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How to avoid getting a poor credit history and what to do if you think you have one.
It is surprisingly easy to develop a poor credit history. Unfortunately, one you have one it becomes harder and harder to resolve the situation. Credit companies queue up to lend you money when you have a good credit rating and often do not need finance but they are less keen if you have a poor credit rating. This often leads people to resolrt to other sorts of borrowing with much higher interest repayments, which makes the loan more expensive and more difficult to pay off, increasing the chance of further problems.
How do you get a bad credit rating?
There are a number of ways of getting a bad credit rating, these include:
Why is a credit rating important?
All lenders will have what is known in the business as a lending score card. This is a series of factors which are taken into consideration when offering finance. Each lenders will use a different scorecard and your personal situation will result in different scores for each lender. Also each lender will have a different pass mark. As a general rule the higher the pass mark the cheaper it is to borrow the money.
How do I check out my credit rating?
There are two main credit reference companies in the UK. You are intitled to request that they show you the information they hold on you and correct any information that is not correct. They will make a charge to send you information on your credit file but it will be less than £10.
The companies are:
Once you have this information you will be able to see if there are any reasons why you have bad credit rating. If you do it is not the end of the world. Following these rules will improve the situation, but bewarned it will not recity the situation overnight.
What to do if you have a bad credit history