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When you hear about credit scores, you might wonder, “What is a bad credit score?” In the UK, a bad credit score generally means any score below 561 on Experian’s scale. This can make borrowing money more difficult and expensive. Let’s dive into why this happens and what you can do about it.

What Constitutes a Bad Credit Score?

Understanding what constitutes a bad credit score is crucial for anyone looking to improve their financial health. In the UK, your credit score is determined by credit reference agencies such as Experian, Equifax, and TransUnion. 

impact of bad credit

Each agency uses its own scoring system, so a score considered “bad” by one might differ slightly from another. However, generally speaking, a bad credit score can be defined as follows:

1. Definition and Range of Bad Credit Scores

  • Experian: Scores between 561 and 720 are considered poor, while scores between 0 and 560 are very poor.
  • Equifax: Scores below 439 are considered poor.
  • TransUnion: Scores below 565 are considered poor.

2. Common Causes of Bad Credit Several factors can contribute to a low credit score, and understanding these can help you identify areas for improvement:

  • Missed or Late Payments: One of the most significant factors affecting your credit score is your payment history. Late or missed payments on credit cards, loans, or other debts can significantly lower your score. Discover more about how missed payments impact your score here.
  • High Credit Utilization: Using a high percentage of your available credit limit can negatively impact your score. It’s generally advised to keep your credit utilization below 30% of your total credit limit. For tips on managing credit utilization, see this guide.
  • Frequent Applications for Credit: Applying for multiple credit accounts in a short period can lower your score, as each application results in a hard inquiry on your credit report. Learn more about the impact of frequent applications here.
  • Defaults and Bankruptcy: Defaults on loans, filing for bankruptcy, or having County Court Judgments (CCJs) against you can severely damage your credit score. To understand how these factors affect your score, visit Norton Finance.
  • Little or No Credit History: Having no or limited credit history can also result in a low score because there’s insufficient information to assess your creditworthiness.
  • Errors on Your Credit Report: Mistakes on your credit report, such as incorrect personal information or unrecognised accounts, can also negatively impact your score.

3. Understanding the Impact of a Bad Credit Score A bad credit score can affect many aspects of your financial life. Here are a few key impacts:

  • Loan and Credit Card Approvals: Lenders are less likely to approve loans or credit cards if you have a low credit score. If they do approve, it will often be with higher interest rates and less favourable terms.
  • Mortgage Applications: Securing a mortgage can be particularly challenging with a bad credit score. Even if approved, the interest rates will likely be higher, increasing the overall cost of the loan.
  • Renting Property: Landlords often check credit scores to gauge if you can reliably pay rent. A low score can make finding a place to live more challenging.

4. Improving Your Credit Score Understanding the factors that contribute to a bad credit score is the first step toward improvement. Here are some actionable steps:

  • Make Payments on Time: Ensure all bills are paid on time and in full whenever possible.
  • Reduce Credit Utilization: Aim to keep your credit card balances below 30% of your total credit limit.
  • Limit New Credit Applications: Avoid applying for multiple credit accounts in a short period.
  • Correct Errors on Your Report: Regularly check your credit report for errors and dispute any inaccuracies.
  • Build a Positive Credit History: Use credit responsibly over time to build a positive payment history.

By addressing the factors that contribute to a bad credit score and taking steps to improve it, you can work towards better financial health and more favorable borrowing terms in the future. Remember, improving your credit score is a gradual process, but with consistent effort, it is achievable.

Financial Implications of Bad Credit

Difficulty in Securing Loans and Credit Cards: Lenders view a low credit score as a sign of risk. This means you might struggle to get approved for loans or credit cards, and if you do, the interest rates will likely be higher​​. This is why catalogues for bad credit are a great option.

Higher Interest Rates: Even if you get approved for credit, expect to pay more in interest. This can add up significantly over time, making it harder to manage your finances and save money​​.

Everyday Consequences of Bad Credit

Renting Property: Landlords often check credit scores to gauge if you can reliably pay rent. A low score can make finding a place to live more challenging​.

Mobile Phone Contracts and Utilities: Many service providers run credit checks. Bad credit can mean higher deposits or outright denials for services like mobile phone contracts and utility accounts​​.

Car Financing and Leasing: Getting a car loan or lease can be tough with a poor credit score. Even if you do secure financing, expect to pay more due to higher interest rates​​.

Emotional and Psychological Effects of Bad Credit

Bad credit doesn’t just affect your wallet; it can impact your mental health too. Feelings of guilt and shame are common, as is anxiety about future financial stability. Long-term stress can even lead to depression, making it essential to address both the financial and emotional aspects of bad credit​​.

Professional and Lifestyle Impacts

Job Applications: Some employers, especially in financial services, check credit scores as part of their hiring process. A poor score can hurt your job prospects​​.

Insurance Premiums: Bad credit can also lead to higher insurance premiums. Insurers might see you as a higher risk, leading to more expensive coverage​​.

Strategies for Improving Bad Credit

  1. Review Your Credit Reports Regularly: Ensure there are no errors dragging your score down.
  2. Pay Bills on Time: Consistently making on-time payments is one of the best ways to improve your score.
  3. Manage Credit Utilisation: Keep your credit card balances below 30% of your credit limit.
  4. Avoid Frequent Credit Applications: Too many hard inquiries can lower your score.
  5. Consider Credit-building Products: Look into secured credit cards or credit-builder loans to improve your score over time​​.

Preventative Measures and Long-term Financial Health

Budgeting and Financial Planning: A realistic budget helps you track income and expenses, ensuring you can manage debt and save for the future. Tools like budget planners or apps can be incredibly helpful here​​.

Using Credit-building Products: Secured credit cards or credit-builder loans can help you improve your credit over time. These products are designed to help you build a positive credit history if used responsibly​​.

Resources and Support

There are many resources available to help you manage bad credit. Financial counselling services can provide personalised advice, while online tools can help you track and improve your credit score. Remember, seeking help is a sign of strength, not weakness​.


Bad credit can feel overwhelming, but it’s not a life sentence. By understanding what affects your score and taking proactive steps to improve it, you can regain control of your financial future. Regularly update your knowledge and keep an eye on your credit report to stay on track. Share your experiences and tips with others in the comments below or on social media to help build a supportive community.

Have Questions? Feel free to leave a comment below or share your experiences. How have you managed to improve your credit score? Your story might help others in similar situations.

By following this guide and using these strategies, you can improve your financial health and move towards a more secure future. Remember, it’s about progress, not perfection.


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