8 November, 2021
What are some of the reasons that my credit score is low?
Late/missed payments – Your payment history makes up the biggest portion of your overall credit score accounting for around 40% of your TransUnion score. regularly missing payments, paying late or not paying your agreed amount can result in a default on your credit report which will lower your score.
Credit Utilisation – Your credit utilisation is how much of your overall credit you are using. Credit utilisation is the second most important part of your credit score. It makes up 30% of your TransUnion credit score. Using over 20% of your available credit negatively affects your credit score.
Applying for a lot of credit – Every time you make a credit application, it appears on your credit report as a hard search. If you get a lot of hard searches, it shows that you are applying for a lot of credit and possibly being denied by a lot of lenders. This implies that you are desperate for credit.
Having little or no credit history – If you have never had credit before, you have no way of proving how you manage credit which is what lenders are looking for when they view your credit report. You have to actually have credit to build a good credit score, granted that you use it responsibly.
Bankruptcies, CCJ’s, IVA’s and DMP’s – Having Bankruptcies, County Court Judgements, Individual Voluntary Agreements and Debt Management Plans on your credit report is a big indication that you struggle to manage your debts and haven’t paid them back. This will drastically decrease your credit score.
What should I do if my credit score has been knocked?
The first thing to do would be to find out why your credit score is being hurt. Checking your credit report will tell you what the issue is whether it be your payment history or how much of your credit you are using. Of course, this can take time to build back up however there are a few easy fixes you can do.
Close old accounts that are no longer in use – If you have a lot of open credit accounts, whether you use them or not, this can be a red flag to lenders. You might also have previously been affiliated with someone who has bad credit which can affect your chances of being accepted for credit. If you have old joint accounts that are no longer in use, close them.
Check your credit report for errors - You may look on your credit report and notice that there is a mistake in the name used on your report or a mistake with your address. If this is the case, make sure to get this amended and check that all your accounts are shown on your report. If you have used different names or addresses for different accounts, these won’t all be shown on your report and some of those missing accounts could have a positive impact on your score.
Register on the electoral roll – Registering to vote is a very simple way to improve your credit score. Being on the electoral register helps lenders confirm your identity and prevent things like fraud and identity theft.
Stop applying for credit – You will need to work on other parts of your credit score alongside this such as paying off any outstanding debts as this won’t improve your score alone, but it will help prevent it getting worse as each application can be seen on your report.
If you have noticed that your credit score has been negatively impacted and want to know what you can do to improve it, have a read through our how to improve your credit score guide at the link below.
Editorial Disclaimer: This article was updated 02.11.2021
Opinions expressed here are the author's alone, and not those of any bank, credit card issuer or any other company. This article has not been reviewed, approved, or otherwise endorsed by any of these organisations. NB: The information on this page does not constitute financial advice, please do your own research to ensure that the product / service is right for your individual circumstances.