While the interest rate you’re offered isn’t just based on your credit score, it’s one of the most important factors.
It’s all about risk. Your credit score tells lenders how well you’ve managed money in the past and whether you’re likely to make your new payments in full and on time. A good or excellent score will usually make you eligible for a low interest rate.
If you’ve missed payments or needed debt management support in the past, lenders might be concerned you won’t be a reliable borrower this time around and so will offer you a higher rate of interest to offset the extra risk.