What Is A Bad Credit Rating?
What Is A Credit Rating?
A credit rating is simply a history of your credit. From the first time you took out a credit card, or even opened a bank account the details are stored and remembered by the UK’s credit agencies. So every payment, every missed payment, every rate and every debt is on your credit history, if it’s a bad credit rating or a good credit rating it is there.
What Is A Bad Credit Rating?
A bad credit rating means that your credit history is tarnished in some way. This comes about by simply missing repayments or going into arrears. So you may have missed one or two month’s credit card repayments and got yourself a black mark on your credit record, or maybe you went over your overdraft limit a few times, which would also appear on your bad credit rating. It might even not be your fault – many people in the UK are victims of fraud and find themselves in arrears or debt thanks to the fraudsters using their credit card or bank account.
Why Does It Matter?
Bad credit ratings matter because it is your credit history which defines you as a borrower. If you just walk into a bank and ask for a credit card or go to a broker and ask for a mortgage they do not know if you are a great borrower or one that always ends up in debt. So the broker or the lender checks your credit history – and if you have a bad credit rating then they will know that you have had trouble paying debt. That will then help them decide whether you can handle another debt or not. If your bad credit rating is too bad then many lenders will simply say no more.
How Can I Change It?
To turn your bad credit rating into a good credit rating you need to find some credit repair debts. Now that might sound crazy, solving debt with more debt, but credit histories look at how you handle debt only meaning the better you handle a debt the better your score. So credit repair debts will have higher rates and tougher demands, but if they are handled successfully then your credit score will show you can handle debt – and your bad credit rating will eventually disappear.
