The cost of having bad credit can be damaging in many ways. Your credit score shows an endless list of lenders and service providers how much of a ‘risk’ you pose to them financially when it comes to lending you money or providing you with a product or service.
In today’s economic climate there are no two ways about it; having bad credit will affect you and a low credit score can be damaging in many ways.
It could be a homeowner loan that you’re after, or perhaps a credit card or even a car on finance. A high credit rating will mean you have a better chance of being granted such products/services than you will with a lower rating and the cost of having bad credit is going to be costly to you.
A bad credit rating will mean that in the eyes of those granting loans or credit, you may no be ‘fit’ enough for them to take a risk with you financially. Remember that most organisations are profit-driven and your credit rating is their way of determining whether or not you fit the bill for making them money. A poor credit rating may see many applications for loans and credit rejected.
In today’s world, a mobile phone contract is somewhat of a necessity to most. All mobile phone companies check your credit rating and a bad rating may mean that they don’t grant you their service which can hit you in the pocket when you‘re forced to pay more for a pay-as-you-go service. A bad credit rating will mean that you may find it difficult to purchase a car on finance or end up paying a high interest rate if you do manage to buy one. You may also find that organisations such as utility companies or telephone companies ask you to pay some kind of security deposit in order you to begin receiving their services.
A bad credit rating will mean that many lenders and creditors will charge you higher interest rates on their products or services. Many insurance companies check your credit rating too.
It’s not just your finances that will take the hit as a result of you having bad credit. Landlords will check your credit when it comes to renting properties as this is their way of checking how reliable you are when it comes to them paying rent. Imagine being turned down for a perfect property because of bad credit! Some jobs even require a good credit rating, too, such as those in the finance industry.
Missing payments on things like short-term loans and credit cards will affect your credit rating. If you fail to follow the terms and conditions set out in any credit agreement, it will be documented on your credit report and may result in a bad credit score.
Getting bad credit can be caused by a number of factors. Typical reasons might include: making late loan repayments, missing repayments entirely, having bankruptcy against your name, or having a County Court Judgement filed against you. Making the minimum repayment on your credit card can also affect your credit score.
If you find yourself in a situation where you think you can’t manage your repayments, it’s important to let your lender know as soon as possible.
It can be difficult to get a loan if you have a bad credit rating because lenders will be wary of whether you’ll be able to make repayments. However, just because one lender turns you down doesn’t mean that another one will.
The first step is to try and rebuild your credit score to prove to lenders that you can be trusted as a responsible borrower. If you are eligible to take out a credit card, you could prove your credit worthiness by spending on the card each month and then paying it off in full to avoid interest.
Some credit cards have been specifically designed for those people with a bad credit history and there are also loans suited to those with bad credit too. Prove you’re a worthy borrower by making the repayments on time.
Whether you're planning on some home improvements, replacing your car or simply getting your finances in order, a loan from Freedom Finance could be more affordable than you think. Use our calculator above to find the ideal loan for you. All quotations given are for illustrative purposes only. Credit subject to status. The rate you are offered will depend on your personal circumstances, credit assessment procedures and other related factors.