Why Do I Have Bad Credit?
There are plenty of people who fully understand and accept that they have a bad credit rating. There are many reasons why someone can suffer from bad credit and with so much information being made available on the internet, plenty of people across the United Kingdom are very much aware of the actions that have led to them having a poor credit rating. Whether these actions were undertaken in the past or have taken place in the more recent future, the way that you manage your finances can have a massive impact on your credit ratings.
Of course, a bad credit rating can cause you a great number of problems in life. Bad credit can:
- Prevent you from obtaining a mortgage
- Hamper your chances to rent the property you want
- Impact on your ability to obtain a credit card or a loan
- Impact on your ability to obtain a car loan
- Impact on your ability to get a job
Yes, there have been recorded instances of people failing to obtain a job because their credit score was so poor. You can see why a company looking to fill roles in a financial advisory position may decide against giving someone a job based on their credit score.
Can someone legitimately advise others on how to manage their finances if they cannot manage their own? Technically the answer is yes, many people are great at providing advice but not so good at taking it, but you can see if there is a close decision to be made, some financial firms will prefer to opt for someone with a stronger credit rating.
If you know you had a bad credit rating, you can prepare yourself for these issues and hopefully work around the issue. The problem for many people is that they don’t realise that they had bad credit. This means that a refusal for credit or an acceptance of credit with a very high rate of APR may actually cause some people problems or leave them feeling shocked.
This is why knowing some of the main causes of bad credit can be of considerable benefit to people:
You Fail to Meet your Credit Agreement
No matter what form of credit agreement you reach, there will be terms and conditions attached to this agreement. This means that you should take the time to make sure that you know what each agreement requires you to do. If you fail to meet these agreed terms, you will harm your credit rating. The most common aspects of the credit agreement that people fail to adhere to is the amount of money that has to be paid and the payment date. If you are late with payments or you are short with payments, you’ll find that your credit score will be negatively affected.
You have suffered a Bankruptcy Event or a CCJ
This is an area that can cause a lot of problems for people but it shouldn’t really come as a surprise. If you have suffered a County Court Judgment (a CCJ), you have been declared bankrupt or you have suffered an IVA, which is an Individual Voluntary Agreement, you will likely find that your credit score will be seriously harmed. This means that you need to avoid these outcomes if you are looking to manage and maintain a reasonable credit rating.
Only Making the Minimum Payment Each Month
This is a harsh aspect that many people are unaware of having a negative impact on your credit rating. Only making the minimum payment on your credit cards every month will act as a sign to potential lenders that you are not doing too well financially. This means that they will not be too keen to provide you with more credit. This means that you may find it a struggle to obtain credit, even if you are fully complying with the terms and conditions laid out in the credit agreement.
Being aware of what can cause bad credit is important and you will also want to know what you can do to improve your credit rating. You should find that obtaining a guarantor loan and meeting the loan payments on time and in full to be of considerable benefit in improving or repairing your credit score.
Andrew Reilly is a freelance writer with a focus on news stories and consumer interest articles. He has been writing professionally for 9 years but has been writing for as long as he can care to remember. When Andrew isn’t sat behind a laptop or researching a story, he will be found watching a gig or a game of football.
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