Bad credit rating

Thursday, November 8, 2007

Your borrowing options will be limited with a bad credit rating. CCJ's (county court judgements), mortgage arrears, payment defaults on credit cards and loans will all penalise you and affect your credit rating.

Most lenders use two main credit reference agencies, those being Equifax and Experian. They compile information on you from the electoral roll, county court judgments and how well you have paid both current and previous debts.

This then allows new lenders who you have applied to for credit, to make an informed decision on whether to lend to you. They will also base it on their own individual criteria.

If you are refused credit the lender must say why. Under the Data Protection Act you can ask for a review of your application. This will allow you to see where you can improve your rating. It will also allow you to see if there are any mistakes on your record.

It is possible to repair your credit, if you have a bad credit rating, but it will take time.

To improve your rating, you must make sure all your payments to creditors are paid on time. Also make sure you are on the voters roll at your property.

You can also buy a copy of your credit report from the credit reference agencies. You can put a 'notice of correction' on your file if you dispute something on your file. This means that new lenders will be able to see an explanation when they conduct a search.

Other hints to boost your credit rating is pay any balances on credit cards on a regular basis and do not apply for credit repeatedly if you have been turned down by someone else.

Similarly if you have no current credit, you may be rejected. This is because lenders feel more comfortable lending to someone who has a past credit history.

If you are struggling to raise the finance you require you could speak to Solution Mortgages to see if we can help you. Please feel free to call on 0845 123 1260 or apply on-line at http://www.solution-mortgages.co.uk/