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Credit scores are different for each person. You can have an excellent, good, fair, poor or very poor credit rating depending on how you manage your money.


What is the difference between bad credit and your credit score?

Somone with no credit score does not have a credit history. Someone with a bad credit score has a credit history, it’s just not very good!

Credit scores are different for each person. You can have an excellent, good, fair, poor or very poor credit rating depending on how you manage your money. If you have never borrowed money, then it’s possible that you don’t have a credit rating. This is because you haven’t carried out enough financial transactions to build one up. Even though never having borrowed money should be a good thing, it isn’t usually the case. Lenders look at your credit file when you apply for a mortgage, loan or rental property. If you haven’t got a borrowing history then the lender has no idea about how you handle your finances.

You will be seen as a bigger risk than someone who has a searchable credit history because the lender can determine how payments have been made and whether or not that person is in financial difficulty. If you don’t have this information, a lender is likely to offer credit at higher interest rates and a low limit. They might even refuse your request.


How do lenders see my credit score?

When you make an application for credit, there will be an option giving the lender permission to obtain your credit report from a credit agency. Once they have the report they can see at a glance whether or not you have missed any loan payments, paid late or failed to pay at all. The file will also show County Court Judgements and Bankruptcy Orders.


Who are the credit agencies in the UK?

The UK’s main independant credit agencies are Callcredit, Equifax and Experian. They collect information from lenders about your spending habits and put them on your file. These agencies don’t lend money, they simply keep your information, update it and share it with lenders.


How is my credit score worked out?

Every company has a different way of working out a credit score. Lenders might look at the scores you have with a credit agency, but they will have their own ways of working out whether you are high or low risk. The credit agencies usually work out your score numerically, for example, 971 is one of the top scores while 550 is very poor. This means that if you have a poor rating with one company, you don’t necessarily have that rating with the other two. It won’t be drastically different, but you might have a poor score with one company and a fair score with another.


Is there a blacklist?

No, this is a myth. Lenders look at your credit score to determine whether or not to lend you money. Your credit report shows them how you are managing and this is what they base their own credit score on.


Does my bad credit stay on file indefinitely?

This is another common misconception, after six years it disappears. This includes County Court Judgements and Bankruptcy Orders. If you have paid off a County Court Judgement or  your bankruptcy is discharged, it will be on your file. Additionally, if you pay off a County Court Judgement within a month or less, it won’t ever appear on your file.



How can I see my credit score?

The three main agencies will send you your score if you sign up to their information schemes. This means they ask you to make a monthly payment of around £15 in exchange for regular updates and information about your credit file. Each one has a trial period of a month. The best way to get your score is to sign up and then cancel the membership.


Is this the same as my credit file?

No. Your credit file holds all the details of your financial transactions and doesn’t usually include a credit score. It is useful to have though as you might discover a mistake, something fraudulent or an account you’d forgotten to close.


How do I get my file?

If you sign up for the trial period, your file will be sent out to you as part of that deal. Otherwise, you can send £2 to each of the credit agencies for a snapshot of your file which will be enough for you to read through. Just type in Experian, Callcredit or Equifax and the information about how to access this information will available on their websites.


Can anyone get my file?

No. You have to give your permission. However, it is not a good idea to refuse a lender permission because they will simply refuse the credit.


If I have bad credit can I make my score better?

Yes. Make sure all your regular payments are made on time and don’t miss any. This will slowly build up your credit score. You can also get a credit card to help you; these are called ‘credit building’ credit cards. Use these to borrow a small amount of money each month and then pay it all off when the payment is due. If you do this regularly over time your score will improve.

Another thing to do is register as a voter which you can do online or by going into your local council. If you are on the electoral roll, a lender can validate your address more easily and it confirms that you have a permanent address which is essential for a good credit score.

If you are struggling for a loan due to your credit score, you may want to visit our poor credit loans page.

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Rebuilding your Credit Score with a Prepaid Credit Card

Ten ways you can get a poor Credit Score

What are Credit Builder Cards?

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