What’s considered a bad credit score in the UK?

Having a bad credit score can feel like getting a bad grade back in school — without knowing what you did wrong. When you think of a bad credit score, you’re probably thinking of the three-digit ratings that credit reference agencies give you. These scores fall into ranges that are broadly considered very poor, poor, fair, good, very good, or excellent, depending on the credit reference agency’s scoring model.

In this article, we’ll take a quick look at what the UK’s three largest credit reference agencies consider to be bad credit scores, plus explain how a bad credit score can impact you, and what you can do to improve yours.

Bad credit scores — according to UK credit reference agencies

• Experian considers anything from 561-720 to be a bad credit score, and they consider scores from 0-560 to be very bad.
• Equifax considers anything from 0-438 to be a bad credit score. They changed their credit scoring scale in 2021, removing the ‘very poor’ categorisation.
• TransUnion uses the VantageScore model, which considers anything from 601-660 to be a bad credit score, and they consider scores from 300-600 to be very bad.

Keep in mind that lenders and credit reference agencies may use different scoring models. So, even if your score is considered to be bad according to one model, it may not be bad on another, and vice versa.

What are the implications of a bad credit score?

Why does a bad credit score matter? If you’re new to building credit, it might be one of those things that you’ve heard about in passing conversations, adverts, or news segments. You know that having a bad credit score isn’t good — but why is that? Some of the main reasons include:

• You might be ineligible for certain credit products: If you want to get a credit card, loan, or mortgage, for example, lenders will take a look at your credit score. To them, it’s a gauge of how likely you are to make your payments, and a bad credit score tells them you might not.
• You could struggle to find housing: Just like lenders, many landlords perform a credit check before letting. If your credit score indicates that you might struggle to pay rent on time each month, they might reject your application. 

Related read: Five tips for renting with bad credit

• It can be harder to get essentials like a phone contract: While there’s no minimum credit score for getting a phone contract, a low credit score could make it harder.

Remember, having a bad credit score might not always prevent you from accessing certain kinds of credit or financing. However, a bad credit score can make financing more expensive. To compensate for your credit score, you might have to pay a higher interest rate. Depending on the type of credit, higher interest rates could cost you thousands of pounds over time.

Tips for fixing a bad credit score

Having a bad credit score can be frustrating if you’re still new to the world of credit. You might feel like you’re locked out from accessing the financing you need to live your life. Fortunately, you’re not alone, and you’re not stuck permanently.

To build a better credit score, consider the following tips:

• Focus on making timely payments: Your payment history is the single-most important factor influencing your credit score, as it’s ultimately what lenders and credit card companies are most interested in. Missed payments will damage your credit score significantly. By paying your credit cards, overdrafts, and bills on time and in full, you’ll demonstrate that you’re in control of your finances, boosting your credit score.
  
  
• Consider credit builder products: If you’re struggling to build a strong payment history, consider using a product like a credit builder loan or a credit builder card. These tools help you demonstrate a history of timely payments when you don’t qualify for other credit products.
  
  Try Pave’s credit builder today to boost your credit score!
  
  
• Reduce your credit usage: Using too much of your available credit can make lenders think that you’re dependent on it. Avoid using more than 25% of your credit limit at a time before paying your balance off.
  
  
• Avoid applying for credit products without being pre-approved: When you apply for credit, the bank, lender, or credit card company will run a hard credit check. Hard credit checks have a small but negative impact on your credit score, because they indicate that your financial situation might change, and that can mean unpredictability. To avoid this, try to find eligibility checkers before applying so you don’t have to make multiple applications.
  
  

Remember, consistency is key. Your credit score won’t jump over a short period of time, but you’ll see results from your continuous and diligent effort.

Turn your bad credit score into an excellent one with Pave

The journey to better credit can be hard. We built the Pave app to make it easier. Pave’s smart protection connects to your bank account so you’re not surprised by any payments that could damage your credit score, and our credit builder accounts can help you improve your payment history and credit utilisation ratio. Plus, we’ll help you grow your understanding of what impacts your credit score so you can take your score further.

If you want to see for yourself why 99% of our users saw their credit score increase within six months of using Pave, get the app today!

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*The 99% number represents Pave Plus customers who have been with Pave for at least 6 months, and have taken all actions listed in the Pave app while not adding negative markers to their credit file, such as late payments or defaults. Pave cannot guarantee an increase in your credit score.

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