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A bad credit rating is not a good thing to have
hanging over you. It can limit your borrowing
options on mortgages or even standard loans and
credit cards. The last things you need are local court judgments,
late payments or even bankruptcy notices on your
file, these will just add to your problems. Some
people have the elution that if you go bankrupt then
'that's fine', well it can hinder your financial
life for years to come.
In most cases, the
only means of credit available is through what is
known as the sub prime market, where borrowers are
charged high rates of interest to reflect the high
risk to the lender. Most lenders go through a main
credit agency for information on your financial
history;
Experian
is the main player within the lending market. They
gather credit information
from a number of sources, including the electoral
roll, county court judgments and bankruptcies. Every time you apply for
say, a credit card they will
have a record of it and this shows up on your free
credit report.
Remember credit
cards can give your credit ratings a boost as long
as you use them in a sensible manner, you can
even make money
out of a credit card company with cash back deals if
you pay the balance off each month. I currently get
0.5% cash back on all purchases made with my card
and have a standing order to pay it off each month,
this gives me a nice little payment just after
Christmas.
Under the data
protection act a lender must say why you have been
refused credit, this will be available for you to see on
your credit report. Many mistakes can be
made and it’s up to you to put it right before you
apply for that all important loan, credit card or
mortgage. There has never been such an important
time to have a so called 'clean slate' with lenders,
they will only go for the most trusted of borrowers
in the future after the disastrous banking mistakes
of 2008.
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