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This is calculated by one of three Credit Reference Agencies – TransUnion, Equifax or Experian – depending on who you choose to check your credit report with. Your credit score is a number that represents something very important – your financial history. The score you’re shown by Credit Reference Agencies is an interpretation of your financial history, and shows you how favourably, or unfavourably, as the case may be, lenders are likely to view you if you apply for credit.
A credit score is an interpretation of your financial history, this being made up of each record on your credit report. In particular, your credit report includes information about what you’ve borrowed and how you have done when paying it back.
If you have a credit score that the Credit Reference Agency you’re using classifies as “bad” or “poor”, then this is usually caused by negative behaviour in your financial past. A late payment or defaulted account will impact your credit score. Any type of insolvency – such as bankruptcy, an individual voluntary arrangement (IVA) or debt relief order (DRO) will also affect your score. Something as small as incorrect details or not being listed on the electoral can also have a negative impact.
What number constitutes a “bad” credit score varies between Credit Reference Agencies. Every Credit Reference Agency scores differently. For example, Experian scores you out of 999 while Equifax scores out of 700. If you choose to use a free service, such as Credit Karma, the scoring system is very different, scoring you out of 5 – with 1 being a bad credit score number.
Let’s use Experian as an example. A score between 0 – 279, is in the very poor range. This means will likely struggle to find a lender who will accept your application for a loan or credit. There are some lenders for whom a very poor financial history is not an issue, but you may find yourself paying a higher interest rate or only able to borrow a very small amount.
No, each Credit Reference Agency provides a different score and interprets information differently. But each of the scores you receive should sit in the same sort of area – a good score on Equifax should mean you have an equivalent “good” score on Experian, for example.
A number of things factor into your credit score, but if it is low or poor it could be down to these issues:
A lot of credit products are listed on your credit report. These include:
A number of things are not found on your credit report that may surprise you.
That means these will not necessarily impact or contribute towards a bad credit score.
Representative Example: Borrowing: £1000 for 18 months, Total Repayable: £1853.43, Total Interest: £853.43, Interest Rate (Variable): 89.9%. Rates between 9.3% APR and 1721% APR – your no-obligation quote and APR will be based on your personal circumstances. Loan term lengths from 3 to 36 months. Subject to lender’s requirements and approval.
Sunny Loans is a registered trading name of Upward Finance Limited, who is an introducer appointed representative of Flux Funding Limited, who is a credit broker, not a lender. Loan repayment terms are 3-36 month loans.
Warning: Late repayment can cause you serious money problems. For help, go to www.moneyhelper.org.uk.
Representative 89% APR