What Is A Bad Credit Score? [2019]

What Is A Bad Credit Score?

Every person over the age of 16 who has a bank account in the UK will also have a credit score.

This is because when you applied to open your account with the bank they carried out a credit search.

This means they contacted one, or more, of the UK credit reference agencies to check your identity such as your name, date of birth, and if you're registered on the electoral roll. When they did this it automatically created your credit file which is something that will stay with you for your entire life.

This is why your credit file is very important and something that you must take care of.

Your credit file consists of information about your finances, and from this information, you're given a credit score by the UK credit reference agencies.

Your credit score is calculated on a number of different points of information, some of which may surprise you;

Did you know that your credit score is affected by how long you have lived at your current address?

Or by the number of times you've simply applied for any kind of credit?

Because there are so many different information points it's almost impossible to know what your credit score is, unless you check your score with a credit reference agency.

You can do this yourself by requesting the information from each of the UK credit reference agencies, or you can use a company that gathers all of the information in one place for you.

This is often a much easier and convenient way of getting your credit score.

Once you know the type of information that's on your credit file you can take steps to improve your credit score. Every piece of information on your credit file has a value, either a good value or a bad value.

But not all values are the same.

For example, a County Court Judgment (CCJ) is considered very bad to have on your credit file and, therefore, can have a very negative impact on your credit score.

If you miss a payment on a credit agreement, that will also have a negative impact on your credit rating but nowhere near as much as a CCJ.

The same is true when it comes to good credit information. The longer you live at your current address will increase your credit score.

And the longer you're employed by the same employer will also increase your credit score.

All of these data points will be used to calculate your credit score but there isn't a set number that's considered to be a bad credit score.

And even if you're credit score is low it doesn't mean that you'll be declined for credit by every lender.

There are some lenders who are happy to accept you for a credit card or a loan if you have a low credit score, but others will decline your application with that same score.

For that reason, it's not set in stone that you will be accepted or declined based on your credit score.

What really matters is the lenders' criteria for accepting your application.

Some lenders have lower criteria than others which means they are more likely to accept your application for credit. Obviously, the higher your credit score then the better deals you'll get when it comes to loans and credit cards.

If you have a bad credit score then you'll be seen as a higher risk to lenders and, for that reason, they will charge you a higher rate of interest on your loan or credit card.

The higher the rate of interest means the more money it will cost you when you borrow money.

A bad credit score will cost you more money when it comes to loans, credit cards, car finance and mortgages etc.

For this reason, you need to make sure that you understand your credit file, the information inside of it, and what you can do to improve your credit score.

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