How to understand your Experian credit score & report

Your credit score is a reflection of how reliable you are seen to be as a borrower. To view your score, you can ask for a report from a credit reporting agency such as Experian.

→ You can check your credit score for free

What is Experian?

Experian is a global information services company that provides data and analytical tools to clients around the world. According to its website, Experian currently has over 12,000 clients internationally and aims to help individuals with their finances and to access financial services. 

Experian credit reports and scores

One of the financial services that Experian provides is a free credit report. This includes information such as your credit history, the credit accounts you hold and your Experian credit score. 

When you apply for credit from a lender, your credit score is used to help the lender decide whether you are a reliable person to lend money to. According to Experian’s website, an Experian credit score is a representation of how a credit provider may see the information on your credit history report. Your credit score is not fixed, however, and it is only a portion of what is considered when a credit application is assessed.

There are two ways you can receive your Experian credit report – by email or by post. To do so, Experian says you’ll need to provide a completed copy of a Experian Credit Report Request Form, proof of identity and a contact number. Once you’ve submitted your order, Experian says you’ll receive your credit report within 10 working days.

What is a good Experian credit score?

Experian rates credit scores on the following scale, from 0 to 1,000:

Excellent 800-1,000 This indicates a credit score that is well above average
Very Good 700-799 A credit score within this range is above average
Good 625-699 This is the average credit score range, Experian says
Fair 550-624 This is a fair credit score and is below the average
Below Average 0-549 A credit score within this range is likely to be considered poor by a credit provider.
Source: Experian

The higher your Experian credit score is, the more likely you are to be approved by a credit lender, based on Experian’s calculations. This is because there is less chance of an adverse event, such as a default on your payments, within the next 12 months. Bear in mind that as Experian states on its website, your credit score is “only a portion of what is considered” when a lender assesses your credit application, meaning that other factors such as your income and wider financial situation can also be important.

Experian is one of many credit score providers, so your numerical ranking may differ depending on which credit reporting agency you go through.

How does Experian calculate your credit score?

Experian says it calculates your credit score by applying a statistical algorithm, which uses past events to predict future behaviour.

While each credit score provider uses a slightly different algorithm to calculate credit scores and may have varying assessment criteria, Experian says the key factors for generating a credit score include:

  • The type of credit provider that has made enquiries on your report
  • The type of product or products you have applied for
  • Your repayment history
  • The credit limit of each of your credit products
  • The number of credit enquiries you’ve made in the past
  • The number of negative events you’ve experienced, if any (such as late payments or loan defaults)

What can have a negative impact on your Experian credit score?

Experian also says that the following could have a negative impact on your Experian credit score:

  • A large number of credit applications in a short space of time
  • Having open accounts with debt collection agencies
  • Short term credit, such as payday lenders
  • Any defaults or missed payments
  • Bankruptcy actions
  • Court judgements

How can I improve my Experian credit score?

If you are looking to improve your credit score, Experian recommends taking the following steps:

  • Make payments reliably: Consistently making your mortgage, loan and credit card repayments when they’re due will help to strengthen your credit score. If you do miss a payment, Experian suggests ensuring that you catch up within the 14-day ‘grace period’ before it is reported as a default.
  • Avoid multiple late payments: Consecutively missing payments and paying bills late can negatively impact your credit score. If possible, avoid missing payments to the point where debt collection agencies are involved.
  • Avoid negative entries on your credit report: Negative entries such as defaults, court judgements, having open accounts with debt collection agencies and excessive credit enquiries may also have a negative impact on your credit score.
  • Regularly check your credit report: Regularly check the information on your credit file to ensure that the new data that is included in it is correct. 

Experian says that improving your credit score takes time and careful management, but adds that the higher your credit score, the better your chances are of getting your credit application approved.

To find out more about credit scores, how they work, and the impact yours can have on your finances, visit our credit score information hub. 

Main image source: LightField Studios (Shutterstock)

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