Experian is shaking up its Credit Score and millions will see theirs drop – but remember it's what's on your credit FILE that really counts

Experian's new scores will be rolled out from mid-November, with everyone moved over by the end of the year. As a result of the changes, more than four in 10 (42%) will see a higher score and the same or a higher band – but an even higher proportion (44%) will see their ranking drop.

That may sound concerning, but it's important to understand that it won't change the fundamentals of your creditworthiness, because the info lenders use hasn't changed. Even Experian itself says your score SHOULDN'T impact your ability to get credit. What really counts is how you manage how lenders see you – see how credit scoring really works.

Your Experian score will now range from 0 to 1,250 and may have a new label

As part of the shake-up, Experian's scores will now also take into account mobile phone contract repayments, use of overdraft facilities, withdrawing cash on credit cards, and mortgage overpayments.

Experian says lenders are paying more attention to these factors – though MoneySavingExpert.com founder Martin Lewis has questioned why the scores themselves had to change, as this could've just been done behind the scenes.

The 'bands' (labels) shown alongside your score are also changing – the most notable difference here is that Experian is dropping the previous 'poor' score bands. It says this wording was discouraging to users, so it's changed it. Here's how the new scores and bands will look:

Remember – lenders use your credit history, NOT your 'score'

Experian is one of the UK's three main credit reference agencies (CRAs), the other two being Equifax and TransUnion. These hold tons of information about how you've managed credit in the past, such as your repayment history for credit cards, loans and mortgages, your past applications, and whether you're on the electoral roll. Lenders use this data to help them decide whether to lend to you. All of this information is held on your credit report.

The agencies then each give you a separate credit 'score' too – but this is just the agency's indication of how a typical lender might view you based on your credit history, and the score itself isn't used by lenders. After all, they're not even all out of the same score: TransUnion's max is 710, Equifax's is 1,000 and Experian's is 999, soon to be 1,250 (we wouldn't be surprised if the others rose soon too).

There's also an element of art as well as science to CRAs' scores, so don't try to micromanage it as each lender is different. For example, close a credit card and your score may rise with one as you've less available credit, yet be less attractive to other lenders as they like signs of long-term loyalty.

Provided you keep these limitations in mind, credit scores can still be useful though – for example, big drops can signal you've committed a real credit sin, such as missing a repayment, going over your limit or defaulting. If you haven't, then you need to find out why and check your credit report – it could be an error or identity fraud.

And your credit history is only part of the picture

While the credit references agencies know a lot of detail about you, the information they hold is only one of the sources lenders use when deciding whether to give you credit. Other crucial factors include:

• Your 'affordability', which is in large part based on your income. For example, even if you've got a perfect credit score, if you apply for a £20,000 loan but only have a £10,000 income, you're unlikely to be accepted, as you won't pass the affordability test.
  
  Credit reference agencies miss this information because your credit report doesn't include details of your salary or income. Similarly, student loans – which can reduce your disposable income and therefore impact your affordability – aren't usually recorded either. See what credit reference agencies do and don't know about you.

• Any past history you've had with the lender you're applying to.

• Current market conditions. Sometimes it's not you; it's them. Each lender has its own specific wish list of what makes a profitable customer. Usually, profitability correlates to low risk, but some specialist lenders see higher risk, and the higher rate they can then charge, as more profitable.

The unique Credit Eligibility Rating in our Credit Club takes all of these factors into account – making it the best way to find out if you're likely to be accepted for credit (if we do say so ourselves).