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What is a 'bad' credit score?
A low credit score could make it harder to get credit, but you can work to improve it.
A quick summary
Is my credit score 'good' or 'bad'?
The measurement scale used by each credit reference agency varies but, as a general rule, the higher the number, the stronger your chances are of being accepted when you make a credit application.
Having a low score doesn’t always mean an application won’t be accepted – lenders and service providers also consider other factors, like affordability and any past account history – it may just mean that you’re offered higher interest rates, and a more limited amount of credit.
Below are examples from the credit reference agencies Lloyds Bank use:
Experian
|
Excellent |
Very good |
Good |
Poor |
Very poor |
|---|---|---|---|---|
|
Excellent 961 - 999 |
Very good 881 - 960 |
Good 721 - 880 |
Poor 561 - 720 |
Very poor 0 - 560 |
Equifax
|
Excellent |
Very good |
Good |
Poor |
Very poor |
|---|---|---|---|---|
|
Excellent 811 - 1000 |
Very good 671 - 810 |
Good 531 - 670 |
Poor 439 - 530 |
Very poor 0 - 438 |
TransUnion
|
Excellent |
Good |
Ok |
Needs some work |
Needs work |
|---|---|---|---|---|
|
Excellent 628 - 710 |
Good 604 - 627 |
Ok 566 - 603 |
Needs some work 551 - 565 |
Needs work 0 - 550 |
What causes a bad credit score?
Credit reference agencies collect information from public records, lenders and other service providers. Factors which could impact your credit score include:
Moving home
Your address links your financial activity and identity, helping to prevent fraud. Having the same address for a long period implies that your circumstances are reasonably stable.
If you have joint accounts
Things like bank accounts, mortgages and even utility bills may create a financial link between you and any joint account holders. This may impact your future credit eligibility if the joint account holder doesn’t have a good credit score.
People you’re linked to financially will show on your credit record. If you’re no longer linked to someone, you could contact each credit reference agency to submit a notice of disassociation.
How to build on a bad credit score
Anything you do will take time, but you could improve your credit score by:
- Paying all bills on time –including credit repayments, utility and other household bills.
- Manage accounts well – stay below your credit limits and try to reduce debit balances whenever possible.
- Limit applications – whether or not you’re accepted, ‘hard’ credit searches could impact your credit score, especially if you make a number of full applications in a short period of time.
- Register to vote – it may improve your credit score to be on the electoral register.
How to check your credit score
It’s a good idea, especially if you’re planning an application, to check the details held by each credit reference agency. If any of their information is incorrect, you could submit a data dispute to the relevant agency, so they can investigate and update their records accordingly.
The agencies used by Lloyds Bank include TransUnion, Experian and Equifax.
Where next?
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