Clearscore vs Experian – Why Are The Scores Different?

Are you wondering why Clearscore and Experian, two big names in the credit world, show different scores?  

You’ve come to the right place for answers! Every month, more than 170,000 people visit our website for guidance on understanding credit scores and finding debt solutions.

In this article, we’ll explain:

•  What Clearscore and Experian are and how they work.
•  The importance of credit scores and how they are calculated.
•  What to look for in your credit score.
•  How Clearscore and Experian differ and why your scores might be different.
•  Tips on how to improve your credit score.

In 2022, arrears on household bills increased by 68% from £1,739 to £2,920.¹ So it’s quite common to feel concerned about debt and your credit score.

Don’t worry; we’re here to help you understand how to manage your debt.

Why is Credit Score Important?

Lenders use your credit score to find out how much of a risk you would pose as a customer if they were to approve your request for credit.

For example, when you apply for a personal loan, the lender will want to make a hard search on your credit history.

A hard search is a detailed look into your credit report, while a soft search is a quick overview of your credit score.

If the information they receive indicates you are creditworthy, they will accept your application. 

However, if your credit score is low, lenders will likely see you as too high risk to offer credit to. Traditional lenders, at least.

You may find that there are subprime lenders willing to extend you credit.

From my experience, these specialist lenders come with additional costs, generally in the form of a much higher interest rate, or more severe late payment fees.

Therefore, it is in your best interest to ensure your credit history is accurate and up to date.

Use this opportunity to teach yourself financial responsibility. Make sure you don’t miss repayments on loans, credit cards, etc.

Only by acting responsibly and repaying your debts in full and on time, can you be certain that your credit score is not being damaged. Also, maintaining a good credit score is a surefire way of improving your financial health.

» TAKE ACTION NOW: Fill out the short debt form

Debt Solutions Comparison

As mentioned earlier, repaying your debts on time can help you maintain a good credit score. But let’s face it, sometimes keeping up with payments can be tough.

Don’t worry. There are different debt solutions that can help you. These are:

How is Credit Score Calculated?

Your credit score is calculated from the information on your credit report, which is a record of your history of repaying debt.

Credit scoring systems typically look at late or missed payments, how much you owed and how often it happened.

These items can help lenders determine whether you’re a reliable borrower.

In addition, every time you take out credit from a bank or a licensed lender, they will disclose that information to credit bureaus.

These agencies will then compile it and use it to create your credit report. Since each agency calculates your score differently, you can never have a “universal credit score”. This essentially explains the Clearscore and Experian credit score variations.

Having said that, you are likely to fall into the same rating category (e.g. good, fair or poor) with all of them since all of the bureaus base their scores on your financial history.

Therefore, the factors affecting your credit score include:

• Your credit repayment history (including missed or late payments)
• How much of your available credit you are using (your credit utilisation ratio) and your total debts.
• Public records (e.g. whether you have any county court judgements or bankruptcy).
• The number of hard credit searches you have on your credit report (this applies every time you apply for credit).

How do Clearscore and Experian Differ?

By now, you should have a general idea of what Clearscore and Experian are and the services each offers.

I did an in-depth credit score comparison of the two, and here’s how each differs from the other, and significantly so. 

Clearscore – does not keep a record of your credit file itself and relies on Experian to provide this information. However, Clearscore uses the information in your credit file in more ways than Experian does.

Not only does it give you your credit score, but it also has helpful timeline features so you can check how your credit score has changed over time.

Additionally, Clearscore is able to match you with lenders and financial products that would be suitable based on your credit score. And all of these features are free to use.

Experian – is a true credit reporting agency.

Indeed, it is Experian that provides Clearscore with the data it needs about its users. Experian stores and maintains your credit file, and is used by many lenders as a guide to your overall creditworthiness.

Unlike Clearscore, Experian is a premium service. You must pay a nominal fee to access your credit file. 

However, Experian offers a free service called Experian Boost, which gives you access to your credit score and report. You can even add more data to your credit report to boost your score.

» TAKE ACTION NOW: Fill out the short debt form

Why are your Clearscore and Experian Credit Score Different?

The underlying problem here is that both Clearscore and Experian use proprietary algorithms to calculate your credit score.

As explained earlier, Clearscore uses Experian as the source of its credit history-related data. However, the way it uses this data differs from that of Experian.

Put simply, Experian will be the more accurate of the two, as it is Experian that lenders use to check your credit score when evaluating a credit application.

But Clearscore provides a more intuitive dashboard for tracking trends in your credit score and checking out what factors impact your score.

It is important to remember that these are not competing services.

While Experian charges for access to their data, Clearscore generates revenue from receiving commissions on financial products it recommends to users.

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How can you improve your credit score?

If you don’t have a good credit score, then you’ll most likely be overlooked for credit cards, loans and mortgages.

This is because lenders consider you a high risk and likely to default on a loan.

The good news, however, is that you can build up trust with lenders by working to improve your credit score over time.

This is how to do it:

• Register for the electoral roll: This provides proof of your home address and your identity.
• Build your credit history: Take out a credit card and pay off the balance in full every month.
• Don’t miss payments: Make regular payments on time to improve your credit score. Based on my experience, this can be a great financial management strategy.
• Check credit report errors: Make credit health checks a priority. Download your credit report and check it for any mistakes. Then ask them to correct it.
• Keep your credit utilisation low: From my experience, it is best to keep how much credit you take from your credit limit below 30%.
• Keep old accounts open to prove a long credit history: This is better than moving from bank to bank.
• Get a credit card builder: If you have a poor credit rating, a credit card builder will help you slowly build up a credit history and boost your credit score.

References

1. StepChange Personal Debt Statistics in Scotland 2022