Having ‘bad credit’ or ‘poor credit’ relates to having a low credit score which can prevent you from being offered credit.
Whenever you apply for any kind of credit, whether it’s a mortgage, credit card, store card or mobile phone contract, they will usually carry out a credit check. The lender can then use the information from the credit check to decide whether to loan you money or how much to loan you.
If you have a poor credit history, it could mean that you have bad credit and this may cause the lender to decide you are too high of a risk to lend to. Every lender will have their own criteria for deciding who they approve.
How do you get a bad credit rating?
You may have bad credit if you have failed to meet credit agreements in the past. Some of the reasons for a low credit score include:
● Multiple late payments
● Default on payment
● County court judgements (CCJs)
● Individual voluntary arrangement;
● Debt relief order
Late payment or defaulted payment could relate to a loan, credit card, rent, mobile phone bill or utility bill among other things.
How can you improve your credit score?
If you want to build a good credit score, then taking the following actions could help:
● Register to vote - getting on the electoral roll helps lenders confirm your name and address
● Check for mistakes on your file - incorrect addresses or wrong information may affect your credit score
● Pay your bills on time- stick to any credit agreements and pay all your bills on time
● Check for fraudulent activity- make sure nobody is using your details to secure credit fraudulently
● Avoid County Court Judgements (CCJs)- if you are struggling to pay debts, speak to the lender and see if you can avoid them taking legal action by arranging a new payment plan
● Pay off high levels of existing debt- don’t apply for more credit if you already have high debt
What to do if you already have a bad credit rating?
If you already have bad credit rating, then you should try and improve your credit score before trying to apply for more credit.
● Check your credit file is correct and there aren’t any errors
● Close any unused credit cards, direct debits, contracts and store cards with a zero balance
● Pay off your debts
● Don’t miss future payments
If you are struggling to pay your debts, don’t avoid your lender. If you are in financial difficulty it is better to be upfront as you may be able to get help.
Remember not all lenders have the same criteria so it may still be possible to get credit from one provider even if you have had an application denied somewhere else.
Morses Club provides home collection loans which are approved in person. We may be able to offer loans even if other lenders have declined an application, but this is not always the case.
As a responsible lender, we like to ensure you understand our process before making your decision. To find out if our loans are the right choice for you, visit our 'how it works’ page.