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What it means if your credit score band is "Poor"

If your credit score falls into the "Poor" band in the UK, it means that your score is in the second-lowest credit score band on the Experian and TransUnion scale, and in the lowest band on the Equifax scale. In other words, it shows that you have a history of credit issues and may be viewed as a higher-risk borrower by lenders.

What does a “Poor” credit score mean?

In the UK, credit scores are put into different bands by the three major credit reference agencies: Experian, Equifax, and TransUnion. Each agency uses its own scoring system, but they all divide the scores into different bands.

Here are the bands for each agency:

  • Experian: Very Poor (0-560), Poor (561-720), Fair (721-880), Good (881-960), Excellent (961-999);
  • Equifax: Very Poor (0-438), Poor (439-530), Good (531-670), Very Good (671-810), Excellent (811-1,000);
  • TransUnion: Very Poor (0-550), Poor (551-565), Fair (566-603), Good (604-627), Excellent (628-710).

Because of this, if we’re talking about the Experian or TransUnion credit score ranges, a "Poor" credit score tells lenders that you have struggled with debt in the past and are still struggling with it. This is usually because of more serious issues – a large number of missed payments, perhaps even a few defaults, or maybe even a CCJ. Since it’s not the absolute lowest credit score band, it can also mean that you might be on the path to put these issues behind you as time passes.

However, if you’re looking at your Equifax credit score, you should treat “Poor” as you would treat “Very Poor” for Experian or TransUnion. It’s Equifax’s lowest credit score band, and it’s a signal that you should hold off entirely from taking any more debt perhaps for the next few years.

What does a “Poor” credit score mean for my finances?

Having a "Poor" Experian or TransUnion score means you are viewed as a high-risk borrower by lenders. This can have significant implications for your financial health. Here are some of the things that can happen:

  • Lenders may view you as a higher-risk borrower and be less likely to approve you for credit products.
  • If you are approved for credit, you may be offered higher interest rates, which can increase the cost of borrowing.
  • You may be offered lower credit limits, making it more difficult to pay an unexpected bill or deal with an emergency. Low credit limits can further damage your credit score, as well.
  • Landlords and mortgage lenders may view you as a higher-risk borrower and be less likely to approve you for a rental or mortgage.
  • Insurance providers may view you as a higher-risk borrower and charge higher premiums for car, home, or life insurance.

In other words, having a “Poor” credit score can mean that you’ll either get refused by most lenders or get the worst deals on the market. You might also be forced to only deal with less than reputable lenders, not trusted high-street banks.

The main challenge, however, will be the total cost of the loans. Poor credit credit cards and loans tend to have very high APRs, often above 50% per year. This can make your debt problem worse and add tens or even hundreds of thousands of pounds in extra costs over your lifetime.

This is why if you have poor credit you should approach debt in a very careful way:

  • Try to get help from family and friends first. You can use an app like Pigeon to structure these loans so you can treat them a bit more formally. It’s very important to not ruin your relationships as well.
  • Hold off from making new loan applications for a while, and try to avoid taking loans from lenders that advertise themselves as working with people with poor credit scores.
  • And don’t give up on your credit score; in fact, keep working on it.

The good news is that now there are many apps that can help you rebuild and repair credit. One such app is Wollit.

Wollit is available on both iOS and Android, and it reports your monthly subscription as loan repayment to all three main credit reference agencies, helping you improve and repair your credit history, which is the main factor that matters for your credit score.

On top of this, Wollit can also report your monthly rent payment to Experian. This can add another line in your credit report which shows lenders that, despite your poor credit score, you do pay your bills on time, helping you eventually reduce the impact of your past mistakes in your overall credit file.

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Terms apply. Results may vary. Improvements to your credit score are not guaranteed. Wollit Credit Builder plans are unregulated.