How do people get bad credit

These days there are many people across the UK that have bad credit, and sadly it is far easier to damage your credit than it is to repair it. Anyone that has damaged credit or knows someone with damaged credit will know that this can result in severe difficulties when it comes to securing any form of finance in the future. Borrowing can become far more expensive, far more difficult, and even impossible depending on the level of damage to your credit.

Although you can repair your credit over time this can be a time consuming and laborious task so you should not expect any overnight miracles. The best way to avoid the pitfalls of bad credit is to try and avoid damaging your credit in the first place, although this is becoming increasingly difficult in today’s economic climate. One of the ways to increase your chances of maintaining good credit is to familiarise yourself with the ways in which credit can be damaged so that you know what to do and what to avoid in order to keep your credit on track.

Paying bills on time

Of course, we all come across the odd occasion when we run short of money or forget to pay a bill, and the payment ends up going through a little late. However, if you do this on a regular basis you could find that your credit rating quickly declines, as these late payments will be logged on your credit file and may adversely affect your credit score.

Late or missed debt repayments

Keeping up with repayments on debts is very important. If you have secured debts it is vitally important that you keep up with repayments, as otherwise you could start losing assets such as your home. However, even with unsecured debts it is important that you do not make regular late repayments or miss repayments, as this will be logged on your credit report and adversely affect your credit, and will also result in you incurring hefty charges.

No credit

It is important to remember that having no credit has the same effect has having bad credit in terms of being able to get affordable finance. It is difficult for lenders to assess whether you are a viable risk if you have no credit history or rating, which means that many will charge you a higher rate or refuse you credit. Therefore you should try and kick start your credit as early on as possible, even whilst still at college or university, in order to ensure that you build up good credit for your future.

Checking your credit report

There is a chance that you could end up with a bad credit rating through no fault of your own. Mistakes, inaccurate information, and even attempted or successful fraud using your identity could result in your credit rating being damaged, and you could end up paying the price for something that is not actually your fault. You can reduce the risk of this happening by regularly checking your credit report and looking out for inaccurate, wrong, or out of date information, which you will then need to query in order to get it changed. Also, look out for any suspicious transactions on your report, as this may indicate fraudulent activity that may have affected your credit rating.

Adverse credit by association

You may find that your credit rating has taken a battering not because of anything that you have done but because of where you live. If the person that lived in your property before, or perhaps a relation that lives or used to live in the property, had or has a bad credit rating you may find that this reflects on your report. Check and see whether this is the case, and if so contact the credit reporting agencies to get this rectified.

Applying for credit

You should also remember that whenever you apply for any form of credit this is logged on your credit report. If your application for finance is then rejected this is also logged on your report, and results in your credit rating taking a knock. Each time you are turned down for credit your rating is damaged further, so you need to ensure that you do not make mass applications for credit, particularly if you feel that you may be turned down or have already been turned down. You should leave at least three months before applying for credit again following rejection, and in the meantime order a copy of your credit report to try and determine why you may have been turned down in the first place.

The above are all factors that can play a part in damaging your credit history and rating, and this can severely impact upon your financial future. It is therefore important to keep your eye on such activities in order to ensure that your credit does not sustain serious damage that could have a knock on effect on your future