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What Is Considered to Be Bad Credit?

bad-credit-considered

What is considered as a bad credit score will vary depending on the Credit Referencing Agency (CRA). There are three CRAs in the UK who evaluate your credit history and rate it on a scale from good to bad. What is defined as good or bad varies between CRAs. Below is a table with the range of scores from the UK’s three CRAs:

 

CRAVery PoorPoorFairGoodExcellent
Equifax0 – 279280 – 379380 – 419420 – 465466 – 700
Experian0 – 560561 – 720721 – 880881 – 960961 – 999
TransUnion0 – 550551 – 565566 – 603604 – 627628 – 710

 

These three CRAs will generate your credit score based on various different details of your financial history, including your borrowing history, repayments made on loans, any outstanding debts, CCJs, bankruptcy and more. You will find your score is typically higher when you have a good borrowing history, and have shown you can manage repayments and other financial situations well.

When a borrower applies for a loan with a credit score that is poor or very poor, only certain types of lenders will accept the application. This is because the credit score can reflect that an applicant have been poor with money management in the past, and is therefore more likely to be poor with managing repayments if the loan were to be approved.

 

Can I Get a Loan With Bad Credit?

 

loan-bad-credit

 

A lot of lenders will only accept applicants who have a good credit score or above. However, there are loans available for people with bad or fair credit ratings. Forces Compare work with a range of different lenders that accommodate for those with adverse credit histories. Some of the loans you can apply for with bad credit through Forces Compare include:

 

  • Secured loans – the loan is typically secured by one of the borrower’s valuable assets, meaning the lender has security that the loan will be repaid, and may therefore not require borrowers to have a good credit score.

 

  • Unsecured loans – borrowers with a bad credit score may be eligible for an unsecured loan, however the amount you can apply for, and the rates on the loans, could be adjusted for these applicants.

 

  • Guarantor loans – commonly used by those with bad credit, a guarantor loan will require borrowers to have a guarantor who agrees to keep up with repayments if the main borrower defaults. Guarantors will typically have to have a good credit score.

 

There are many different types of loans available for those with bad credit. Many people can worry that their credit score may be stopping them from accessing the finance they need. However, Forces Compare work with a range of trusted partners, many of which accept those with adverse credit histories.

 

How Bad Is a Bad Credit Score?

 

credit-check

 

Whilst not optimal, a bad credit score isn’t the end of the world, and certainly does not stop you from finding great finance options. There are a variety of different lenders who can accommodate for those with bad, or fair credit histories, getting the security they need from other factors of the application, such as a valuable asset or a guarantor with good credit.

A bad credit score also isn’t permanent, and there are things you can do to boost this rating. By taking out a bad credit loan and keeping up with repayments, you can actually help to build up a good history with borrowing. This can then be recognised by the CRAs, who can then boost your rating.

 

How Do I Improve a Bad Credit Score?

 

credit-score

 

Aside from building up a good history of borrowing with a bad credit loan, there are various other ways to help improve your credit score. These include making sure you keep up with any and all existing repayments (e.g. a credit card), registering to vote, and avoiding too many hard searches in a short period of time.

One of the main ways people can improve their credit score is building up a good borrowing history. It’s therefore important to always keep up with repayments, and to notify the lenders if your struggling to keep up.