MORTGAGE brokers have welcomed the news that Experian’s new and ‘smarter’ credit score has gone live, saying it better reflects the realities of modern economic reality — though they say some people will naturally be worried if their score category has changed.
Meanwhile, one landlord has said he plans to use the new tool to perform credit checks on would-be tenants.
In an email to customers this morning, Experian said: ‘We’ve changed the way your score is calculated, so it’s more accurate than ever.
‘The way banks and lenders make credit decisions has evolved. So our score has evolved, too. Lenders are now looking at things like rent, overdrafts, and mortgage overpayments. Your new score has this all built in.’
In the email, Experian reassured customers that ‘the switch to the new score won’t affect any current applications’.
Jonathan Alvarez Herrera, Mortgage Consultant at Ringwood-based Ayla Mortgages, welcomed the move but worried some people may be concerned.
He said: “Any improvement in how credit data reflects real-world financial behaviour is welcome, especially the inclusion of things like rent payments, which give a fairer picture of how someone manages their money and might help first-time buyers with a short credit history or low credit utilisation.
“However, whenever a scoring model changes, some people will inevitably see their category shift even if their underlying financial behaviour hasn’t. That can cause confusion or unnecessary worry for consumers, especially when Experian says the score itself hasn’t changed — just the interpretation of it.
“From a mortgage perspective, the key point is this: lenders do not make decisions based only on the consumer score shown in Experian or any other bureau. They mainly use their own internal scoring systems and raw credit data.
“My advice to people is avoid persistent overdraft use, keep credit utilisation low and ensure payments are made on time. These behaviours matter more to lenders.”
Aaron Strutt, Product and Communications Director at London-based Trinity Financial, said many prospective mortgage borrowers do not realise how drastically their credit score can affect their ability to get a mortgage — and just how automated the whole system is.
He said: “Lenders want to know any applicant’s credit score, track record of making or missing payments and their overall level of debt. Plus a whole range of other financial information.
“It is really important to check that your credit is all OK and get an agreement in principle before viewing properties to make sure it is affordable and that you will be considered for a mortgage. The golden rules include checking your credit report before you go property hunting.”
Shaun Sturgess, Director at Swansea-based Sturgess Mortgage Solutions, said the move was positive: “Experian’s revised credit scoring model is a welcome development that better reflects the way people manage their finances today.
“The inclusion of rental payments within Experian’s new score is a positive step forward, particularly for renters who have demonstrated strong financial responsibility yet struggle to prove affordability when applying for a mortgage.
“It’s encouraging to see Experian recognising this, and I hope more lenders follow the example set by Skipton in using rental data to support fairer and more accessible mortgage lending.”
Meanwhile, portfolio landlord Kundan Bhaduri at London-based The Kushman Group, said he would be using the new credit score tool to check tenant suitability: “At long last, rents are going to be taken into account for people’s credit behaviour.
“Landlords have been screaming at the top of their voice that actions must have consequences, and so it is here for everybody to see.
“Tenants who pay their rent on time and in full every month should see a boost to their credit history and consequently the score, and the ones that are perennially late should be penalised.
“Moving forward this will also form part of our reference checks, as we are going to ask new prospects to share a copy of their credit report to evidence timely rent payment.”
