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The Facts about Bad Credit

The Facts about Bad Credit

Introduction to credit

According to credit provider Vanquis, 1 in 4 consumers is worried about their ability to make repayments in the future. This in itself says a lot about the state of the economy and the pressure on household budgets. Often, missing payments on credit commitments cannot be avoided. However, when possible, you should do everything in your power to ensure they are your number one priority in order to maintain a healthy credit history.

When you miss a payment on a credit commitment such as a loan/mortgage, utility, subscription, or credit card this will leave a black mark on your credit file. Consistent missed payments or failure to contact lenders when in trouble could result in defaults being reported onto your file. Having missed payments and defaults on your credit file will damage your chances of being approved for credit in the future. Visit the website credit cafe to get detailed information.

What is a credit score?

A credit score is a number given (often ranging from 0 to 1000) based on a person’s credit history. Often lenders will have credit history criteria that the applicant must meet to proceed any further in the loan approval process.

Different lenders will have different credit history criteria, meaning that just because you’ve declined by one lender doesn’t mean you won’t be deemed eligible by another. Often the rate that a lender is offering their credit at will be a good indicator of the credit history criteria. Low-rate lenders will require the applicant to have a good credit history, while a lender offering high-rate credit will have more flexible lending criteria.

If you’re looking for the maximum cash value with a flexible payment plan that actually works, you could consider taking out a title loan. For example, the lenders at Montana Capital Car Title Loans understand that applicants often have less than perfect credit, and that’s okay! Their loan approvals are based on your ability to pay back the loan, regardless of whether you have bad credit or not. These types of loans help everyone get ahead in life, regardless of your credit score.

How did I get a bad credit score?

There are several ways in which you can damage your credit profile, here are just a few:

  • Late or Missed Payments – as outlined above, being late with or completely missing payments will lower your credit score. Missed payments will stay on your credit file for up to 6 years meaning while you may have forgotten about them; your credit score hasn’t!
  • Too Many Applications in a Short Space of Time – although you may not know it, making multiple applications in quick succession will damage your chances of being approved for credit in the future. This is because it will show financial desperation; a trait that lenders will view as ‘high risk’.
  • Exceeding Credit or Overdraft Limits–exceeding credit limits on credit cards or overdraft limits will indicate to prospective lenders that your finances are spiraling out of control; again, labeling you as a ‘high risk’ customer.
  • Not Being Registered on the Electoral Roll – lenders will often use the electoral roll to prove an applicant’s ID and/or Address. Failure to appear on the electoral roll will often mean your application is declined at the first hurdle.

Can I Boost my Credit Score?

Fortunately, you can boost your credit score, here’s how:

  • Pay off any arrears you have on credit commitments and ensure that you keep up to date on all payments.
  • Register on the electoral roll at your current address at your current address
  • Leave at least three months between making credit applications (especially if you have been declined)
  • Regularly check your credit file to see if it is improving and to look for any errors that may be on there by mistake.

If you are looking to improve your credit score then you could also look to apply for a credit builder card. These are designed to help establish or rebuild your credit history however their success does depend on your ability to manage the repayments.

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