TransUnion Overhauls Credit Scoring System for UK Consumers

TransUnion says it is modernizing the way it calculates U.K. consumers’ credit scores.

The information, insights and credit reporting company on Wednesday (Aug. 26) introduced a new credit scoring system designed to help consumers better understand their credit score and their options when it comes to borrowing.

“The next-generation consumer credit score will give consumers a clearer and more detailed view of their credit health, now shown across a wider 0-999 score range,” TransUnion said in a news release. “This is more than a new number range, it is a new score incorporating trended data and combining how consumers use credit over time with a moment in time view to provide a more considered picture of how consumers manage credit day to day.”

In addition, the new score draws on what TransUnion says is a larger range of data, such as how account balances change over time and how consumers use credit cards. The new score also “takes steps to address financial inclusion by better reflecting consumers with little or no credit history, such as those who are new to credit,” the release said.

The company’s current U.K. scoring system ranges from 0 to 710, with scores of 0 to 550 considered “very poor,” and those between 628 and 710 deemed “excellent.” Under the new system, scores at the bottom end of the range (0 to 487) are considered “very low” rather than “very poor,” while an excellent score ranges from 786 to 999.

“It is important to note that whilst the consumer credit scoring is changing this does not impact lender decisions and the underlying credit information contained within a credit report is not changing,” the release added. “Lenders use a consumer’s credit report alongside their own factors to determine lending decisions. For this reason, consumer’s financial applications will not be impacted by the score change.”

Last year, rival company Experian introduced its own new credit score for U.K. consumers, which takes into account things like rental payments, overdraft use, and credit card cash advances. It too features an expanded score range of 0 to 1250, instead of the previous 0 to 999, to provide what Experian said is a more granular breakdown of consumer financial behavior.

As PYMNTS wrote earlier this year, lenders are increasingly “evaluating recurring financial activity that reflects day-to-day money management rather than periodic borrowing.”

That shift is in line with an environment in which, as PYMNTS Intelligence has found, many Americans do not bother trying to borrow as “traditional scoring models have effectively left 80 million consumers without steady access to credit.”