Think poor credit ratings and debt problems are caused only by irresponsible spending habits? Think again.
If you're suffering from a poor credit rating, make sure you apply the right way
Statistics show that some of the more common causes of debt include divorce, reduced income and unemployment or redundancy.
With figures from the Office of National Statistics GDP and the Labour Market, 2013 Q2, August Labour Market Update, showing 2.51 million people in the UK out of work in the second quarter of 2013, it’s no wonder more and more people are finding themselves with money worries and turning to various credit options to survive.
If you’re struggling to gain access to credit, it’s important to go about applying in the right way to avoid causing more problems for yourself.
Head over to Vanquis’ credit information resources for information and advice on credit ratings, as well as bankruptcy and County Court Judgments.
Here, we list the mistakes people can make when trying to recover from a bad credit rating – and steps you could take to avoid them.
1 - Don’t apply for credit again until you know why you’ve been rejected
If you’ve been refused credit before, it’s important to understand why so you can avoid making the same mistake again. As different credit providers judge applicants on different criteria (despite the popular myth, there is no such thing as a single credit blacklist), reasons for rejection vary greatly.
To find out why you’ve been rejected, you’ll need to check your credit reference file, which credit providers look at in conjunction with your application. To check your file, contact one of the three main UK credit reference agencies –
Experian, Callcredit or Equifax – who will be able to help. It’s worth noting that you may have to pay for their services.
2. Don’t be economical with the truth
Whenever you apply for credit, and whoever you apply to, it is vitally important to always tell the truth in your application. Do not attempt to hide any past payment problems or CCJs – giving misleading information will only make your credit situation worse.
3. Don’t apply for lots of credit cards in a short space of time
Credit providers can see how many credit applications you’ve made, but can’t see whether these applications were accepted or declined. Lots of applications in a short period may give the impression you’re desperate, making you a less appealing borrower.
4. Don’t give up on getting credit completely
One way to begin rebuilding your credit rating is to take out a specialist credit card and meet your payments. If your credit rating is poor, your application may be unlikely to be accepted by a mainstream credit provider.
However, responsibly using a credit card from a company that is specifically designed to help people build, or rebuild, their credit rating can prove you are able to manage your credit commitments. This in turn could make you more attractive to other credit providers in the future.
5. Don’t forget your bills and other financial commitments
When concentrating on rebuilding your credit rating, sometimes other financial commitments, like bills, can get overlooked. It’s important to remember that late payments for other bills in the recent past can damage your credit score too. Keeping up to date with current bills and credit payments demonstrates responsible financial behaviour.