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What is a bad credit score?

Find out how having bad credit can affect you

published: 09 December 2022
Read time: 5 minutes

Your credit score has a major impact on your ability to borrow from lenders. But what is a bad credit score and how is it affecting you? Understanding your credit rating is the first step to improving it

A credit score is a number or rating based on how well you manage your finances – such as how much you borrow and whether you make loan and credit repayments on time.

Lenders always look at your credit score before deciding whether to accept your applications for financial products such as mortgages, loans, and credit cards.

If your credit score is low, you won’t receive the best deals on offer and in some cases you may be turned down altogether.

What does a bad credit score look like?

There are three main credit reference agencies – Experian, Equifax, and TransUnion. All agencies use a slightly different scoring system but in all cases, the lower your number the worse your credit score. To receive the best offers and most competitive rates, you will want to work towards increasing your credit score. And the higher your score, the more likely you are to have card, loan, and mortgage applications accepted.

MoneySuperMarket’s credit monitor service uses TransUnion – credit scores range from 0 to 710. In this case, a good credit score would start from around 566. Anything below 550 would be considered a low credit score. The table below outlines what different credit scores mean for your ability to get a loan or credit card, based on TransUnion data.

Using our credit monitor is free, and you can check your rating as often as you like. Checking your score won’t affect your credit rating in any way.

Woman looking at mobile phone with work tools around her

Why do I have a poor credit score?

There could be several reasons why you have a poor credit score. Here are some of the most common…

  • Late or missed payments – If you don’t keep up with your bills, it’s likely to negatively affect your credit score. Setting up direct debits is a good way to ensure you don’t miss any payments.

  • County court judgements – If you’ve defaulted on an account, you might be taken to court for repayment. This can place a negative mark against your credit file which can last years.

  • An error on your credit file – Mistakes happen, but you can get them corrected by contacting the company involved and leaving a note of correction on your file.

  • Using too much of your available credit – If you’re up to your credit limit every month, it can act as a red flag to other potential lenders that you’re overstretching your finances and overly reliant on credit. 

  • Old credit accounts left open – It’s a good idea to close unused credit card accounts – particularly if they are joint ones linked to someone else. It can give potential lenders confidence that you’re on top of your accounts. 

  • Little or no credit history – If you’ve just turned 18, recently moved to the UK, or have never previously borrowed money, you won’t have had the chance to build up a good credit score and prove to lenders your responsible use of credit.

How will a bad credit score affect me?

A bad credit score can affect you more than you might think because it impacts every area of your life where you might need credit.

A bad credit score could affect you in several ways, such as…

  • You’ll only be able to get credit cards, loans, and mortgages at high interest rates.

  • You’ll find there are fewer financial options available to you.

  • You’ll face lower credit limits, such as the amount you’re allowed to borrow on a credit card.

  • You might be completely rejected from financial products when applying.

It can be easy to underestimate how many areas in life we need credit. As well as obvious examples such as credit cards, loans, and mortgages, even mobile phone contracts and an authorised overdraft, will generally involve companies running a credit check on you before letting you proceed.

How can I keep track of my credit score?

The easiest way to keep track of your credit score is to use our free credit monitor service. It’s quick and easy to sign-up and allows you to check your credit score as often as you like without leaving any mark on your credit file or affecting your rating.

Credit scores are updated monthly, so you could set a calendar reminder to check your score at a set date each month and see how it changes.

Credit monitor keeps tabs on your credit file and will inform you of any suspicious looking activity, such as fraudsters trying to open credit cards in your name. It also provides helpful hints and tips on how to improve your credit score – which can open the doors to more choice when it comes to borrowing.

How can I improve my credit score?

If you have a low credit score, don’t worry – there are ways you can improve it.

The first step is to get hold of your credit report and see where you stand.

You can check for any errors and contact the relevant companies involved to rectify any mistakes found.

Another quick way to boost your credit score is to register on the electoral roll – which often gets forgotten when you move house.

In addition, there are lots more ways to improve your score – although some take more time and work. These include closing down unused credit accounts or taking out a specialist credit-builder credit card which, when used well, will prove to lenders over time that you can responsibly handle credit.

Other useful guides

Want to find out more about credit? We have a range of useful and informative guides:

What is a good credit score?

Using credit cards to improve your score

What credit card is best for me?

Check your credit score with MoneySuperMarket’s credit monitor

Even if you already know your credit score, our free credit monitor service is a useful tool which can help you keep on top of your score and boost it as high as possible.

It’s straightforward to use and can quickly give you an up-to-date credit score. It can also provide hints and tips on how you can improve.

Get clued up on credit scoring

Our quizzes can help you understand why your score might be fluctuating and find out what your score can affect, other than your finances.

How does your credit score affect your life?

Try our quiz to see how your credit score can impact more than just your money.

What can make your score move?

Take our quiz to find out what affects your credit score.

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