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REDDITThe terms ‘bad credit’ or ‘poor credit’ relate to those people who have a low credit score or not much of a credit history. This can result in them being declined when they apply for loans, mortgages, credit cards, store cards, mobile phone contracts or other types of credit.
When you apply for credit, the lender will usually carry out a credit check. They may then use the information to decide whether to offer you credit and how much they will offer.
If you have a poor credit history you could have bad credit, which may cause the lender to deem you as too high of a risk to lend to. Every lender has their own criteria for deciding who to approve for loans or credit.
How do you get a bad credit rating?
You may have a low credit rating or ‘bad credit’ if you have previously failed to stick to credit agreements. Some things that may cause a low credit score are:
— Default on payment or late payment
— County court judgement (CCJ)
— Individual voluntary arrangement
— Debt relief order
— Bankruptcy
Improve your credit score
You have a better chance of building a good credit score by doing the following things:
— Register to vote- get on the electoral roll as this helps lenders verify your name and address
— Check for mistakes on your file- make sure the address and all your details are correct
— Pay your bills on time- including loans, rent, mobile phone agreements and utility bills
— Check for fraudulent activity- make sure your details aren’t being used by somebody else
— Avoid County Court Judgements (CCJs)- if you can’t meet your payments, speak to your lender rather than waiting until they take legal action
— Clear high levels of debt- if you already have existing debt than clear it down as much as possible before applying for more
What to do if you have a bad credit rating
If you already have a bad credit rating, then try and improve your credit score before applying for more credit. You could take the following steps:
— Check your credit file is correct and error-free
— Close any unused credit cards, direct debits, contracts and store cards that have a zero balance on them
— Pay off your debts
— Don’t miss future payments
Don’t avoid your lender if you are in financial difficulty; be honest with them, they may be able to help.
Lenders don’t all have the same criteria for who they will lend to. You may still be eligible for credit from one provider even if an application was denied somewhere else.
(AD) At Morses Club, we provide home collection loans which we approve in person. We may be able to offer loans where 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 solution for you, visit our ‘how it works’ page.
Representative Example: £200 loan repayable over 20 weeks at £15 per week, Rate of Interest 50% fixed, Representative 756.5% APR, Total Amount Payable is £300
