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Is it possible to recover from bad credit?

If you have experienced financial difficulties in your life, either recently or in the more distant past, this can have a negative effect on your credit score. And if you have a bad credit score, this could then prevent you from borrowing money, for example loans, credit cards or mortgages.

In this article we take a look at:

  • What is your credit score?
  • How can you find out your credit score?
  • How can you improve your credit score?


What is your credit score?

Your credit score is a 3-digit rating that gives an indication of how reliable you are when it comes to handling money. It is based on your financial history, including your track record of repaying money that you owe, for example present and past loans, credit cards and mortgages.

Your credit score is determined by the three main Credit Reporting Agencies (CRAs) in the UK: Experian, Transunion or Equifax. They each have slightly different numbering systems, but as a guide, the following numbers represent a very good credit score:

Experian: 881 or above (out of 999)

TransUnion: 604 or above (out of 710)

Equifax: 420 or above (out of 700)


How can you find out your credit score?

It is important that you are aware of your current credit score, particularly if you are planning to take out any kind of finance arrangement such as a loan, credit card or mortgage. If you know your credit score in advance it means that there are no nasty surprises around the corner. And if you do identify problems with your credit score, there are things that you can do to improve it – which we will look at later in this article.

You can find out your credit score for free from the following links:


TransUnion – via Credit Karma

Equifax – via Clear Score

If you want to find out more details about the information on which your credit score is being based, you will also need to access your full credit report. To do this you may need to set up a subscription with one of the CRAs but you are usually able to get the first month free, which you can then cancel before the end of the month so that you do not have to pay.


How can you improve your credit score?

If your credit score is not as good as you would want it to be, there are several things that you can do to start improving it. To do this it is worth getting hold of your full credit report so that you can check all the information on it, and work out why you have bad credit.

Once you have your full credit report, here’s what to do:

  • Check your credit report thoroughly for errors. You need to make sure that your information is correct and up to date, including personal information such as your address and date of birth as well as financial information. If you find any errors, contact the CRA. It could be a mistake, but also be aware of the possibility of identity theft, ie someone applying for credit in your name.
  • Make sure that you are on the electoral roll at your current address. This enables lenders to confirm your identity, which can help to increase your credit score. You can register on the Gov UK website.
  • Make sure that your report does not show you as having financial links to anyone if this is no longer the case. For example, if your ex-partner has a poor credit score and you are shown as still being linked to them financially, this can bring your score down too.
  • Check that you are paying all your bills on time, including household bills and phone bills as well as loans and credit cards. Even a couple of missed or late payments can quickly start to bring down your credit score. It’s a good idea to set up direct debits for all regular bills so that payments go out on time and there is no risk of you forgetting to pay.
  • Work out your overall level of debt. Your Debt to Income – DTI – ratio is important here. This refers to how much of your income you are using to repay debt. If your DTI is over 20% you may find it more difficult to get credit. This is not something that you can change overnight, but be aware that if you have a high DTI and/or are close to your current credit limits, many lenders would be wary about you taking on further debt. 
  • Consider starting a new affordable financial arrangement to prove that you are now able to make loan repayments reliably. 


We hope that the above information is a useful start in recovering from a poor credit score and making a fresh financial start. And if you are trying to reorganise your current financial commitments, remember that Loans 2 Go offers loans for bad credit that may be able to help.


 For more helpful financial and lifestyle tips, visit us here again soon at Loans 2 Go.