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When you apply for a mortgage, personal loan or credit card, lenders will check your credit report and credit score to help them determine whether or not to offer you credit, how much to offer you and how much interest to charge you.
Experian is one of three main credit reference agencies in the UK. It’s used by lenders when deciding how much of a risk you are as a potential borrower and how much money they can make from you. A number of factors detailed on your credit report are used to calculate your credit score, which ultimately places you in a rating group, ranging from “very poor” to “excellent”.
Experian takes everything it knows about you (whatever is in your credit file) and boils it down to a number. If you have a good score, you can usually be approved for a loan, credit card or mortgage.
It’s also worth noting that although all lenders will look at your credit score, they also have their own qualifying criteria when approving customers.
Each credit reference agency has its own scoring system.
Experian’s scores range from 0 to 999: the higher your score, the better your chances of obtaining a loan. Depending on your score, you’re said to have excellent, good, fair, poor or very poor credit.
|Experian credit score||Experian credit rating||What this means for you|
|0–560||Very poor||It’s highly likely that your credit application will be rejected.|
|561-720||Poor||You have a chance of being approved for credit but are likely to be charged a high interest rate and receive a low limit.|
|721-880||Fair||You have a good chance of being approved for credit and you should be offered a reasonable interest rate, but you’re likely to receive a low credit limit.|
|881-960||Good||You’re likely to be approved for credit and will be offered a reasonably good – but not the best – interest rate.|
|961-999||Excellent||You’re very likely to be approved for a competitive credit offer.|
If you want to find out what your credit score is, you can do so for free with all of the credit reference agencies. If you want to access your credit report, you’ll usually have to pay, although some agencies offer a free one-month trial subscription.
You may have had a loan, credit card or mortgage application rejected because of a low credit score.
If you’re failing to be approved for a credit application because of your credit history, there are ways you can improve it. You need to be patient as it takes time for your good financial decisions to improve your score.
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