A bad credit score occurs when one cannot pay their obligations on time. For example, you may have an outstanding credit card balance that you must pay on time. A bad credit score can cost you a lot when it comes to getting different types of credit from finance companies. Despite the negative credit image that can affect you due to a bad credit rating there are also a number of different aspects that can impact you.
There are a number of different credit reference agencies in the UK that each has their own scoring system when it comes to a credit rating. What may be classed as a good score with one agency may be classed as a bad credit score with another. It is important to understand the scoring metrics with the current credit reference agency that you choose to sign up with.
Where can I check my credit score in the UK?
Transunion (formerly CallCredit)
The above credit reference agencies are free to use, and will instead make their money through offers and financial products that they will offer to you. For example if you have a bad credit score, they will offer you financial products that are suited to people with bad credit that can be used to improve their credit score. It is when you take out these products that the credit reference agency will receive a commission from the provider of the products.
What score is a bad credit score?
As mentioned above, please familiarise yourself with the scoring metrics provided by each credit reference agency. For example Experian has a scoring matrix of 0-999 whilst Equifax is 0-700 and 0-710 for Transunion. What may be considered a bad credit score with one, may not be the same for the other.
For Experian, anything between 0 – 560 is considered to be a poor credit rating
Equifax is slightly different with their poor credit rating ranging from 280 – 379.
Transunion display their bad credit ratings to be anywhere between 561 – 565.
How can I improve my bad credit rating?
Bad credit always creates problems for any individual that has it. To correct your credit rating, you must first identify the reasons for the adverse ratings. These situations often occur in people’s lives due to the following CCJ reasons, delays, defaults, VAT, bankruptcy, late payments, etc. All the reasons are related to money. Unfortunately, money problems happen in life when your income doesn’t match your expenses.
With the help of a credit reference agency they can help you determine where the exact problem exists or if you are facing the problem due to any other issues. The credit history problem may also occur due to an administrative error by the lender, which can sometimes happen.
Bad credit is not a permanent problem. There are several techniques and companies that can help you improve your overall credit score. By following there steps or techniques, you have a good chance of getting the best score without putting yourself in additional financial difficulty.
The easiest and quickest way to improve your credit score is to repay your existing debts. The quicker those debts are repaid, your credit score will be improved almost instantly. These debts can range from outstanding credit cards to loans.
By repaying your existing debt, you are not only increasing your credit score, you are also improving your overall affordability which is what many direct lenders such as www.luckyloans.co.uk look for when it comes to providing you with a loan.
Once you have followed the steps to improve your credit rating, you then want to set a long term goal to consistently improve your score and stay on top of your report. This can be done by taking out a short term loan or credit card that has affordable monthly repayments.
By taking out a financial product such as the above and making monthly repayments towards the total amount, your creditors will see that you are actively repaying a debt and staying on top of it, which can again improve your overall rating.
Remember, your credit report is free to access all year round, for as long as you want, regularly check it, stay on top of it and you will reap the rewards.