Bad Credit History – A Brief Guide

Speak to any random person on the street about their credit history and the chances are that most of them wouldn’t be able to tell you what their credit score was. And why? Because it’s just not something that’s immediately obvious; in fact, most people go through life assuming that if they ever wanted credit, they’d get it without any trouble. The truth, however, is rather more bleak – of all the people you’d stop to talk to, the odds are that 1 in every 4 people stopped would be suffering from a bad credit history. Surprised? Considering the current recession biting everyone in the pocket, you shouldn’t be…Unfortunately, it’s not all that difficult to find yourself with a bad credit history since a great many things can nibble away at your credit rating without you even realising it. Of course, some of the causes are rather obvious: for instance, if you take out a large loan and then decide to miss a few monthly payments for no good reason, fail to discuss it with your loan provider and then ultimately default on the entire amount, it’s incredibly likely that you’ll end up with a bad credit history. The same goes for failing to pay off a mortgage and having your house repossessed, taking out credit cards and then not paying back the money spent on them, earning County Court Judgements (CCJs) or declaring yourself bankrupt – all fairly obvious reasons for bad credit, since they’re all rather extreme and not normally something that most of us would deliberately do.However, it’s often the accidental problems that end up leaving the stain of bad credit on your financial history. Many of us, for instance, may have missed paying a utility bill on time purely by mistake and found ourselves in receipt of a ‘red bill’ demanding payment, which counts – albeit in a tiny way – towards how the big credit reference agencies like Experian and Equifax view you as being responsible with your finances. The same goes for accidentally going overdrawn on your bank account (incurring charges in the process) or overspending on your credit card; even if you correct it shortly after the event, it still gets recorded on your credit history. And perhaps most importantly if you’re currently in the market for a loan, constant applications and rejections for loans in a short period of time can result in your credit score being devalued, since the repeated checks carried out on your credit history for each application raise red flags to lenders and loan providers.Thankfully, there are plenty of ways to prevent getting bad credit: pay your bills on time, keep your borrowing to a minimum and generally try to live within your means. And even if you do get a bad credit history, it’s not the end of the world – thanks to the creation of Bad Credit Loans and credit cards designed expressly for people with bad credit, it’s possible to repair even the worst credit history over time. So long as you can act responsibly with your money, anything’s possible…In SummaryBad credit history…Affect nearly 25% of all credit-eligible people in the UK today
Is easier to be burdened with than you’d think
Can prevent you getting credit or loans in the future
Is avoidable if you pay bills on time and stay within your financial limits
Can be repaired with Bad Credit Loans and be being responsible with your moneyCopyright: Individual Finance, 2010