The High Cost Of A Poor Credit Rating
By Joe Kenny
Is your rating good or poor? If you've recently been turned down for a card, store card or loan, it could be because you've paid off everything so perfectly that you have no history. But it's more likely to be because your rating is poor. And this means it could be difficult to get at a price you find attractive.
What Makes A Poor Rating?
Applications for are scored using criteria on the application form. For example, home owners score higher than renters and it's useful to be on the electoral roll. People tend to get a poor rating if:
- They have defaulted on payments in the past;
- They have been made bankrupt;
- They have paid bills late (arrears);
- They have had County Court Judgements (CCJs) against them
Bankruptcies and CCJs stay on a file for six years, and it is hardest to get if these are the problem.
Banks, card companies and store card issuers also look at people's report. This is a file maintained by a reference agency detailing people's applications and approvals for credit, borrowings, payment record and electoral roll entry. Equifax and Experian are two of the biggest and best known reference agencies and are used by most of the lenders. Over time, a report can become quite large, with details of every payment made or missed for every card and loan.
How Will A Poor Rating Affect You?
A poor rating can mean that a person is turned down for credit. At the very least, it makes it difficult to get a loan, card, store card or mortgage. Even if people manage to get these products, they rarely benefit from the same low rates and incentive offers as other card applicants. Instead, they may have to pay a higher interest rate, either permanently, or until they show a good record of payments on the card or loan.
To give an example, a person with an excellent rating could borrow money at an interest rate of under 6% (depending on the loan amount and the particular deal). A person with a poor rating might have an interest rate of well over 25%.
Loan Options For People With Poor Ratings
People with poor ratings have the option of having a secured loan. This means that if they default their house can be seized to ensure that the lender is paid. For cards they could have a card with a high interest rate. There is also the option of a prepaid card. This is similar to a prepaid mobile phone card. The card holder tops the card up with money and can spend that amount in places where a card is needed.
How To Improve Your Rating
Improving your rating can be simple. Make sure you are listed on the electoral roll and pay your bills on time. Finally, get a copy of your file from Experian or Equifax to make sure the details are correct. That way you won't pay the price for someone else's bad
history.
Article Source: http://www.articles-galore.com
Joseph Kenny writes for the UK Loan Store, visit them here, Personal Loans Store and more information on bad loans available on site.
Visit Today: www.ukpersonalloanstore.co.uk/
Products and Services mentioned in this article are available Here
