Experian, one of the UK’s leading credit ratings agencies, announced a significant overhaul of its credit scoring system, set to begin rolling out this month. The new system will increase the maximum credit score from 999 to 1,250 and aims to provide a more accurate representation of an individual’s creditworthiness.
The new scoring model will no longer penalize people for rental payment histories. Today lenders are learning the value of knowing whether or not future borrowers have a history of timely rent payments. This change is a huge win for renters. It enables renters to prove their financial responsibility and reliability.
Experian plans to have the new scoring system fully implemented for all customers by the end of the year. This new model will be available starting this fall via the free version of Experian’s service. Today, these user experience improvements are available to all users at no additional charge.
In terms of customer impact, the agency has projected that 44% of its customers may drop down a score band following the implementation of the new system. 42% are predicted to advance to a higher band, and only 14% will have their score band stay the same.
The introduction of rental payments into credit scores has been described as “great news for renters who are paying on time, every month,” according to an Experian spokesperson. This additional inclusion is meant to better empower consumers. It helps them become more creditworthy by rewarding behaviors such as paying their rent on time and minimizing the use of overdraft.
As Experian takes these steps, its rivals TransUnion and Equifax have so far left their scoring methodologies unchanged. These factors contribute to why Experian continues to dominate the UK market. It is doing much to proactively adapt to evolving lending practices and meet consumer needs.
