There are millions of people around the world who suffer from bad credit. If you have bad credit, don’t panic. Many things can make your credit bad, but there are also many ways to turn that around and ways to get by in the meantime.
First, it’s important to remember that there is no such thing as an overall credit score, nor a list that bars you from financial institutions. Each company, institute and agency will give you a score based on your credit history, and this is what determines whether or not they will give you a loan.
That said, what are some common reasons for a bad ‘credit rating’?
Many possible factors can contribute to a bad credit score, and generally speaking it will be a combination of several that will see you denied a loan. Some of the reasons that come up most regularly are:
• Failing to adhere to the terms of a credit agreement. This can put a serious black mark against your credit history and includes late or missed credit card or loan repayments.
• Making the minimum repayments on a debt. It can seem a little unfair since you are technically adhering to the rules. However, it can cause lenders to fear that you may be struggling financially.
• Declaring bankruptcy. The chances are if you’ve declared bankruptcy, you won’t be asking yourself why you have bad credit, but it’s still a surefire way to leave a mark on your record.
• Having a County Court Judgement filed against you. This can happen if you, as a borrower, fail to make repayments on a debt.
• Never having any debt. This one seems absurdly counter-intuitive, but makes sense when you think about it — there is no record of you being able to pay back loans. While you may have the finances to do so, there is no evidence that you will.
Now you may have a better idea of why you’ve been told you have a bad credit rating, but you’re no closer to actually fixing it. So, let’s look at what you can do in the meantime if you need an emergency financial boost and some ways to bump that score up.
Despite having bad credit, you can still borrow — you just have to find the right lender. There are plenty of bad credit loans out there to help you through leaner times or unexpected emergencies, just make sure your loan matches your financial situation. Additionally, there are specifically designed credit cards that will help you start building your score back up.
It isn’t just specially-designed tools that can help, however, since there are plenty of actions you can take now. First, make sure that it isn’t a mistake. It could be as simple as an error on your application or possibly something more sinister in your credit records such as identity theft. Second, start paying any and all bills you have on time. If you think you aren’t able to, contact your creditors to see what your next steps should be. Finally, don’t shop around — applying to loads of loans and suffering multiple rejections can worsen your score.
You need to analyze how you got a bad rating and what you need to do to change that. Then, figure out if you need a loan right now and if so how to get it. Finally, make a plan for how to move forward to be in a better financial position next time you look for a loan or credit card.