A Guide to Bad Credit

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Bad credit is often something that people hear about but they are not entirely sure what it is and if it affects them. Your credit history is a record of your responsible repayments of debts and your credit report is a record of your credit history which will look into a number of sources, such as banks, credit card companies, collection agencies and governments.

What is Bad Credit?

So, what is bad credit? You will have a bad credit rating if you haven’t paid your credit and other obligations on time or at all. A bad credit rating means that you will struggle to get approved for new credit and not receive the best rates. In the UK, there are three main credit rating referencing agencies where you can check your score: Experian, Equifax and Noddle. A good credit score will be 700+ with Experian, 660+ with Equifax and 3+ on a 1-5 rating. A lender will check your credit score when you apply to borrow money to determine whether or not you are a responsible borrower.

What Affects Credit Score?

There are many different factors that affect your credit score, including late payments, minimum payments, bankruptcy proceedings, CCJs, no financial history and frequency of credit applications. It is important to check your credit before applying for credit so that you can take steps to improve your rating if required. This is possible, but it can take some time so it is a good idea to check your credit rating

the electoral roll, closing down old accounts, making payments on time, building a credit history by using it for small amounts but often and cutting financial links to previous partners.

Credit For Those With A Bad Score

If you are denied credit, there are still options available to you in the form of credit cards for people with bad credit – these are available from places like Ocean Finance. In addition to allowing you access to credit, this also provides you with the ability to begin to rebuild your credit score so that you can get approved in the future and get access to the best rates.

Having a bad credit rating is not ideal and should be avoided at all costs through responsible borrowing. It is not the end of the world if you do have a bad rating, however, as you can always take steps to improve your credit score and get access to other financial products.