What is a 'bad' credit score?

A low credit score could make it harder to get credit, but you can work to improve it.

Is my credit score 'good' or 'bad'?

The measurement scale used by each credit reference agency varies but, as a general rule, the higher the number, the stronger your chances are of being accepted when you make a credit application.

Having a low score doesn’t always mean an application won’t be accepted – lenders and service providers also consider other factors, like affordability and any past account history – it may just mean that you’re offered higher interest rates, and a more limited amount of credit.

Below are examples from the credit reference agencies Lloyds Bank use:

Experian

Excellent

Very good

Good

Poor

Very poor

Excellent

961 - 999

Very good

881 - 960

Good

721 - 880

Poor

561 - 720

Very poor

0 - 560

Equifax

Excellent

Very good

Good

Poor

Very poor

Excellent

811 - 1000

Very good

671 - 810

Good

531 - 670

Poor

439 - 530

Very poor

0 - 438

TransUnion

Excellent

Very good

Good

Poor

Very poor

Excellent

628 - 710

Very good

604 - 627

Good

566 - 603

Poor

551 - 565

Very poor

0 - 550

What does a bad credit score mean?

  • The lower your credit score is, the more difficult it could be to get a mortgage, credit card, personal loan, overdraft or car finance.
  • If an application is approved, you could be offered higher interest rates and a lower credit limit, based on the potential risk of offering you credit.
  • Bad credit might also affect your ability to get some jobs, e.g. in legal or financial services.

What causes a bad credit score?

Credit reference agencies collect information from public records, lenders and other service providers. Factors which could impact your credit score include:

Your borrowing history

Having limited experience with credit, or making mistakes with it in the past, could both result in a low credit score.

Arrears and missed, late or defaulted payments

Making payments on time demonstrates you’re a responsible borrower. In addition to credit repayments, things like utility bills also count.

How you manage accounts

Going over your agreed credit limits, or carrying a high amount of debt are just some of the things which could impact your credit score.

Two people looking out

If you have joint accounts

Things like bank accounts, mortgages and even utility bills may create a financial link between you and any joint account holders. This may impact your future credit eligibility if the joint account holder doesn’t have a good credit score. 

People you’re linked to financially will show on your credit record. If you’re no longer linked to someone, you could contact each credit reference agency to submit a notice of disassociation.

Credit applications

Whether or not you’re accepted, ‘hard’ credit searches may impact your credit score, especially if you make a number of full applications in a short period of time.

The electoral register

Being on the electoral roll is one way that your identity and home address can be confirmed, which could help to improve your credit score.

Keys in a door

Moving home

Your address links your financial activity and identity, helping to prevent fraud. Having the same address for a long period implies that your circumstances are reasonably stable.

Court records

Defaults, County Court Judgements (CCJs), Individual Voluntary Agreements (IVAs) and bankruptcy may negatively impact your credit score for up to 6 years.

How to build on a bad credit score

Anything you do will take time, but you could improve your credit score by:

  • Paying all bills on time –including credit repayments, utility and other household bills.
  • Manage accounts well – stay below your credit limits and try to reduce debit balances whenever possible.
  • Limit applications – whether or not you’re accepted, ‘hard’ credit searches could impact your credit score, especially if you make a number of full applications in a short period of time.
  • Register to vote – it may improve your credit score to be on the electoral register.

More about improving your credit score

How to check your credit score

It’s a good idea, especially if you’re planning an application, to check the details held by each credit reference agency. If any of their information is incorrect, you could submit a data dispute to the relevant agency, so they can investigate and update their records accordingly.

The agencies used by Lloyds Bank include TransUnion, Experian and Equifax.

Check Your Credit Score with Lloyds Bank

Key points about bad credit scores

A low credit score may limit your borrowing options, or make it harder to access credit at all.

  • Many factors contribute to a low credit score, including little or no credit history, missed payments, past financial difficulties, and even moving home regularly.
  • Credit reference agencies collect information from public records, lenders and other service providers, before generating a credit score. The measurement scale varies by agency.
  • You may be able to build your score in a number of ways, including making payments on time, managing accounts well, limiting new credit applications and registering to vote.
  • The information held by each agency may vary, so it could be worth reviewing your credit scores and reports with TransUnion, Experian and Equifax.

Where next?

Know where you stand with Lloyds Bank

Sign up for ‘Your Credit Score’ to see your rating with TransUnion. It’s free to check and won’t hurt your credit score.

More about Your Credit Score