What Is a Good Credit Score Out of 700?

Knowing what your credit score is can be very helpful, but sometimes getting your head around how everything works and how it is calculated can be a bit challenging. 

A good credit score is a score between 420 - 465 according to Equifax, a leading credit reference agency in the UK.

Let’s look at what you need to know about credit scores, how they work, and what the UK’s average credit score is.

What is a credit score and why does it matter?

A credit score measures your ‘creditworthiness’. This determines how likely you are to pay back money that you lend.

In the UK you are given a number that indicates your creditworthiness. Everyone over the age of 18 who has opened an account, has a credit score.

Once you have opened an account your ‘credit report’ starts. 

Getting access to a range of products and services will be determined by how strong your credit score is. A strong credit score has perks when it comes to needing to apply for the following:

• Loans

• Credit cards 

• Mortgages

• Mobile phone contracts

It can also assist with really generous credit limits and better interest rates. Direct lenders will be less likely to lend money if they think that you will not repay as lenders are under no obligation to lend money to anyone. 

There are three Credit Reference Agencies (CRAs) in the UK that calculate credit scores:

• Experian

• Equifax

• TransUnion

These Credit Reference Agencies are the only organisations that are able to perform credit checks and are authorise by the Financial Conduct Authority to provide you with a credit report.

Who is Equifax and how do their ratings work?

Equifax assists consumers to access products and services they need and want by calculating their credit score rating.

They are one of the largest sources of consumer data collectors in the UK and have more than 120 years of experience.

By assisting financial institutions, companies, employers and government agencies, they make it easier for them to make decisions regarding who to lend credit to with confidence.

Equifax’s ranking is based on a score of 700 and the average estimate for credit score with them is 380. Based on their scoring categories, 380 is seen as a ‘fair’ credit score.

Equifax rates credit scores in the following categories:

• 0 - 279: Very Poor

• 280 - 379: Poor

• 380 - 419: Fair

• 420 - 465: Good

• 466 - 700: Excellent

What does a fair, good or excellent score mean for you?

The best way to put it- the higher your credit score is, the more choices you have. 

If you are wanting to apply for a credit card and you have a ‘fair’ credit score, your interest rate might be slightly higher.

The credit limit you start off with might be increased over 6 - 12 months depending on your financial stability and payments being made on time.

The better your average credit scores the higher your chances are of getting a competitive interest rate and higher credit limits. 

What hurts your credit score and how can you repair it?

It will mostly come down to how you have managed your money and debt. Your financial history is a deciding factor in how your credit score is decided and calculated.

As soon as you take steps to improve your score, even just with one agency, you will see improvements across the board.

Keep in mind, it might take some time for the positive improvements to show by means of a higher credit score, as your credit file needs time to be updated.

What pushes your credit score down:

• Moving too often

• Errors or fraudulent activity on your credit reports that are not detected 

• Withdrawing cash from your credit card frequently

• Too many credit applications in a short time

• A history of late or missed payments

• Going over your credit limit

• Not being on the electoral roll

• Having a joint account with someone who has a bad credit record

• Insolvencies or bankruptcies on your credit history

• Maxing out a loan or credit card

How to improve your credit score:

• Avoid having too many credit cards

• Avoid maxing out your credit cards

• Make your repayments on time

• Do not skip instalments 

• Report rental payments (if you are renting)

• Register to vote

• Close old or small credit accounts that are not used often

If lenders do not have enough info on your credit history it’s difficult for them to make a lending decision. 

How can I see what my credit score is?

Each year you can request a credit report from each of the three major credit report agencies. This is free and it is a good idea to request a report from each of the credit rating agencies and carefully review them.

There can be inconsistencies or inaccuracies and if you spot an error on either report you should submit a dispute to the agency where the error is showing.

Actively managing your credit is important and your responsibility. Having good credit scores and good payment history can affect the ability to purchase a home, buy a car or even pay for a mobile phone.

Staying in control of your finances is the only way you will achieve your goals and keep your credit score in a category that will benefit you when applying for a loan, credit card or mortgage.