What is a bad credit score

A bad credit score is a negative assessment of your finances by a credit reference agency based on your history of borrowing (or lack of it). If your credit score drops too low, your financial options will shrink. The good news is that a credit rating isn’t fixed – it changes in response to how you manage your finances. That means by showing you can be relied on to pay back what you’ve borrowed, credit reference agencies will turn your bad credit score into a good one.

Man reading through some papers to review his credit rating

Knowing your credit score could really pay

When it comes to credit scores, knowledge is power. Knowing your credit score could be an important first step in managing your money and setting yourself up for the future.

Your credit score is how companies decide how financially reliable you are. It’s based on your credit report – which is like your financial footprint. It provides a record of how you’ve spent, borrowed and managed your money in the past.

A bad credit score can make it more challenging to get a loan or credit card, and could cost you more in financing rates on major purchases. A very poor credit score could even get in the way of getting a mobile phone contract. So it could really pay to stay on top of your credit score. It’ll give you a good sense of where you stand with potential lenders and service providers. It also gives you a glimpse into what banks, utility companies and other companies know about you. 

Requesting your credit report is also a good way to catch any mistakes that may have wormed their way on there. After all, you can’t fix a problem if you don’t know it exists. Here’s how to check your credit score. So check your credit score and credit report at least once a year. It’s free. It’s your right. And you can do it in a few simple steps.

Do you have a poor credit score?

All three leading credit rating agencies (CRAs) rate credit scores five categories: excellent, good, fair, poor and very poor. Depending on your credit score, you’ll fall into one of these categories. The important thing to remember is that each CRA uses a different numerical scale to determine your credit score. So a score of 500 could be good, great or bad depending on which CRA it’s from.

Here’s what a ‘poor’ or ‘very poor’ credit score looks like from each of the UK’s three largest CRAs:




Very poor








The important thing to remember is that all three agencies base their scores on similar criteria. So if you got a ‘poor’ rating from one, you’re likely to get a similar rating from the others.

What does a bad credit score mean to you?

Whether you know it or not, your credit rating can have an impact on your financial life. That’s true even if you don’t have much debt. So it could really pay to know what your credit score is. That way, you know where you stand, and can take some steps to improve it.

A ‘poor’ credit rating could limit your eligibility for a mortgage, loan or credit card. You’re also likely to be charged a higher interest rate and be restricted to a lower credit limit.

So it really could pay to do everything possible to improve your credit score.

If you have a ‘very poor’ credit score, you could find it a bit more challenging to get a mobile phone contract, household utility or internet provider. You could also find it harder to be approved for a mortgage, credit card or personal loan – since companies use your credit score to decide how reliable you are when it comes to paying your bills.

When it comes to your credit rating, it really could pay off to know the score. So take the time to find out your credit score and credit history. A good place to start is The truth about your credit rating: Seven common myths busted.

And if you want the bottom line on average and good credit scores, have a look at What is a good or average credit score.

Ways to improve your credit score


Your credit score isn’t carved in stone. You could improve it – no matter how good or bad it currently is. In fact, there are quite a few things you can do right now to improve your credit rating.  Some are quick and easy, like putting yourself on the voter registry. Others will take a bit longer, like changing the way you manage your bills. But over time, you’ll begin to see the rewards.

Here are some of the things you can do to start:

  • demonstrate financial stability by paying your bills and loan repayments on time
  • take advantage of convenient banking apps and online alerts to notify you of low-balances and upcoming payments so you don’t go over your credit limit
  • register for the electoral roll. It’s a free, quick way to improve your credit score
  • close down old accounts you no longer use – especially those with available credit
  • settle any outstanding county court judgments (CCJs) or credit agreement defaults
  • spread out your credit applications so you don’t apply for several cards over a short space of time
  • try to avoid being turned down for a credit card by using our convenient Credit card eligibility checker to find out if you qualify before making an official credit card application
  • cut financial ties and terminate joint accounts and utility bills with previous partners or housemates to avoid being affected by their bad credit. You can even ask to add a ‘notice of disassociation’ to your file – which you can do by contacting each CRA directly
  • check your credit report every year to make sure no errors have crept in
  • if you don’t already have a credit card, consider applying for a credit builder card to establish a credit record or demonstrate your ability to manage money.

Representative example

Representative APR
33.9% APR (variable)
Purchase rate
33.9% p.a. (variable)
Based on a
credit limit
Annual fee
No annual fee

The approval of your application depends on your financial circumstances and borrowing history.

No matter what your credit score and financial situation are, there are often steps you can take to improve your financial outlook. 

What's next?

If you’re looking for some helpful ideas on how to improve your credit score, you’ll find lots of them right here.

How to improve your credit score?