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

If your credit score falls into the "Very Poor" band in the UK, it means that your score is in the lowest credit score band on the Experian and TransUnion scale. Equifax doesn’t have this credit score range since its lowest one is “Poor”, but otherwise it means the same thing.

If your credit score is “Very Poor”, then it shows that you have a poor credit history and are considered very high-risk by lenders. Here’s what you need to do if you’re in this situation.

What does a “Very Poor” credit score mean?

In the UK, credit scores are categorised into different bands to help people understand their creditworthiness.

These bands are used by the three main credit reference agencies: Experian, Equifax, and TransUnion. Each agency has its own method of calculating credit scores, which can result in different scores for the same person.

A "Very Poor" credit score is the lowest possible rating given by the credit reference agencies. Your credit score is in this band if it’s below 560 for Experian and 550 for TransUnion. Equifax has a similar band called just “Poor” and it’s for scores below 438.

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

Having a "Very Poor" credit score can significantly harm your ability to secure loans, credit cards, and other financial products. Lenders view people with very poor credit scores as more likely to default on payments, which increases their risk. This can lead to:

  • Extremely high interest rates. We’ve seen APRs as high as 1,000% per year for loans targeted at people with very poor credit. This can make your debt problem much worse and potentially even send you down a debt spiral which you might find almost impossible to get out from.
  • Very limited options. Having a “Very Poor” credit score can mean that you’ll most likely get refused by the majority of lenders. Even if you get approved, it will only be by specialised lenders who offer bad credit loans with extremely high interest rates and short repayment periods.
  • Higher deposit requirements if you’re renting, or for opening an account with an utilities provider.
  • You might not be offered an overdraft line when you open a current bank account.
  • In extreme cases, you might even be refused a mobile phone contract if it comes with a premium phone.

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

  • Get help from family and friends first. If you just need a bit of cash, use an app like Pigeon to treat these loans a bit more formally so you can keep your relationships safe. If you need more support, discuss the option of them becoming your guarantors.
  • Stop making new credit applications for a while, and especially avoid taking payday loans or loans from “bad credit” lenders.
  • If your very poor credit is a result of a single event, add a Notice of Correction to your credit reports. This is a short 200-word note in which you can explain why something negative is on your credit report and give lenders some context into your situation. Lenders might understand if your default, for example, was because of job loss or illness.

However, the most important thing is that you take steps to rebuild your credit. The good news is that now there are many apps that can help you repair your credit score. 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 very poor credit score, you’re the kind of person who pays their bills on time.

Eventually, all of this will help you to reduce the impact of your past mistakes in your overall credit file. However, you need to know that it will take time. You might need to wait at least 2-3 years before becoming eligible for anything resembling a normal loan or credit card again. The important thing, though, is that you’ll get there.

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