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Published 30 August 2022

What is a Bad Credit Score?

If your credit score is on the low side, it may affect your chances of taking out products, such as loans, mortgages and credit cards. Find out what counts as a bad credit score and how to improve it.

A bad credit rating is when a credit agency negatively reviews your financial history when giving you a rating, known as a credit score. There are three main credit reference agencies in the UK and each one has an independent credit rating system, and a bad (or poor) credit score tends to be low. Having a bad credit rating will make it harder to borrow money.

Since each credit reference agency’s scoring scale is different, there isn’t a fixed number that counts as a bad credit score.

The table below shows the scales for bad credit scores at each of the main UK credit reference agencies.

Poor0 - 438 561 - 720551 - 565
Very Poor-0 - 5600 - 550

What causes a bad credit score?

Several factors may negatively affect your credit score, such as:

» MORE: Why has my credit score gone down?

How does a bad credit score affect me?

Credit scores affect many aspects of your financial life, making them important to consider and keep track of.

Generally speaking, a bad credit score reduces your chances of being accepted for new credit such as a loan, credit card or mortgage. While you may be able to access bad credit loans, lenders that do approve your bad credit application are likely to charge higher interest rates and restrict your credit limit.

That’s because a poor credit score suggests there is a higher risk you won’t be able to repay what you borrow.

You won’t be able to get a loan with no credit check – a no credit check loan – from regulated UK lenders.

» MORE: What credit score do I need for a loan, credit card or mortgage?

Can I improve a bad credit score?

The great news about credit scores is that they are not set in stone. Even if you have a bad credit score right now, there are steps you can take to improve it and boost your eligibility for borrowing money in the future.

A few ways to improve your credit score include:

It’s important to remember that improving your credit score is a long-term process, so you won’t see changes overnight. But, with commitment and consistency, your credit score can improve gradually and unlock more deals and favourable interest rates.

» MORE: 15 ways to improve your credit score

Image source: Getty Images

About the Author

Brean Horne

Brean was a writer and spokesperson for NerdWallet who covered a variety of topics including money-saving tips, credit scores and managing debt. With over five years' experience in finance, she…

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