Equifax Credit Scores - Credit Ratings Explained!
First things first, consumers need to understand credit scores and the way lenders use credit scoring with applications. Essentially there is not one universal credit score! When you apply for a financial product, the lender will apply a credit score to your application, based on their criteria, of who they want as a customer for the product.
Your credit report details will be considered in this along with key factors in your application such as salary, homeowner, employment status. Remember if you have an impecable credit report, with a solid credit history this will ensure you have better chance than most at being accepted, but also accessing the most competitive interest rates, with larger credit limits. To access your credit score you need to sign up for a credit report service. The average UK Equifax credit score is 430.
For an Equifax credit score anything above 467 is considered excellent, where as Experian's excellent banding starts at 961. You can order your Equifax credit score for £5.95 a time, or it is free when you pay £14.99 per month.
Equifax Credit Score Bands/Ranges
Equifax is the second largest of the three credit reference agencies and its top score when it comes to credit scoring is 900. The Equifax credit scoring guidelines are as follows:
0-278 (very poor) – These scores are at the lowest end of the table and people that have a credit score of between 0-299 are likely to be classed as very high risk by lenders. This is because lenders would expect those falling into this category to have severe problems with repaying credit.
279 - 366 (poor) – Those with a credit score of between 279 and 366 would still be classed as high risk by lenders. This is because lenders would expect a large number of people that fall into this category to have severe problems with repaying their credit.
367 - 419 (okay) – This is a slight improvement on the previous two scoring bands, as lenders would expect people that have scores of between 367 and 419 to be a moderate risk. This is because they would expect a small number of people in this category to experience severe problems with repaying their credit.
420 - 466 (good) – People that have a score of between 420 and 466 would most likely be viewed as low risk by lenders. This is because lenders would expect few people in this category to be experiencing serious issues with repaying their credit.
467 (and above is excellent) – This score is at the top end of the Equifax scale, and most lenders would regard people in this category to be very low risk. This is because they would expect very few people with credit scores in this region to have problems with repaying their credit.
What is the Point of Credit Scoring?
To ensure lenders obtain customers that will pay back debt basically, along with the interest they earn, from loans, mortgages, credit cards etc. Lenders have different credit scoring for different products, for example credit cards versus mortgages.
Remember if you have a top credit score from Equifax (or the other credit reference agencies such as Experian or Callcredit, you could still be rejected for a credit product. You may be rejected by one lender and accepted by another.
So as you're gathering it is not as simple as, analysing your credit score from Equifax and saying it is 419, and thus being able to obtain any credit!
Why Purchase Your Equifax Credit Score?
When you first access your Equifax Credit Report, it will give you an indication of areas that could be improved. An Equifax credit score, will allow you to understand where you stand, quickly, use as almost like a quick quality assesment of your credit report. It is important to understand this scoring, and then analyse all the warnings, and tips and hints. For example if the first time you access your Equifax Credit Report, and buy your credit score and it is 349, and thus poor on the scale above, you know some work needs to be done on your credit file, before any applications are made.
Say you work on your Equifax credit report for 12 months, you can then buy another Equifax credit score, to see if there has been an improvement. Bear in mind credit score and credit reports take maintenance, there are no quick fixes whatever credit repair companies tell you. However with a dilligent approach you can make a big different to your credit report and credit score.
A key conclusion of this, is knowledge is power. Remember to talk to a lender, before applying, if you know your credit score is not strong discuss this with them, and understand if you have a chance of being successful before even applying. For example they should have some clear indications of the requirements for a product. If for example your salary is too low, then it does not matter if your credit score is excellent.
How to Access Your Equifax Credit Score
Once you have signed up with Equifax, you can then access your credit score from within your account. Equifax offers 30 day free trials, and then the monthly cost is £14.95. Equifax credit score can also be bought for £5.95 a time, if you are on a previous monthly tariff for example £7.99 per month.