The world of credit scoring can be a difficult one to navigate, but one that is essential to many parts of our lives. We all know having an excellent credit rating is desirable as it enables you to access more types of borrowing and at better rates as you are seen as less of a risk to creditors. However, what is the reality of this and do you actually need an ‘excellent’ score to borrow when you need it?
Here, we’ll look at what is the average credit score in the UK and what your options are if you are someone with bad credit looking for short term lending options.
What is Your Credit Score?
Your credit score is an indication of your current creditworthiness. It provides lenders with a snapshot of your overall credit report, with the higher the score the better. There are three main Credit Reference Agencies (CRAs) that provide this score – Experian, TransUnion, and Equifax. Everyone is entitled to see their current credit score and it can impact not only applying for loans, credit cards, and mortgages, but also mobile phone contracts and even applying for rental agreements.
The three main CRAs all use slightly different credit scoring systems, but they all give you an overall number and rating. The higher the score the better, with the scoring as follows:
Experian – 0 – 999, with 961-999 ‘Excellent’
Equifax – 0 – 1000, with 811-1000 ‘Excellent’
TransUnion – 0 – 710, with 628-710 ‘Excellent’
Anyone that has an ‘excellent’ credit score will be generally seen as the most creditworthy, indicating a much lower risk to lenders when considering whether to approve your application. However, this only represents a small number of people across the UK, with the average scores further down the list.
The Average Credit Score in the UK
As the range of people with good and bad credit is large, this means the average credit rating across the UK sits further down in the middle of the CRAs credit scoring systems.
- The Experian average credit score in the UK reached 797 in 2021, which is an increase from 792 in 2020 and 776 in 2019. This means most people have a ‘Fair’ credit rating.
- The Equifax average credit in the UK score was 383 when published in 2018. This represents a ‘Fair’ credit rating when ranked up to a maximum of 800. They changed their credit scoring to be out of 1000 in 2021 where 383 would represent a ‘poor’ score.
- TransUnion hasn’t recently published their average credit score in the UK, however, it was estimated to be approximately 610 which would represent a ‘Good’ score.
With the UK on average having a ‘Fair’ credit score, this puts most people in the middle of the range, meaning the majority do not have a good or excellent credit score. So, what does this mean for borrowers who have been told they need to have a good credit rating? Does it mean they can’t receive the financial help they need in an emergency, or when looking to borrow to buy essential goods and services? Well not necessarily, but many people can make a few changes to help boost their score by checking their credit report.
What to Do if You Have a Poor Credit History
If you are someone with a poor credit score, you’ll want to discover what has caused this and if anything can be done to boost it. The best way to see is by checking your credit report which is where your score is calculated from. There are many different factors that will impact your overall score, some more obvious than others. If you have missed repayments on borrowing or defaulted on a loan, for example, then this will negatively impact your score. However, other issues on your credit report such as missing information, wrong address history, and even not being registered to vote can also cause your score to be lower.
As everyone is entitled to a statutory credit report, you will be able to check your report for free if you do not wish to sign up for a subscription with CRAs. It may not be as thorough as your full paid report, but it will have the essential information present. It’s a good idea to periodically check your credit report with all 3 CRAs as they can all hold different information and not all lenders use all 3. Experian is the largest CRA in the UK, but it is worth checking both Equifax and TransUnion too.
- Check your credit report before applying for new credit so you can discover any issues that might prevent you from being approved.
- If you are rejected for credit, check your report to see how this has impacted your score.
- Check addresses held on your credit file – if any are missing you should look to add them in, and remove or update any that are not correct.
- Check any financial links you have with other people – for example, an ex-partner, and remove this association.
- Flag any information you feel is inaccurate or incorrect with the CRA
Finding Lenders Who Can Help Those with Bad Credit
Whilst it is preferable to have a good or excellent credit rating, it isn’t the end of the line for borrowers with bad credit. There are many lenders who specialise in bad credit loans where they may be able to help compared to banks and other online lenders. At QuidMarket, we also may be able to help those with a poor credit history get help with any unexpected or emergency expenses.
To see if you may be eligible when you need a quick loan and you have no available savings, click apply now and fill in our short application form. We cannot guarantee you’ll be approved, but we welcome those with varying credit histories who can afford the required repayments on a loan up to £600 for new customers.
If you need further information or have any questions, please contact us. To find out more about credit scoring and CRAs, please visit Money Helper as well as Experian.