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Get A Loan With Bad Credit - What Is Bad Credit History? |
Most people owe money to some extent but how you manage your debts is what counts on your credit file - anything you do wrong is recorded and creates your credit history - a file which lenders use when deciding if you represent a good risk to them and hence if they will lend you money. It's not just loans and mortgages but also other lines of credit such as monthly insurance direct debits, mobile phone contracts etc.
There are many different reasons you may have a bad credit history which can make it difficult to borrow money when you need to. The golden rules to avoid a bad credit history are simple:
Don't borrow more than you can comfortably afford to pay back
Always pay your bills on time
Sometimes the above is easier said than done - an unexpected change in circumstances, the loss of a job, illness etc or even just the rising cost of living can cause outgoings to be higher than income and hence create problems. In these circumstances you should always contact your creditors immediately - don't bury your head in the sand or the problems can escalate.
Understanding how your credit history is compiled will help you to avoid situations which may result in you earning a negative credit history. There are simple things you can do to keep your credit history clean Bad Credit History
Pay your bills on time - avoid making late payments on any debts
Do not miss payments or default on a debt - this includes your council tax
Pay credit card bills off in full at the end of the month
Do monitor your accounts for identity theft
Make sure you fulfil financial contracts or commitments as failure to do so may be reported to credit reference agencies
Try not to change address or job too frequently as this can affect your credit history
If you have defaulted on any debts make sure you clean up your credit history as soon as possible by honouring your repayment schedules
Avoid bankruptcy
It's often a good idea to keep an eye on your credit file to make sure information registered is accurate and up to date. If any data is incorrect then it could result in a credit application being rejected ... simple things like forgetting to change your address on an old account, being linked with an ex spouse, a search that you did not authorise can all affect your file so check all is OK.
