What is a Bad Credit Score, and Can You Still Shop? The I Need Credit Guide

What is a Bad Credit Score?

In simple terms, a bad credit score indicates that lenders might see you as a higher risk when it comes to borrowing money. This is because your credit report – a detailed history of your borrowing and repayment habits – suggests you've had some difficulties in the past. These difficulties could include things like missed payments, defaulting on loans, county court judgments (CCJs), or even bankruptcy. Each major UK credit reference agency (Experian, Equifax, and TransUnion) has its own scoring system, but generally, lower scores mean a higher perceived risk. For instance, on Experian's 0-999 scale, a score below 720 might be considered 'poor' or 'very poor'.

Having a bad credit score doesn't mean you're a bad person; it simply means your financial history has some bumps that can make it harder to get approved for traditional credit products like credit cards, mortgages, or personal loans at favourable rates. Lenders use these scores to quickly assess your creditworthiness, helping them decide whether to lend to you and what interest rate to offer. It's an automated way for them to manage their risk, but it can certainly feel frustrating if you're trying to make a purchase and keep getting turned down.

How Do Credit Scores Work in the UK?

Credit scores are numerical summaries of the information held in your credit report. Your credit report details:

• Your Personal Information: Your name, current and previous addresses, and date of birth.
• Credit Accounts: Details of all your credit accounts, such as credit cards, loans, mortgages, and overdrafts. This includes how much you borrowed, your credit limit, and whether you've made payments on time.
• Payment History: A record of whether you've paid your bills on time or missed payments. Late or missed payments are a big red flag.
• Public Information: Things like CCJs, individual voluntary arrangements (IVAs), or bankruptcies.
• Searches: Records of applications for credit you've made. Too many 'hard searches' in a short period can sometimes lower your score.

Each of the three main agencies (Experian, Equifax, and TransUnion) gathers slightly different information and uses its own unique algorithm to calculate your score. This is why your score can vary between agencies. For example:

• Experian: Scores from 0 to 999. Under 720 is generally considered 'poor' or 'very poor'.
• Equifax: Scores from 0 to 1,000. Under 438 is often considered 'poor' or 'very poor'.
• TransUnion (formerly Callcredit): Scores from 0 to 710. Under 566 is usually 'poor' or 'very poor'.

It's worth checking your credit report with all three agencies periodically to ensure accuracy and to understand where you stand.

What Factors Can Lead to a Bad Credit Score?

Several factors can contribute to a low credit score:

• Missed or Late Payments: The most common cause. Even one missed payment can have an impact.
• Defaulting on Debts: Failing to repay a debt altogether is a serious issue.
• County Court Judgments (CCJs): These are court orders for you to pay back money you owe.
• Bankruptcy or IVAs: Formal insolvency procedures.
• High Credit Utilisation: Using a large proportion of your available credit limits can suggest you're over-reliant on credit.
• Too Many Credit Applications: Each 'hard search' can temporarily lower your score.
• Lack of Credit History: Paradoxically, having no credit history can also make it harder to get credit as lenders have nothing to assess.
• Association with Someone with Bad Credit: If you have joint accounts with someone who has a poor credit history, it can affect yours.
• Errors on Your Credit Report: Sometimes, mistakes happen! It's crucial to check your report and dispute any inaccuracies.

Can You Still Get Credit with a Bad Credit Score?

Yes, absolutely! While traditional lenders might be hesitant, there are still options available, especially for every day or emergency purchases. This is where solutions like TrustPay come in. TrustPay understands that everyone's financial journey can have its ups and downs. That's why it offers a different approach.

With TrustPay, you can get access to 0% APR store credit up to £1,200 to spend at Trusty Stores, and here's the key: there's no credit check. This means your past credit history, whether good or bad, won't stop you from getting the items you need. It's a straightforward way to spread the cost of your purchases without worrying about a traditional credit application and the impact it might have on your score.

Frequently asked questions

How long does a bad credit score last?

Most negative information, like missed payments or defaults, stays on your credit report for six years from the date of the event. CCJs also remain for six years. Bankruptcies can stay for six years, though sometimes longer depending on the circumstances. As time passes and you demonstrate more responsible financial behaviour, the impact of older negative entries lessens.

How can I improve my credit score?

Improving your credit score takes time and consistent effort. Key steps include making all payments on time, reducing your overall debt, keeping your credit utilisation low (ideally below 30% of your credit limit), registering on the electoral roll, and regularly checking your credit report for errors. Over time, these actions will help build a more positive credit history.

Does TrustPay affect my credit score?

No, TrustPay does not perform a credit check when you apply, and using TrustPay for your purchases will not appear on your credit report. This means it won't affect your credit score, either positively or negatively. It's a completely independent way to shop, designed to be accessible regardless of your credit history.

Shop with confidence and get the items you need today at Trusty Stores.