How Does Bad Credit Affect You
When Applying for a Loan?
Loan suppliers all work differently in developing their credit score or rating method that they use to decide whether to just accept you for a loan. They'll use not only the general public information on the market to them via the most credit bureaus like Experian or Equifax however a score card supported their attitude to lending and the risk they're ready to take. If you have got an unhealthy credit history then the chances are that almost all mainstream lenders can turn you down after you apply to borrow cash. This leads individuals to question their credit standing. So let us take a look at what is bad credit and the ABC’s of establishing good credit history.
There is no blacklist file that folks find themselves on as typically suggested but clearly having 'Bad Credit' can impact your ability to borrow on a mortgage or loan. If you fail to keep to the terms of previous or existing credit agreement then info about this can appear on your credit file. For instance, making credit card or loan repayments late, or missing them altogether, can impede your ability to borrow in future.
If you have been declared bankrupt, entered into an individual Voluntary Arrangement (IVA) or having a County Court Judgement (CCJ) registered against you this can badly have an effect on your credit rating and the selection of finance choices on the market to you.
To a lesser degree your credit file may be affected if you only build the minimum compensation on your credit card monthly, because it could lead lenders to assume you're troubled to clear your loans or credit.
Now that you know what is bad credit and how it affects you. So what do you do to maintain or repair your bad credit? The ABC’s of establishing good credit includes some of the following steps.
Home ownership status - lenders typically prefer to lend to home homeowners instead of tenants and younger customers living with parents.
Employment - Being employed instead of self employed is preferred by some lenders. Additionally, having a stable job history with not too many changes can mean you'll be scored higher.
Other credit balances available - If you have got unused credit cards then contemplate closing the account as having large unused credit and potential to borrow is also seen as a possible risk to new lenders.
Pay all bills on time - more and more businesses and agencies as well as council tax may share your payment history
Register on the voters roll - It doesn't mean you have got to vote! It may actually facilitate though and means that you're traceable for specific lenders
If you have got unhealthy credit then the types of loan on the market are possible to be restricted to specialist suppliers who can look to mitigate their risk and exposure whilst charging in some cases a higher rate of interest than the big banks for instance who as alluded to above are trying to cherry pick the sort of client they lend to. Some lenders for instance may off a loan with no full credit check however look for a supporter, others can explore for security in assets or property.
ABCs of Establishing Good Credit