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Whatever risk people pose to a loans company, there are still possibilities
available to borrow some money, so do not give up just because you have
a bad credit rating. What does make a difference is the amount of interest
you will have to pay. You will get a bad credit rating if you have defaults
on repayments, mortgage arrears of county court judgements (CCJs). To
lenders, your past history is a flag to your reliability in repaying a
loan. Even if the problems you encountered in the past are over now, your
past is what's important. Should they choose to take that risk, they will
cover themselves by charging you more interest.
Loan providers use credit checking companies to find out your credit
rating when you apply for most financial products, but especially loans.
Most of Britain's adult population will feature in these files. Any CCJs
or other financial problems will show up on your credit record. Bear in
mind also that the credit checking company count people living at your
address as relevant to you. The reason for this is that some people have
been found to apply for a loan on behalf of someone else at their address
with a bad record, then transferring the money to them. So this trick
will not work any more! If you have a good record and are living with
someone with a bad record, beware that you may find trouble getting approved
for any financial products, whatever your relation to them.
It's also worth knowing that every time a search is performed on your
credit record, it leaves a "footprint" on it, and that has been
found to be negative for your credit rating. So, you could apply for store
credit, credit cards, hire purchase, loans, whatever, and it actually
harms your credit rating. You may never have financial problems, but you
should think hard before you apply for financial products. Your credit
rating and history will affect whether you get a loan, and the terms of
that loan.
In general, you will find it difficult to get approved for a loan by
a building society or bank should you have had recent financial problems.
These days, you can also apply to financial organizations that are perfectly
reputable and well established for loans that are based not on your past
history but on your current circumstances. In return though, you should
expect higher fees and interest rates.
No matter how careful you are financially, unplanned events such as redundancies,
illnesses and divorces or having a small period of difficult markets when
self-employed could cause you to have a bad credit history. Search the
market, and you may still find a loan, so don't give up.
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