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What is a good credit score?

Disclaimer: this page aims to provide an understanding of what is considered to be a good credit score, but may not apply to all customers as lenders consider a variety of other factors.

If you’re getting ready to make a big financial decision, you won’t be surprised to know that having a good credit score can make a big difference between being accepted or rejected for finance.

While not the only thing that will influence your chosen lender’s decision, having a credit score that is good rather than fair can make a big difference. And if you have an excellent credit score, then it’s even less likely that you’ll have any issues.

To help you prepare for your next major financial decision, here’s how you can find out whether or not your current credit score is good.

How do you know if you have a good credit score?

Your credit score is of major importance to lenders when deciding whether or not to accept your credit application. It lets them know how you’ve handled your finances in the past and is represented by a three-digit number. The higher the number, the better your score.

To check your credit score, you can approach one of the major credit reference agencies below:

When calculating credit scores, these credit reference agencies will use either the FICO or VantageScore range.

What is a good Fico score?

FICO is the most common credit score used by credit reference agencies. It takes into account the following when calculating ratings:

  • Payment history
  • The current level of indebtedness
  • Types of credit used
  • Length of credit history
  • New credit accounts

Experian and Equifax use the FICO range, placing your score into one of the following categories:

  • Poor – 300 to 579
  • Fair – 580 to 669
  • Good – 670 to 739
  • Very good – 740 to 799
  • Exceptional – 800 to 850+

What is a good VantageScore?

The VantageScore range, while less common, is still used by certain credit reference agencies. VantageScores are based on the following factors:

  • Payment history
  • Credit utilisation
  • Total balances and debt
  • Depth of total credit
  • Recent credit behaviour

TransUnion uses VantageScore, with the below ranges:

  • Very poor – 300 to 499
  • Poor – 500 to 600
  • Fair – 601 to 660
  • Good – 661 to 780
  • Excellent – 781 to 850

Of course, it’s important to be aware that each agency calculates its scores differently, so your score may not fall exactly into the categories outlined above.

What might be considered a fair score in one agency could be considered good in another, while a good score may be excellent elsewhere, so you want to be sure to check all three to get the best idea of your score.

What is the average credit score in the UK?

Based on UK data from the past three years, the average credit score in the UK sits between 775 and 800, meaning that the average UK citizen is likely to have a good or excellent credit score.

Of course, this may not be the case for everyone due to the variation in scores between the FICO and Vantage ranges, which is why it’s very important to check all three of your scores.

Why is my credit score different to other people's?

It goes without saying that everyone’s credit score is different. Regardless of if you have the same loan as someone or earn the same wage, how you go about handling your own finances will determine your credit score.

However, there are reasons why your credit score might be lower than expected:

  • Not having yet applied for or utilised any form of credit
  • Having an inactive account for six months or more.
  • Missing payments on credit
  • A limited employment history

Improving your credit score

If you’re concerned that your credit score is too low, there are several ways you can improve it. However, these are not necessarily quick steps, and it may take time to raise your credit score to a good or exceptional ranking.

For detailed information, read our article on how to improve your credit score.

Fortunately, having bad credit doesn’t necessarily mean you can’t get finance. At Zuto, our team specialise in providing car finance for bad credit scores, so get in touch today to see how we can help you - or head over to our help and advice page for more from our credit experts.

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