What is a Bad Credit Score?

As you might already be aware, your credit score is something unique to you and your financial history, but the quality – and the benefits – of this score can vary. While having a ‘good credit’ score is obviously ideal, circumstances can result in you having a ‘bad credit’ score.

This negative-sounding name can obviously set alarm bells ringing and can have implications on your ability to borrow from certain lenders, however the situation might not be as ‘bad’ as you first thought – and there are steps to take to improve the situation.

So, to help and set the record straight, we’ve detailed our answer to the question ‘what is a bad credit score?’ and offered some additional advice around the reality of having bad credit.

Bad Credit Explained

The three main credit reference agencies have their own scoring systems and any credit score they calculate which is below a certain figure will be classed by them as ‘fair’ or ‘bad’ or ‘poor’ credit.

Why do I Have Bad Credit?

There are a number of reasons why you might have bad credit, these can include:

  • You’ve missed payments on loans, credit cards and other bills.
  • You are being, or have been, declared bankrupt.
  • You are only able to make minimal repayments on your debts.

Why Has My Credit Score Gone Down?

It might be that you used to have a good credit rating, but a recent assessment has downgraded this to ‘bad’ or ‘poor’ and you’re subsequently left scratching your head and wondering ‘Why has my credit score gone down?’.

As frustrating as this is, you may wish to reconsider some of the above reasons for having bad credit and look into whether any of these factors have since affected you and your finances.

How Long does Bad Credit Last?

Building up good credit is something that can take time and as such there’s no definitive answer to the question ‘How long does bad credit last?’.

It’s really more about the steps you take to actively improve your score. Here are a few suggestions of what you can do:

  • Make sure that any bills are paid on time.
  • Register onto the electoral roll (if you haven’t already).
  • Update or correct any mistakes on your file (if applicable).
  • See if you can change or close any joint accounts where the other account holder has bad credit.
  • Keep an eye on your credit report so as you can spot any issues quickly

The above approaches should be effective solutions for improving your credit score over time.

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