When people talk about their credit rating, they often think there is one universal credit score.
They might assume that if their credit score is 900 and their friend's credit rating is 710, they have a better chance of taking out loans or credit cards than their friend does.
In reality, this isn't an accurate portrayal of how credit scores work. There is no universal credit score and there’s more to your credit file than the number at the top of it.
Did you know that you have three different credit scores? Read on to learn more and find out what is the average credit score in the UK.
As an example, Experian's maximum credit score is 999, Equifax's maximum credit rating is 1,000 and TransUnion's maximum score is 710.
There are three main credit reference agencies in the UK (Experian, Equifax and TransUnion) and each one has a different method for scoring individuals set on different ranges.
However, each credit reference agency is regulated by the Financial Conduct Authority (FCA) meaning you can enjoy peace of mind that you're being assessed fairly and within reason.
This means that the UK average score varies from one company to the next. Lumping the scores from all three credit rating agencies together would be ineffective to measure the average.
So, let's take a look at the average credit score of each of the three credit bureaus.
The average Experian credit score is 797, according to data from October 2021.
This compares to an average score of 792 in 2020 and 776 in 2019.
Experian suggests COVID-19 may have played a role in the increase.
Since people were unable to spend money on nights out, meals in restaurants and foreign holidays during the early stages of the pandemic, many people found it easier to save money and reduce their debt.
Experian's analysis is the most comprehensive study of the nation’s credit scores, but how do other credit reference agencies compare?
In 2018, Which reported that the UK's average Equifax credit score was 380.
This was a significant leap from an average credit rating of 346 the previous year.
The data was provided by ClearScore and involved analysing more than five million customers over the course of a year.
ClearScore generated a list of postcodes with the highest and lowest average credit scores.
The highest-ranking areas tended to be in the south of England.
Kingston upon Thames in London was in the top spot for the second year in a row, with an average credit score of 400.16.
Residents in Lerwick were second with an average credit score of 395.96.
The worst credit scores were in Wolverhampton (328.16) and Motherwell (325.67).
It's unclear what the average TransUnion credit score is because this credit reference agency hasn't released a detailed breakdown of how their scores compare to others.
According to Experian, the highest UK average credit scores can be found in these areas:
City of London (893)
Isles of Scilly (886)
While the lowest average Experian credit scores can be found in these areas:
Blaenau Gwent (707)
If you'd like to see the average credit score in your town or city, take a look at Experian's average credit score map. By typing in your postcode, you can see how your credit rating compares to other people in your area.
According to Experian's data, not only does credit score vary by location, it varies by age too.
Here are the average Experian credit scores based on age group.
18 to 20-year-olds - (823)
21 to 25-year-olds - (792)
26 to 30-year-olds - (776)
31 to 35-year-olds - (770)
36 to 40-year-olds - (779)
41 to 45-year-olds - (792)
46 to 50-year-olds - (804)
51 to 55-year-olds - (819)
Age 55+ - (863)
A good credit score can vary between the different credit rating agencies.
Very Poor - 0 - 560
Poor - 561 – 720
Fair - 721 - 880
Good - 881 - 960
Excellent - 961 – 999
Very Poor - 0 – 550
Poor - 551– 565
Fair - 566 – 603
Good - 604 – 627
Excellent - 628 – 710
In 2021, Equifax removed 'very poor' from its rating system and added ‘very good’ in between ‘good’ and ‘excellent’.
It also increased its largest credit score to 1,000. Up until last year, Equifax’s maximum credit score had previously been 700.
The new credit score bands are as follows:
Poor - 0 - 438
Fair - 439 - 530
Good - 531 - 670
Very good - 671 - 810
Excellent - 811 - 1000
Your credit scores are important as they're a reflection of your credit history as a whole and impact your ability to borrow money.
When you apply for a loan, credit card or another type of debt, the lender will carry out a credit check to determine your risk and decide whether you're a reliable borrower.
They'll carry out this credit search with at least one of the three credit reference agencies. You'll often hear a FICO score used interchangeably with a credit score. Don't worry, FICO is just a way of calculating credit scores.
If you have a bad credit record, to lenders this can be a sign that you don't manage credit effectively and you've struggled with late or missed payments in the past.
If you have a good credit score, this can indicate to lenders that you're a responsible borrower who can manage debt effectively and repay creditors on time.
However, your credit score doesn't paint the whole picture.
When you apply for a loan or credit card, most lenders will look at your credit history as a whole.
They'll see your credit score, but they're unlikely to make a decision based on that number alone. Instead, lenders typically want to see that:
Your payment history (on time and in full)
You pay your bills on time (gas, electric, car finance)
You're registered to vote
You don't max out all available credit (number of credit accounts)
You haven't made multiple credit applications in a short space of time
You have a clear address history
You have a good 'credit mix' (a mixture of different types of credit e.g personal loan, credit cards and mortgages)
You don't have any CCJs and you haven't been declared bankrupt
Lenders also have their own methods for scoring individuals. So, while some might refuse to lend money to you based on your borrowing history, others might approve your application.
If you've been refused credit because of a bad credit record, it's good to wait a few months before making another application.
Submitting too many applications in a short period can deter potential lenders and make them worry you won't be able to pay them back. Thus, reducing your credit limit (i.e., the amount you're able to borrow).
It’s also wise to improve your credit score before applying for another loan or credit card.
Here are a few tips to get you started:
Paying existing debts on time and in full
Make sure you’re on the electoral roll
Lowering your credit utilisation ratio
Checking your credit report is accurate and up to date
Getting in touch with the credit reference agencies if you notice any incorrect information or signs of fraudulent activity on your credit report
Improving your credit score isn’t an overnight process but by managing your debt responsibly, you can build up a good credit history over time and increase your access to good interest rates and generous terms.