What is a good credit score: understanding your credit rating

Liad Shababo
August 9, 2021
Credit Building

You know by now that your credit score matters. In fact, if you're going to be applying for any form of credit, your credit rating more than just matters. With credit reference agencies (CRAs) collecting and holding information on how you manage your accounts, every action you take can affect your credit report and have a knock-on effect on your credit score.

Being able to check your credit score and review the information that CRAs are holding on you, do you know what you're looking for? Do you know what credit rating is good? Do you know which credit score is the best? No? Well, let us try and explain.

First things first about your credit score

The first thing to explain before we look at what credit score is good is that your credit file is going to vary between the 3 CRAs. This isn't a problem and is perfectly normal, but it is something to be aware of.

The reason your credit score can differ between Experian, Equifax, and TransUnion is because not every lender reports to every CRA. It is possible that you have a loan with one provider, and they will report to Equifax. You may have a credit card, and the card issuer reports to Experian. Perhaps you have a mortgage, and your mortgage provider reports to TransUnion. Some lenders may report to more than one CRA, and some may report to all 3. 

To confuse things further, even where a lender reports to all 3 CRAs, and even if all of your lenders did, you still wouldn't get the same credit score. Why? Because each CRA uses a different range of scores, where one can give a maximum score of 999, and another only goes as high as 700.

Who would have thought that a 3 digit number could be so confusing? Ready for some clarity? Then read on.

The math behind a good credit score

As we have seen, each of the 3 CRAs has a different range of numbers that they use to assign you your credit rating. Given the broad range involved and the fact that different lenders report to different CRAs, you are highly unlikely to see the same rating at each of these. Before we look at what credit score is good, let's have a look at the scales that each CRA has:

Experian credit ratings

This CRA rates you from 0 all the way up to 999. This is how they break down their credit scores:

  • 0-560 - Very poor
  • 561-720 - Poor
  • 721-880 - Fair
  • 881-960 - Good
  • 961-999 - Excellent

Equifax credit ratings

With Equifax, the highest credit score you can be given is 700, and this is how they rate you:

  • 0-278 - Very poor
  • 279-366 - Poor
  • 367-419 - Fair
  • 420-466 - Good
  • 467-700 - Excellent

TransUnion credit ratings

The third of the credit reference agencies give the highest credit rating as 710. This is how they record their scores:

  • 0-550 - Very poor
  • 551-565 - Poor
  • 566-603 - Fair
  • 604-627 - Good
  • 628-710 - Excellent

So as you can see, simply quoting a number as a credit rating isn't that straightforward. If I were to tell you that my credit score was 470, you could well think that my credit report was in shipshape. If I was telling you my credit rating was from Equifax, then you would be right. If I were then to tell you that my credit rating was from TransUnion or Experian, your opinion on the state of my credit report would be somewhat different!

So how does any of this help to get you a good credit score?

Having promised some clarity on what credit score is good, perhaps you're feeling more confused than ever? If so, all you really need to take away from this is that as long as you are aware of the ranges each CRA uses, then you can determine if your credit rating is good or whether it needs some work.

Rather than just knowing what credit score you have with one CRA, it is worth knowing what score all 3 of them give you. It is also worth knowing what your credit report contains with them all. That way, you can spot any inaccuracies and have them put right. 

Making sure that you have your credit rating from all 3 agencies now means that you can review these scores on a regular basis and make sure that they are either remaining strong or moving in the right direction.

It's all about what credit score is good for you

What credit score is good for you really depends on what you want to use credit for. If your credit rating sees you in the 'very poor' range you may find it very hard to get a mortgage or a credit card. If all you are seeking is a mobile phone contract, it is possible that being in this range will do. 

What matters most is understanding how your credit score is worked out, how to improve it, and what to do if it starts to dip. A credit rating isn't some form of black magic that only the few can understand; it is something that is very much in your control once you understand it. Checking it regularly means that you can take action as soon as you need to if it starts to drop, and also means that you can apply for credit with confidence. It's also better to start building credit before you need to take credit. This is because your credit file takes time to grow and the best results will only show after about 12 months. The good news is that with Wollit you can start building your credit score in 2 minutes with all 3 major UK credit reference agencies.