Major credit history firm makes big changes to how it calculates scores – what you need to know explained

A MAJOR credit history firm is making a big change to how it calculates scores. TransUnion is expanding its current scoring scale from a maximum of 710 to 999. 2BDAR3E The businessman trying to improve credit score Credit: Alamy The new system will begin appearing on credit-monitoring websites and apps from late September until June 2027. It means some people could temporarily see two different TransUnion scores, depending on which service they use. Sign up for the Money newsletter Thank you! But borrowers have been reassured that the shake-up will not affect applications for credit cards, loans or mortgages. It comes after Experian revealed it is shaking up its credit scoring system to reflect “everyday financial behaviours that matter”. How are TransUnion credit scores changing? Under the new system, consumers will receive a score between zero and 999. TransUnion is also changing the names and ranges of its five credit-score bands. The “very poor” category will be replaced by “very low”, while the top rating will remain “excellent”. The new bands will be: Most read in Money Excellent – 786–999 Good – 653–785 Fair – 563–652 Low – 488–562 Very low – 0–487 Currently, TransUnion scores customers out of 710. Its existing “excellent” band starts at 628, while anyone with a score of 550 or below is classed as “very poor”. But you should not directly compare a score under the old system with one under the new model, as TransUnion is changing how the figure is calculated as well as expanding the scale. TransUnion said its new score will examine a broader range of financial behaviour instead of relying as heavily on a single snapshot. This will include trends showing how account balances have changed over time and how people use their credit cards. The agency said this should provide a more detailed picture of how consumers manage borrowing from day to day. The changes are also intended to distinguish between people with poor credit histories and those who simply have little or no borrowing history. This could include young adults and people who are new to credit. TransUnion said the new model would be more inclusive and provide consumers with a clearer view of their financial position. James Robinson, managing director of consumer interactive at TransUnion UK, said many people mistakenly believe the credit score they see is the exact score used by lenders. He said: “Our new score is designed to minimise this confusion by using a broader range of behaviours over time, rather than a single snapshot. “That fuller picture can help people better understand the positive financial behaviours influencing their score.” Will the change affect my credit applications? TransUnion said the overhaul will not change the underlying information held in your credit report or shared with lenders. Banks and other providers don’t usually base their decisions on the consumer score shown in an app. Instead, each lender assesses the information in your credit report using its own criteria. It may also consider factors such as your income, existing debts, affordability and previous relationship with the provider. This means seeing a different TransUnion score during the changeover shouldn’t affect whether you are accepted for credit. However, any changes to the information in your report — such as missed payments or increased borrowing — could still influence a lender’s decision. Why might I see two different scores? TransUnion will introduce the new system in stages between late September and June 2027. Credit-monitoring apps and websites that use TransUnion data will switch over at different times. As a result, you might see an old score out of 710 on one platform and a new score out of 999 elsewhere. This does not necessarily mean one of the scores is wrong or that your financial circumstances have suddenly changed. It’s important to check which scoring model each service is using before comparing figures. Why your credit score is important Your credit score is a three or four-digit number that reflects how reliable you are at borrowing and repaying money. A low credit score can make it harder to get a mortgage, loan, or hire purchase agreement on a car. As well as Experian, there are two other credit rating agencies in the UK: TransUnion and Equifax. Experian is the only agency to overhaul how credit is measured. Each credit reference agency (CRA) has a database of information where it tracks your loans and repayments. Using this data, the CRAs generate a credit report and a three-digit or four-digit credit score, which indicates how reliable you are. The credit report examines a wide range of financial information, including personal details such as name, date of birth and address, as well as if the person is registered on the electoral roll. It also records credit accounts, like loans, credit cards, mortgages, overdrafts and mobile phone contracts. To check your credit score, visit Experian, TransUnion or Equifax. You can get a free account on Experian to see your credit score and access tools to check your eligibility for credit offers. How to boost your credit score IMPROVING your credit score takes time and consistent financial management, but there are things you can do to help boost your credit score. Make sure to pay your bills on time every month Set up direct debits for bills, credit cards and loan repayments to keep you on track You will be monitored on how much available credit you use (credit utilisation) by keeping it low – ideally below 30% of your total credit limit – you can improve your score. Constantly reaching your limits on your credit cards suggests financial strain, even if you make payments on time. If you aren’t already, make sure to register on the electoral roll at your current address. Lenders and credit reference agencies use this information to confirm your identity and stability. Being on the register can add a few points to your score Keep your personal details up to date with your bank and creditors Limit how often you apply for new credit. Each application you make triggers a hard search on your credit file, which could temporarily lower your score. Review your credit report regularly with all three agencies to make sure the information is correct. Comment now