Paying your rent punctually may soon enhance your prospects of securing a credit card or mortgage, according to Experian. The credit reporting company is revamping its credit scoring system to consider more positive financial behaviors individuals exhibit regularly.
In addition to rent payments, individuals will receive credit for decreasing overdraft usage, abstaining from credit card cash advances, and making consistent phone contract payments. Tenants will need to opt in for their rental payments to be factored into the scoring, with any missed payments negatively impacting their score.
The new scoring model will now range from 0–1,250, replacing the previous 0–999 scale, and will eliminate the “poor” and “very poor” categories, as well as the color red. The new bands will be labeled as Excellent, Very Good, Good, Fair, and Low.
Following the expanded scoring, over 40% of people are expected to shift to a different score band. Experian assures that while the scoring changes may affect band placements, they will not influence eligibility for credit products like mortgages, loans, or credit cards.
Experian plans to offer guidance and suggestions to assist individuals in improving their credit scores if they fall into a lower band. The updated score will be gradually implemented starting in November, reaching all customers by year-end. It is important to note that there is no universal credit score in the UK, as each of the main agencies – Experian, Equifax, and TransUnion – employs its own unique scoring system.
Edu Castro, Managing Director of Experian Consumer Services, UK & Ireland, noted, “Our new Experian Credit Score better reflects more of the everyday financial behaviors that matter – like paying rent or reducing overdraft use – offering a clearer understanding of the information on your credit report. This means people get a more personalized view of how they’re doing financially and more practical ways to improve their score – helping unlock better borrowing opportunities for the future.”