of paying rent on time. However, missing rent payments could negatively impact one’s credit score, affecting their ability to take out a mortgage, get a loan, or enter into a hire purchase agreement. The new system will also consider other financial behaviors such as cutting overdraft use, avoiding credit card advances, and making mortgage overpayments.
Experian clarified that these changes will not affect eligibility for credit, mortgages, loans, or credit cards, and the other two credit ratings agencies in the UK, TransUnion and Equifax, will not alter their scoring methods following this update. The rollout of the new scoring system is set to begin this month, with the goal of making it accessible to all customers by the end of the year. As a result of the changes, 44% of customers are expected to drop down a score banding, 42% to move up a banding, and 14% to remain in the same band.
Overall, these adjustments signal a shift towards considering a more comprehensive range of financial behaviors in credit scoring, providing borrowers with a clearer understanding of how their everyday actions impact their creditworthiness. As the financial landscape continues to evolve, credit agencies like Experian are adapting their systems to better serve the needs of consumers and lenders alike
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