Money Matters: What To Do If You Have Bad Credit

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Have you struggled with debts in the past? Have you missed payments on store cards, credit cards or loans? Or have you come unstuck trying to pay rent or mortgage fees? If you have bad credit, you may be anxious that you’ll never be able to borrow again or build up your credit score. But this isn’t the case. Yes, bad credit can set you back, but there are positive steps you can take.

Understanding your credit score
Your credit score is a rating, which banks and lenders use to assess the risk you pose when applying for financial products, such as loans. If you have a low score, you’re less likely to be offered preferential rates, and you may struggle to even get a loan or a mortgage. If you have a high score, this means that you resent a lower risk to the lender, and you should have access to the best interest rates. A low score is usually classed as 350 or lower while a high score is around 850.

If you have bad credit, this will affect your credit rating. If you’ve defaulted on payments in the past, you have outstanding debts or you have faced legal charges, these will all lower your credit score. It’s also essential to make sure that you’re listed on the electoral register before you apply for a loan. If you’re not, you may be rejected regardless of your credit history.

Improving your credit rating
If you have a low credit score, it is possible to increase it. If you pay off loans and credit cards and you can cover the cost of monthly outgoings, such as a mobile phone contract, for example, this will improve your rating. It’s important that your account is active. If you’ve never taken out a loan or had a credit card, your score may be low even if you don’t have debts. This is because you haven’t shown that you’re able to repay money in the past.

Borrowing options
Many lenders won’t agree to providing loans for applicants with bad credit. However, there are lenders out there that offer specialist personal loans. If you are considering a loan of any kind, don’t rush into making a decision. It’s advisable to discuss your options with a financial adviser and compare different offers. If you rush into something, you may be signing up for something without fully understanding the terms and conditions. Always make sure you understand what you’re getting yourself into. How much are you going to pay back and how often? How long does the repayment process take? Ensure that you can afford the repayments before you sign up. The last thing you want is to fall behind or stretch yourself too far.

It’s often very easy to get into trouble when it comes to spending. Sometimes, it’s hard to balance the books, and before you know it, you’re struggling to pay your rent, and you’ve missed payments on a loan or credit card. If you’ve had problems in the past, it’s never too early to start preparing for the future. A bad credit rating can make life harder, but it’s possible to improve your score. Keep up to date with payments, and use your account on a regular basis. If you want to borrow money, there are lenders out there who offer loans to those with poor credit. If you are taking out a loan, tread carefully. Make sure you read the small print and seek advice first.

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