Finance

Experian Credit Score: Your Ultimate Credit Score Guide!

You can acquire loans and pay interest rates based on your credit scores, but your credit scores are used to determine much more. Insurance companies utilize credit scores to determine the premiums they charge for auto and homes coverage. It is up to the landlords to decide who gets to live in their units. Credit scores influence who qualifies for the best cell phone plans and who must make larger deposits to obtain utility services, among other things.

Thus, credit ratings are a financial instrument, but whether they are used as a lever or hammer is determined by how good or bad the credit score is.

Great credit scores can translate into excellent prices on a variety of products, including loans, credit cards, insurance premiums, apartments, and cell phone contracts. Bad grades can force you to either lose out on opportunities or pay more money.

The total cost of increased interest rates resulting from poor or mediocre credit over the course of a person’s life can surpass six figures. Informa Research Services, for example, has compiled the following information on interest rates:

  • On a $200,000 mortgage, someone with FICO scores in the 620s would pay $65,000 more in interest than someone with FICO scores in the upper 760s. (FICO and VantageScores are both in a range of 300 to 850 points.)
  • On a five-year, $30,000 auto loan, a borrower with a lower credit score would pay $5,100 more than the borrower with a higher score.
  • A $50,000 home equity loan with a 15-year repayment period would cost a low-score borrower $22,500 more than a high-score borrower.

Because credit scores have become such an important part of our financial lives, it’s important to maintain your track and understand how your actions affect the figures on the credit report. Regardless of your age or income, you may establish, defend, and take the benefit of excellent credit in a variety of ways.

Table of Contents

What is a credit bureau?

The term “credit bureau” refers to an institution that gathers and investigates individual credit information and then sells that information to creditors for a fee, allowing them to make decisions about providing credit or making loans to that individual.

Credit bureaus collaborate with a wide range of lending institutions and credit issuers in order to assist them in making lending choices. Their major goal is to ensure that creditors have access to the information they require in order to make lending determinations. Banks, mortgage lenders, credit card issuers, and other personal financial lending organizations are examples of the types of clients that a credit bureau serves.

Neither credit bureaus nor lending organizations are responsible for determining whether or not an individual should be granted credit; instead, they only collect and synthesize information about an individual’s credit score and provide that information to lending institutions. In addition to businesses, consumers can become customers of credit bureaus, and they receive the same service as businesses: information about their credit histories.

What is a credit score?

A credit score ranges from 300 to 850 and represents how creditworthy a person is. The better a borrower seems to potential lenders, the higher their credit score. In order to calculate one’s credit score, one looks at one’s credit history, including the number of open accounts, the total amount of debt, and the repayment history. In order to determine whether a borrower is likely to pay back a loan on time, lenders utilize credit scores.

Your financial future can be dramatically impacted by your credit score. Lenders use it as a major factor in determining whether or not to grant you credit. Subprime borrowers, on the other hand, are those whose credit ratings fall below this threshold, which is commonly defined as 640. Subprime mortgage interest rates are frequently higher than those on standard mortgages since lenders are taking on greater risk. Borrowers with poor credit may be required to have a co-signer or have a reduced payback period imposed upon them.

As a result, a borrower with a credit score of 700 or above may be eligible for a lower interest rate, saving them money in interest over the life of the loan. An outstanding score is one that falls within the range of 800 to 900.

A person’s credit score can also influence the amount of money necessary as a down payment for various services, such as a cell phone, cable TV, or other essentials like utilities, or for renting an apartment. A credit card company’s decision to raise or lower a holder’s interest rate or the credit limit is based on their score.

It is possible that you have more than one credit score, given the wide variety of credit scoring methods that exist. You may find a somewhat different score if you use a different site or product to get yours.

In other words, don’t get hung up on a single score or even a specific number. Instead, focus on where you fall in the spectrum. In addition to the number, most websites and credit card companies will provide some background for the score.

You’ll find out where you stand and whether or not you’ve done well or very well. There is likely to be a lot of information on why your score is what it is. Knowing your credit score range might give you a better idea of how lenders see your creditworthiness and what kinds of loan products you may be eligible to apply for

How does the credit bureau work?

Consumers’ personal financial information is obtained by credit bureaus from a wide range of sources, including financial institutions, collection agencies, businesses, and government entities that keep public records (court records, for example, are publicly available). More extensive information, such as payment history for cell phone and utility bills, can be accessed by some credit bureaus.

Fair Isaac Corporation’s FICO scores, introduced in 1989, are the most widely used in the United States. Credit issuers can select the FICO score that best suits their inquiry out of 19 widely utilized FICO ratings.

The credit score is then combined with the other data in the credit bureau’s database to produce a complete credit report, which is used by lenders to assess whether or not to grant credit and the appropriate interest rate for borrowers. To get a cheaper interest rate on a loan, you need to have a good credit score.

Top credit bureaus

Despite the fact that there are multiple credit bureaus currently operating in the United States, the three most important are Equifax, Experian, and TransUnion (see below). 6 Additionally, in addition to utilizing FICO scores, these three bureaus have collaborated to develop their own credit score, known as the VantageScore.

Both scores are calculated on a scale from 300 to 850. However, the VantageScore was originally calculated on a spectrum from 501 to 990, and some industry-specific FICO scores are assessed on a scale ranging from 250 to 900. FICO and VantageScore, on the other hand, assess the relevance of particular categories in different ways, resulting in results that are generally dissimilar. A good FICO score, for example, is considered to be in the range of 670 to 719, while a good VantageScore is considered to be in the range of 661 to 780.

Another significant variation between the two ratings has to do with the sources of their information. Based on information from all three credit agencies, VantageScores generate a single score that may be used in conjunction with a credit report from each of the bureaus. FICO, on the other hand, derives its score solely from information obtained from a single bureau. You could have three separate versions of your FICO score, one for each of the three credit reporting agencies, for example.

What is a FICO® Score?

The Fair Isaac Corporation, often known as FICO, developed the credit score model, which is now widely utilized by financial institutions throughout the world. Despite the fact that there are various credit-scoring systems available, the FICO score is by far the most widely used. There are a variety of strategies to increase a person’s credit score, including making on-time loan payments and keeping debt to a bare minimum.

Consumer credit ratings are generated by FICO® in a variety of ways. It is possible to obtain “basic” FICO® Ratings from the corporation, which can be used by lenders across a wide range of industries, as well as industry-specific credit scores for credit card issuers and auto lenders.

The base FICO® Scores vary from 300 to 850, with the “excellent” range defined by FICO as 670 to 739 being in the middle of the range. There is a difference in the range of FICOindustry-specific ®’s credit scores, which vary from 250 to 900. The intermediate categories, on the other hand, are divided into the same groupings, and a “good” industry-specific FICO® Score is still between 670 and 739.

The following credit score chart defines the ranges for a FICO credit score.

300-580 Poor
580-670 Fair
670-740 Good
740-800 Very Good
800-850 Excellent

Experian credit score

In addition to Equifax and TransUnion, Experian is one of the three major credit reporting agencies. Customers’ outstanding debt and payment histories are reported to Experian as well as Equifax and TransUnion, who are Experian’s competitors in the credit reporting industry (TRU). Using this information, the bureaus create reports that detail which accounts are in good standing, which are in bad standing, and which are in collections and public records, such as bankruptcy and liens.

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More than just a single number, Experian has a distinct advantage over FICO. If two people have 700 FICO scores, their credit histories may be significantly different. Lenders can examine a borrower’s actual credit history—every bill he or she has due for a decade or more—and examine how that individual has handled that debt by analyzing Experian credit reports. An ideal borrower may be given the same FICO score as a high-risk borrower by FICO’s algorithm.

Experian’s biggest drawback is that it is rarely utilized as a stand-alone tool for making credit decisions, unlike FICO. Experian isn’t the only one that lenders look at when assessing a borrower’s creditworthiness; the other two are Equifax and TransUnion. So it is important to analyze all three credit reports on a regular basis to look for inaccurate or unfavorable information.

Experian credit report and FICO® score

Your credit report is a thorough record of all your credit and debit accounts. In it, you may see your total debt, how often you pay your payments on time, and how long you’ve been managing your credit accounts. It also includes personal data like name, SSN, and address.

Many companies, like Experian, offer free credit reports. Every 12 months, you are entitled to one free credit report from each of the three bureaus. All Experian credit reports offer comprehensive credit history data. Your Experian credit report may contain the following data. This guide’s information categories and order may differ from your credit report.

Accounts that were not paid as planned, including late payments, debts that were charged-off or sent to collections, and accounts settled for less than the entire amount owed, may appear on your report. Bankruptcies are also reported negatively in the public records section.

Experian does not make judgments about your credit report, positive or bad. The list of possible negative items is given to help you identify items that Experian believes lenders will find troubling when analyzing your credit history. Deferred payments, for example, are likely to be seen as a danger by potential lenders and anyone checking your credit report.

Experian Boost™: your free guide to Experian credit score

Increasing your credit score can take months or even years of near-perfect financial decisions and behavior. Most people find this challenging, and their credit ratings remain in the lower ranges.

As a result, Experian is now offering a new tool called Experian Boost to help millions of Americans, especially those with no prior borrowing history, improve their financial standing. The fact that lenders are unwilling to lend to borrowers with no prior borrowing history is a problem in itself.

Your credit score is an essential contributor to your financial health. It is the ultimate factor in determining whether you qualify for a loan, a mortgage, or a line of credit and the interest rate you pay. A low score means higher interest rate payments and might ultimately lead you to be disqualified.

Experian Boost can help increase your FICO®  Score, particularly if you do not have a history of loans or a credit card in your name.

Permission granted to Boost to access your banking transactions can be withdrawn at any time, and you can opt out of the service. With no cost and hassle-free signup, Experian Boost looks to be promising and exciting. With an improved FICO® Score, you can get approved for the mortgage to buy your dream house, lower the cost of borrowing (interest rates) significantly, and even become eligible for a higher line of credit.

The Experian Boost methodology

In order to benefit consumers, Boost recognizes timely payments of utility bills and cell phone bills when computing their FICO® score. Credit bureaus generally overlook these financial components, yet they can help millions of Americans improve their credit scores.

Users of Experian Boost will not be charged anything, to begin with. Individuals with poor credit or no credit at all can benefit from this service.

When requesting a credit score boost through Experian Boost, consumers must give permission for the credit reporting agency to view their bank account statements in order to track down payments for things like cell phone and utility bills. This information is used by Experian to alter your Experian credit report and FICO score.

It is important to know that Boost will only include your positive payment history and disregard any missing or defaulted payments on your phone or utility bills. When it comes to traditional methods of calculating credit scores, missed and defaulted payments have a negative impact.

In order to take advantage of Boost, Experian requires that you permit them to access your bank accounts through their website. A new FICO® Score is sent to you within a few minutes of confirming and verifying the facts in your credit file. Increasing your FICO Score is as simple as pressing a few buttons, and the benefits are nearly immediate.

Experian credit score check

There are several methods for determining your credit ratings, including:

  • Visit a website that offers free credit scoring. There are a plethora of websites that provide free credit scores; just make sure you read the terms and conditions before signing up. Some free websites provide educational ratings that are intended to help you have a better grasp of your credit position. Experian offers a free FICO® Score, which you can obtain by visiting their website.
  • Consult with your credit card issuer or lender for more information. Many credit card and auto loan providers provide complimentary credit scores, which you may see by logging into your account online or by receiving your credit score on your monthly statement. Typically, you must choose to receive the number in order to receive it.
  • Consult with a non-profit credit counseling organization. Credit counselors may frequently obtain your credit ratings for no charge and go over the results with you. Check with the National Foundation for Credit Counseling to see if there is one in your area.

Experian credit score range

There are numerous credit scores available with varying ranges. As a result, two distinct scores can accurately indicate the same amount of loan risk. When you obtain a credit score from Experian, you will receive not only the score but also an explanation of how lenders would perceive your creditworthiness based on the number. If you have a high Experian credit score, you almost certainly have a high lender credit score as well, even if the figure is different.

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VantageScore 3.0 uses the industry-standard 300–850 score range, with a higher score indicating a lower credit risk. While each lender establishes their own risk categories, these score ranges can be used to identify the following broad credit tiers for the US population:

Super Prime 781-850
Prime 661-780
Near Prime 601-660
Subprime 500-600
Deep subprime 300-499

Why should you improve your Experian credit score?

When you request credit, the lender will compute your credit score in order to help them decide whether or not to lend to you in the first place. It is usually based on the following:

  • Your credit report contains this information.
  • Specifics of your application.
  • If you’ve been a customer before, they may already have information about you.

Depending on the information they have access to and the lending criteria they use, each lender may have a somewhat different method of determining your credit score.

Credit reference agencies (CRAs), such as Experian, are also involved in the calculation of credit ratings for lenders and the general public. By checking your free Experian credit score, you can get a sense of how lenders may see your credit history in the future. And don’t worry, looking at your score will have no effect on it.

How long does it take to improve your Experian credit score?

It is dependent on a variety of factors, but you should be aware that it will not happen overnight. When you open a new bank account or credit card, it can take several weeks for the information to appear on your credit report; therefore, it may take at least as long for you to notice significant gains in your credit score. It’s also possible that you’ll have to wait for new accounts to mature a little (for example, for a few months) before they begin to contribute to your credit score improvement.

As you establish a credit history, paying your bills on time and in full will help you boost your credit score. For six years after they are recorded on your credit report, late payments, defaults, and court judgments will appear on your credit report. The impact of any missing payments or defaults, on the other hand, is likely to diminish over time as the record accumulates. After six years, they will be completely removed from your report’s database.

10 tips to improve your Experian credit score

Demonstrate your residence

In order to vote, you must be registered on the electoral roll at your current residence – this is true even if you live in shared accommodation or at home with your parents.

Establish a credit history for yourself

Companies may find it difficult to judge your creditworthiness if you have little or no credit history, and your credit score may suffer as a result of this. Especially prevalent among young people and those who are new to the nation, this is a concern. You may be able to make some efforts to improve your credit history, which is a fortunate development.

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Make on-time payments on a regular basis

Paying your accounts on time and whole on a monthly basis is an excellent approach to demonstrate to lenders that you are a dependable borrower who is capable of managing credit responsibly. Old, well-managed accounts will almost always help you boost your credit score – yet you should be aware of the potential consequences of having unused credit cards.

Maintain a modest credit use rate

The percentage of your credit limit that you have used is referred to as credit utilization. Consider the following example: If you have a credit limit of £2,000 and you’ve used £1,000 of that limit, your credit utilization is 50%.frequently relocatinglenders will view a smaller proportion as a positive sign, and your credit score will rise as a result of this. Make every effort to maintain your credit use below 30 percent, if at all possible.

Check to see whether you can obtain a score boost right now

Your ability to handle your finances can be demonstrated to us by securely connecting your current account to your Experian account. If you pay your Netflix, Spotify, and Council Tax bills on time and put money into savings or investment accounts, we’ll search for evidence of your responsible financial behavior. In the course of your credit search or application for credit, we’ll share a summary of your upgraded data with participating lenders. Learn more about Experian Boost and see if you could benefit from it to raise your credit score immediately.

Double-check your report for faults and make note of any inaccuracies

Even minor errors, such as a typographical error in your address, can have a negative impact on your credit score and maybe sufficient grounds for a lender to refuse you credit. It’s a good idea to review your credit report to ensure that all of the information contained within it is accurate and up to date.

If you do notice a mistake, contact the service provider directly and request that it be corrected. If you require assistance, we can file a complaint with them on your behalf. You have the right to request that we add a Notice of Correction to your credit report if there is negative material on your credit report that is correct but occurred during extraordinary circumstances (such as a period spent in the hospital or losing your job).

Keep an eye out for any suspicious activity on your credit report.

If fraudsters acquire access to your personal information, they may be able to take out credit in your name without your knowledge or permission. It is possible to get assistance from Experian’s expert fraud support team if you notice something incorrect on your credit report, such as an application that does not appear to be legitimate. See what you should do if you believe you have been a victim of identity fraud.

If at all possible, avoid relocating frequently

This isn’t always easy to prevent, but it’s important to remember that lenders prefer to see evidence of steadiness in your financial situation. Lenders, for example, may believe that you are relocating frequently because you are having difficulties paying your rent. Discover why your physical address is a significant component of your credit history.

Keep previous accounts open and demonstrate a long credit history by using them

It can be beneficial to demonstrate to lenders that you are capable of managing many credit accounts successfully, especially over an extended period of time. In most cases, having long-standing, mature credit accounts, as well as only using a tiny fraction of your available credit limit, will be rewarded by credit scoring models. You may also read our article on what to do with unused credit cards for additional information on this.

Consider obtaining a credit-building credit card.

If you want to repair your credit rating, a credit builder card might assist you in re-establishing your credit history. They are characterized by limited spending limitations and hefty interest rates, among other things. When you first apply for a credit card, your credit score may temporarily suffer as a result. However, if used properly, it can assist you in improving your score over time.

It is possible to build credit with credit builder cards if you utilize them for a small amount of expenditure each month (on everyday essentials you were going to buy anyway). Then, to prevent paying interest, make sure you pay off your credit card balance on the whole and on time each month.

How can improving my credit score benefit me?

A better credit score indicates that companies consider you to be a smaller risk, increasing your chances of being approved for credit. This is due to the fact that a good credit score indicates that you have a history of appropriately managing your credit, such as paying all required payments on time.

The following are some of the advantages of improving your score:

Increased likelihood of approval for credit cards, mortgages, and loans

With a higher credit score, you have a better chance of being approved for any type of loan, credit card, or a mortgage that you apply for. You may also be able to select from a broader selection of credit options and service providers, which may allow you to save money in the process.

Interest rates are being lowered

You may be eligible for lower interest rates on loans and credit cards if lenders believe you are a lower risk. This might make borrowing money more affordable for you. In some cases, having a strong credit score can increase your chances of being approved for a low-interest loan or a 0% spending card.

Reduced vehicle insurance premiums

If you opt to spread the cost of insurance over a year, your credit score may have an impact on the interest charges that you must pay on top of your insurance payment in addition.

Credit limits that are higher

Increasing your credit score should increase your chances of being approved for larger loans in the future. This could assist you in achieving goals such as purchasing a new automobile or completing house modifications more quickly.

How long does it take to improve your Experian credit score?

It is dependent on a variety of factors, but you should be aware that it will not happen overnight. When you open a new bank account or credit card, it can take several weeks for the information to appear on your credit report; therefore, it may take at least as long for you to notice significant gains in your credit score. It’s also possible that you’ll have to wait for new accounts to mature a little (for example, for a few months) before they begin to contribute to your credit score improvement.

As you establish a credit history, paying your bills on time and in full will help you boost your credit score. For six years after they are recorded on your credit report, late payments, defaults, and court judgments will appear on your credit report. The impact of any missing payments or defaults, on the other hand, is likely to diminish over time as the record accumulates. After six years, they will be completely removed from your report’s database.

4 tips to keep your Experian credit score healthy

Once you obtain decent marks, which are often 690 or higher, you have a lot to lose.

A single missed payment can result in a deduction of more than 100 points from your total. Consider putting all of your credit card payments on auto-pilot to avoid a lapse in payment coverage. A collection account or a legal judgment might also have a negative impact on your credit score. Keep track of your medical expenses because many of them are sent to collections without warning.

The following tips would help you to keep your credit score healthy to avoid the above-mentioned hiccups.

Keep credit applications to a bare minimum

Applying for credit on a regular basis in a short period of time can lead lenders to believe that you are unduly dependant on credit and, as a result, a higher risk. Every credit application, no matter what type of credit you’re applying for or how much money you’re requesting to borrow, will result in a hard search being recorded on your credit report that companies can access. Try to space out any credit applications – a decent rule of thumb is no more than once every three months, but keep in mind that lenders’ requirements can differ from one another.

Keep defaulted accounts to a minimum

Defaulted accounts typically occur when your business relationship with the company has deteriorated, usually as a result of your failure to make multiple scheduled payments. Accounts that have gone into default can have a substantial impact on your credit score.

Borrow only what you can afford to pay back

Getting into financial problems can result in things like County Court Judgments (CCJs), Individual Voluntary Agreements (IVAs), and even bankruptcy. These items will appear on your credit report for a minimum of six years and will have a severe negative influence on your credit rating.

Keep a close lookout for con artists

Maintaining a careful eye on your credit report and keeping an eye out for any indicators of fraudulent activity could help you keep your credit score in good standing, according to experts. If you see an increase in the amount you owe or any applications that you did not make, you may have been a victim of identity theft. It’s important to remember that if you are a victim of fraud, your lenders should correct any damage to your credit report as soon as possible after conducting an investigation and establishing the facts. If you get in touch with us, we can assist you in repairing your credit record following fraud.

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Experian credit score phone number

If you’d like to acquire a copy of your personal credit report or credit score, or if you need assistance with fraud, we provide the following quick and efficient services:

Online: Navigate to Personal Services and select one of our personal credit report ordering choices.

By Phone: Dial 1 888 EXPERIAN to reach Experian’s National Consumer Assistance Center (1 888 397 3742).

You can dispute information on your Experian credit report online if you already have one. Alternatively, you may contact the Experian experts at the phone number listed on your report as they cannot resolve the issues by email.

Please email support@experiandirect.com with any issues concerning your credit monitoring membership.

If you have any questions concerning Experian’s approach to privacy or any of its specific privacy rules, you may contact them at the following address:

Chief Privacy Officer

Compliance Department

Experian

475 Anton Blvd.,

Costa Mesa, CA 92626

Final word

Building and Maintaining Good Credit Is a Lifelong Endeavor

If your credit score isn’t where you want it to be, building it can have a huge positive impact on your ability to get affordable credit and even cheaper auto and homeowners insurance rates. But once you achieve your goal, you may be tempted to focus less on your credit score.

Even after building credit is no longer a priority, it’s important to continue to practice good credit habits to maintain your positive history. With Experian’s free credit monitoring service, you can get real-time updates when information on your Experian credit report changes. You’ll also get free access to your FICO® Score powered by Experian data and your Experian credit report.

As you keep track of your credit score and the information that informs it, you’ll be in a better position to make adjustments as needed to keep your credit score in tip-top shape.

John Otero

John Otero is an industry practitioner with more than 15 years of experience in the insurance industry. He has held various senior management roles both in the insurance companies and insurance brokers during this span of time. He began his insurance career in 2004 as an office assistant at an agency in her hometown of Duluth, MN. He got licensed as a producer while working at that agency and progressed to serve as an office manager. Working in the agency is how he fell in love with the industry. He saw firsthand the good that insurance consumers experienced by having the proper protection. John has diverse experience in corporate & consumer insurance services, across a range of vocations. His specialties include Major Corporate risk management and insurance programs, and Financial Lines He has been instrumental in making his firm as one of the leading organizations in the country in generating sustainable rapid growth of the company while maintaining service excellence to clients.

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