The new scoring system will use a broader range of data, such as how account balances have changed over time
A second major credit score firm has announced significant changes to its system, including the number consumers see on their file and the data used to assess them.
TransUnion, one of three main credit agency firms in the UK, is making the major overhaul, to be rolled out phases across several months.
It includes expanding the scoring system from zero to 710, up to zero to 999, which the company say is to incorporate new data and show how consumers are using credit day-to-day as well as over time.
How credit cards are utilised, how account balances can fluctuate over time and other consumer financial behaviour will also be reflected in the new scoring system.
The new scoring rate will rate borrowers from “very low”, which replaces the existing “very poor” bottom score, up to “excellent”, in five distinct levels.
TransUnion said this was being done “to reflect consumer financial behaviour with greater depth and precision”.
The overhaul is also set to differentiate between consumers with little or no credit history and those with a poor rating, meaning it should be fairer to those newer to credit.
It comes after Experian announced an overhaul of its scoring in November last year from 0-999 to a maximum of 1,250, while in March the Financial Conduct Authority (FCA) also updated how credit files in general are used, with changes set to come into force next year.
A credit score is a personalised number that lenders use to assess creditworthiness, or how likely a borrower is to repay money. A higher score means borrowers are more likely to get approved for a loan and offered better rates.
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James Robinson, managing director of consumer interactive for TransUnion in the UK, said: “There is still significant confusion among consumers about what credit scores mean, with many believing the score they see is the same one used by lenders.
“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, engage more confidently with their credit health and access the guidance they need to improve it.”
TransUnion will phase in its new scoring system from next month until June 2027, with some consumers initially seeing two different credit scores, depending on which app or provider they use.
The firm stressed the information shared with external lenders will remain unchanged and that different score will not impact lending decisions on credit applications.
Lenders use a consumer’s credit report alongside their own factors in making lending decisions.
TransUnion added the new scoring will be backed by more than 300 practical tips and personalised insights on how to understand the factors that affect credit profiles and actions to improve it.
These will be offered on sites and apps that partner with TransUnion, alongside the group’s own website.
Madhu Kejriwal, chief executive of TransUnion’s UK operations, said: “Our next-generation score is clearer, more transparent, informative, and better aligned with how lenders view consumers today.
“We believe that understanding your credit health is the foundation for confidently making more informed financial decisions.”
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