Bad Credit FAQs
Frequently asked questions about bad credit
What is a bad credit score?
Credit scores in the UK are not standardised. Instead, each credit reference agency (CRA) creates its own scoring system. The three main UK Credit Reference Agencies are: 1. Experian (scores out of 999) 2. Equifax (scores out of 1,000 — used to be 700) 3. TransUnion (scores out of 710) Each agency may give you a different score, even if the data is similar. A "Bad" Credit Score for each of the CRAs are as follows: Experian (out of 999): 0–560 = Poor Equifax (out of 1,000): 0–438 = Poor TransUnion (out of 710): 0–550 = Poor At Fair Finance we’re a direct lender for ‘financially excluded’ clients — we don’t turn you away just because your score is deemed “bad” because it is low. We are a sub-prime lender. This means that a lot of our customers apply for loans with Fair Finance because their credit history is not perfect, and they know that unlike the High Street lenders, we will consider their loan application. Our customers include everyday people with Defaults, CCJ and benefit only income. Although there is no guarantee of an improvement to a consumer’s credit score, repaying a Fair Finance loan in a timely fashion may improve your credit history — because we report on-time repayments to the main UK credit reference agencies helping you on your journey back to mainstream lending. At the same time, it should be noted that missing a loan repayment will be reported to the credit reference agencies and not only will this negatively impact your credit score it will make it harder for you to obtain credit in the future.
What causes bad credit?
There are a number of factors which could result in you having a bad credit score and therefore appear ‘risky’ to some lenders. These include:
- Missed or Late Payments
- Defaults and County Court Judgments (CCJs)
- High Credit Utilisation
- No Credit History
- Too Many Credit Applications
- Inconsistent or Incorrect Information
- Financial Associations with Someone with Bad Credit
As a responsible lender, we will look at your credit history, however we are more concerned with how you have managed your credit in recent times, say the past 12 months. We will also focus on your current income vs outgoings, to establish what your typical monthly disposable is, so one-off issues will rarely rule you out.
We also offer a free benefit checker to see if you are eligible for any government benefits assistance. In the last 12 months we have found over 100,000,000 in underclaimed benefits for our customers.
How long does bad credit stay on your file?
With the exception of ‘hard credit searches’ the majority of negative credit information, like missed/late payments, defaults and CCJs stay on your credit report for 6 years. Hard credit searches stays for 12 months and too many hard searches in a short period can lower your score. After 6 years items are automatically removed from your report. While negative marks do stay on your credit file, repaying your Fair Finance loan in a timely fashion will get reported too — so rebuilding your credit file is in your hands. We have designed flexible loans (with terms of 6–12 months, which you can choose subject to the monthly payment being affordable) for new customers so you can improve your credit history as long as you keep up with the repayments.
How to fix or improve bad credit?
Although it takes time, it’s 100% possible to improve your bad credit score with consistent action (and patience!) The top 10 things to do are:
- Register on the Electoral Roll
- Make All Payments On Time
- Reduce Credit Card Balances (Credit Utilisation)
- Don’t Apply for Too Much Credit at Once
- Consider a Credit Builder Card
- Keep Old Accounts Open (If Not Costly)
- Check Your Credit Reports for Errors
- Build a Thin File with Rent Reporting or Savings Tools
- Avoid Payday Loans
- Be Patient and Consistent
At Fair Finance our loans are a built-for-purpose credit-builder: every on time repayment helps build a positive credit history. At the same, we should point out that late or missed payments will be detrimental to your credit profile. We also signpost clients to budgeting tools, benefit-checkers and free debt-advice through MoneyHelper to support your wider finance journey.
Can you get credit or loans with bad credit?
Yes — Fair Finance is one such lender. We lend up to £3,000, even with CCJs or defaults. And unlike many sub-prime lenders, we keep rates competitive (no hidden fees, no late-payment penalties), and reinvest any surplus back into our services lending to more people who are in underserved communities.
Can you rent a home with bad credit?
Yes. It might be slightly more difficult as letting agents or landlords might ask for additional assurances but it is possible. It’s common for them to check your credit score, but they tend to focus more on your ability to pay rent than on your full credit history. Some additional requirements they may ask for include:
- A Larger Deposit
- 3-6 months Rent in Advance
- A Guarantor
- References
Improving your credit via timely loan repayment with Fair Finance can help you over time demonstrate stability to landlords. At the same, we should point out that late or missed payments will be detrimental to your credit profile and will not impress landlords. We emphasise transparent reporting, so housing applicants can show reliable repayment patterns — not just default flags.
Does checking your credit score lower it?
No. checking your own credit score (known as a soft search or soft check) is completely safe and does not lower your credit score. At Fair Finance we encourage customers to check their reports regularly and for free, to identify mistakes early — and of course our debt-advice team can support you, if needed.
What is a credit utilisation ratio and what’s ideal?
Your credit utilisation ratio shows how much of your available credit you’re currently using as a percentage. It mainly applies to types of revolving credit, such as credit cards. For example, if you have a credit card with a £1,000 limit and you’ve spent £400, then your utilisation is 40%. Credit utilisation is factored into your credit score. - Ideal credit utilisation: Under 30% - Excellent: Under 10% - Too High: Over 50% Alongside credit scores, we perform bank-statement analysis, so your real-life spending and management is identified. By conducting an affordability review we help customers manage their cashflow and avoid taking out loans that they cannot afford.
Will closing credit cards help my score?
Not usually. It may seem counterintuitive but in fact, closing down all your credit cards can sometimes hurt your credit score, depending on your situation. We underline long-term credit-building habits (like keeping stable accounts open), together with our loans, as a combination to rebuild credit files responsibly. Through free debt advice sites like MoneyHelper, customers can get help to review which accounts to keep and how to manage their long-term finances.
Can I remove negative information or dispute errors?
Yes, in fact you have a legal right to challenge inaccurate or incomplete information under the Data Protection Act. You can contact your chosen CRA to raise a dispute. Investigations normally take up to 28 days and if upheld they will update or remove it from your file. If the agency or lender refuses to correct a clear error, you can escalate the matter to the Financial Ombudsman Service. Repaying a Fair Finance loan in a timely fashion creates positive entries, to counterbalance or outweigh past negatives over time. Because we offer loans with terms up to 18 months, you can improve your credit file with repaid loans much quicker than with a traditional lender.
