How to fix a bad credit score

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Fixing bad credit is a task that requires patience, persistence, and a clear step by-step plan to work through.

There are some immediate actions you can take, but rebuilding your credit rating mainly comes from careful borrowing and demonstrating consistent, good repayment behaviour over time.


Step 1 – Understand what the negative parts of your credit history are

Repairing credit is very important, as your credit history is used to determine if you should be allowed to borrow money in the future. The nature of your credit history, and how good or bad it is, can impact everything from the kind of credit products you’re likely to be approved for, how much you can borrow, and the interest rates available to you.

The better your position with your credit history, the more choice you’ll have and the better deals you’ll be able to secure when you do need to borrow money. Here, we’ve taken a look at how to repair bad credit with the goal of securing a better financial future for yourself.

The first step when fixing bad credit is to understand what the negative parts of your credit history are and how much work needs to be done for you to get back to a positive place. This means first, checking your credit rating to understand, broadly, how your credit history may be viewed by lenders you apply to, then next, accessing a copy of your credit report to dig into all of your history and understand what’s counting against you and how badly.

You can choose to get this from a free service such as Clearscore, or you may also choose to use a paid subscription service, which will come with regular updates on changes to your credit file from one of the main Credit Reference Agencies – Experian, Equifax or TransUnion. There is usually a free trial period for these, so that you can try out the service and make sure it’ll be valuable to you before you spend any money.

Both paid and free services provide a rundown of your credit history and also provide you with a credit score. This is calculated based on your history to show you, overall, how your financial behaviour stacks up. This can also help you to understand how lenders you apply to will view your application, and help you to find lenders who are likely to accept your application given your circumstances.

Using all of this information, you can work out where you need to make improvements to increase your score and access the kinds of credit products and offers you want to be able to use.

What is a good credit rating needed for?

Your credit history is checked when you apply for a number of financial products, including but not limited to:

  • A mortgage
  • Car finance
  • A mobile phone contract
  • Short-term loans
  • Buy now, pay later deals
  • Credit cards and store cards
  • Personal loans
  • Rental agreements
  • Insurance
  • Some employers
  • Utility services – such as your gas and electric provider

When you apply for credit products, the lender will carry out a credit check against you by searching your credit report. They’ll be looking for indicators that you may not pay back what you’ve borrowed, such as defaults on other accounts, late or missed payments recorded and any other evidence that you’ve mismanaged your money in the past.

If you have a good credit rating, then you won’t have any of these things in your credit report, or if you do, they’ll be old or very infrequent.

What is considered to be a good credit rating?

The score or rating you are given on your credit report depends on the Credit Reference Agency you use. Each agency uses a different scoring system and scale, and when you apply for credit from a lender, they will use their own system to decide whether or not to approve your application, too.

The scores you see from Credit Reference Agencies should simply be viewed as a useful impression of how a lender is likely to view your credit history, not an indisputable truth. Here are some examples of what good to perfect scores look like with each of the Credit Reference Agencies:

  • Experian – A good score is anything between 880 and 999
  • Equifax – Scoring between 420 and 700 is a good score
  • TransUnion and Credit Karma – Scoring 4 or 5 is considered to be good

Remember, your score isn’t necessarily the most important thing – resolving negative markers on your report and ensuring credit is paid back on time and in full improves your credit history as a whole.

Step 2 – How to go about fixing bad credit

Follow these steps to improve your credit rating. It’s important to bear in mind that these aren’t quick fixes – repairing credit is a matter of demonstrating good borrowing behaviour over time. It’s not possible to erase bad credit overnight, and it may at times seem like it’s not worth the effort but keep going. Be patient and persistent.
It’s important to take steps to improve your credit now, to maximise your chances of being accepted for credit like mortgages further down the line. Here are some ways to repair your credit score and establish a good credit history over time.

  • Ensure payments on existing credit are made on time – Demonstrating your ability to repay what you owe on time is one of the key things that lenders look for, so make sure any credit agreements you have outstanding are being paid on time and in full.
  • Register on the electoral roll – Whether you vote or not is your choice, but registering on the electoral roll makes it easier for lenders to verify your address and can improve your chances of being accepted for credit. Click here to register.
  • Check for any mistakes on your credit report – Carefully comb through your report to ensure there are no mistakes on there. Make sure that all of the accounts listed are shown accurately – if you’ve recently paid off and closed an account, is this up to date?
    In particular, check that the loan amounts listed are all correct, and that the name and address details registered against each account are all accurate, and the same. Discrepancies between accounts can – and will – be picked up on by lenders and could be a cause for concern for them.
  • Look for fraudulent activity on your report – If you haven’t checked your credit report in a while, make sure that as you review it, you recognise all the accounts listed. If you see anything you’re not sure about, then this could be a fraudulent application or account.
    By this we mean that you did not take out or apply for that credit product, but another person has taken it out in your name. If you spot any, get in touch with the lender immediately and raise a report with Action Fraud. You can also get in touch with the Credit Reference Agency you are using and ask them to make a note on your report.
  • Look to see if you’re linked with anyone financially – If you take a loan out jointly with somebody else, like a mortgage or a joint bank account, this will link you to that person financially.
    If their credit rating is poor, this may impact you too. If the credit has been repaid or the account no longer needed, close this and ask that they are removed from your report as a financial association.
  • Try to pay off larger amounts of debt – Focus on the biggest and most expensive debt amounts first, as these will be having the biggest impact on your credit rating.
  • Avoid moving home a lot – We understand that moving home isn’t always your choice, but if you are able to set down roots and can avoid moving too much in a short space of time this will look better on your credit report.
    Credit Reference Agencies keep a history of your address for the past six years, so that they can provide lenders with this information to give a good overview of your situation to them.
  • Check for defaults or CCJs – In the UK, if you have accounts that are in default, or a lender has registered a CCJ to recoup what you owe to them, then these will be listed on your credit report and they will remain there for six years from the day they were issued.
    If you have since settled the debts that these markers relate to, then if you speak to your lender they may remove them as a gesture of goodwill. If these are active markers, though, they will not be removed until the time limit has passed or you repay the debt – whichever is sooner.
    If you’re experiencing financial difficulty and need advice to manage or clear your debts, we recommend you seek free and impartial debt advice from a not-for-profit service such as Citizen’s Advice or National Debtline.
  • Add a notice of correction if your circumstances have changed – A notice of correction is a 200-word statement that details the reason behind anything listed on your credit report. One example of when you may want to do this is if you lost your job and were unable to make payments on your bills and got into debt. You can have a notice of correction added once you are back in work to explain what happened.

Another situation in which you may want to consider adding a notice of correction is if you were unwell or have been in hospital and were unable to work and fell behind on bills as a result. Adding a notice of correction doesn’t guarantee you’ll be accepted for future credit but it will be shared with lenders you apply to for their consideration.

How do I report a mistake on my credit report?

If you spot anything on your credit report that shouldn’t be there, it’s very important to raise it. A mistake may seem small, but can have a surprising impact on your ability to get credit when you need it.

First and foremost, you should contact the company that has placed the incorrect record on your credit report, and speak to them about the inaccurate record. You can also raise the mistake with the Credit Reference Agency. If you choose this route, they will then mark the record in question as disputed, and then they have 28 days to either remove the information or tell you why it cannot be taken out of your report.

Before raising any ‘mistakes’ it’s very important that you check them carefully and do some research before appealing. For instance, some lenders may have a parent company that records on your credit file are registered under, or you may have forgotten about an old credit account. If you raise a dispute about something that is not a mistake, then it will not be removed.

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Want to know more about loans and credit? Then take a look at our other in-depth guides below.