back Back
info-speech-bubble

Pre-application Support

What is a bad credit score in the UK?

If you’ve ever needed to purchase something on finance, then you no doubt know how important your credit score is in getting your application accepted. As a result, having bad credit can sometimes be a financial hurdle.

Fortunately, knowing whether bad credit is something that’s affecting your ability to get finance is the first step towards managing your money correctly.

To help improve the chances of being approved, here’s how you can find out whether or not your current credit score is considered bad.

What is considered a bad credit score?

So, what is a poor credit score? Generally speaking, having bad credit refers to any number that sits below the middle credit score value given by the following three major reference agencies:

As mentioned in our article discussing what makes a good credit score, your credit profile is the main way for lenders to see how you handle your finances.

A bad credit score will typically sit somewhere within the following ranges:

  • Experian and Equifax – 300 to 579
  • TransUnion – 300 to 600

As you can see, what’s considered to be a bad credit score is similar for all credit reference agencies. But bear in mind, even scores that sit just above these may also be considered poor credit, depending on certain factors, so it’s always best to check all three to get the clearest idea of your financial profile.

Why do I have a poor credit score?

There are many reasons why you might have a poor credit score. These will differ in relation to your own personal circumstances, but will usually include one or all of the following:

  • Late or missed payments – this could be anything from unpaid utility bills and mobile phone contracts to a missed mortgage payment.
  • A County Court Judgement – this is where someone takes court action against you in relation to money owed and you fail to respond to the claim in time.
  • Credit report errors – an error on your report that isn’t corrected will lower your score.
  • Using too much credit – relying heavily on credit to pay for things can indicate a lack of fiscal responsibility.
  • Keeping old credit accounts – not closing old accounts or joint accounts no longer in use can impact your rating.
  • Minimal credit history – not opting for finance or payment contracts prevents lenders from seeing how you handle repayments.

How does a bad credit score affect me?

You may be turned down for credit cards and loans or even utility bills and mobile phone contracts.

Even a fair credit score can have downsides, leaving you with fewer available financial product options, lower credit limits, or biggers interest rate for any credit you do qualify for.

Fortunately, having bad credit doesn’t necessarily prevent you from getting access to all finance. Here at Zuto, we specialise in bad credit car finance, helping more than 100,000 drivers with low or no credit buy a car over an affordable timeframe.

The best ways to improve a very poor credit score

While having a low credit score may be discouraging, it’s not all bad news. It’s very easy to begin improving your credit score.

The first thing you should do is get hold of a credit report to see where you stand. With this knowledge, you can then follow some immediate credit correction steps, all of which you can find in our guide on how to raise your credit score quickly.

Reach out to the team today for more information from our credit experts or head over to our help and advice page.

Sources:

https://www.moneysupermarket.com/credit-monitor/what-is-a-bad-credit-score/

https://www.barclaycard.co.uk/personal/money-matters/credit-score-basics/what-is-a-bad-credit-rating

https://www.forbes.com/advisor/credit-score/what-is-a-bad-credit-score/

https://www.lloydsbank.com/understanding-credit/what-is-a-bad-credit-score.html

Recommended articles