A credit score reflects your past borrowing and repayment history. Hing a low credit score can make it challenging to secure a range of financial services as lenders may view you as higher risk.
Below is a breakdown of the UK credit reference agency Equifax's credit score bands.
There are two other UK credit reference agencies with their own banding: Experian and TransUnion. Each credit reference agency uses slightly different scales, and your score will certainly be different for each. However, they should all broadly agree with one another. In other words, if you've got a poor credit score on Experian's report, you'll likely he a similarly low score with Equifax, even if the numbers are different.
There are several reasons why people might he a low credit scoreOne common reason is a limited credit history. For instance, if you're new to credit or hen't had experience paying bills or direct debits, lenders may he insufficient data to assess your history as a borrower.
Other factors that can impact your credit score negatively include missed or late payments, or using up a lot of your ailable credit limit (this is known as a high credit utilisation rate). If you've made several applications for credit in a short space of time, this can also he a negative impact on your credit rating.