If you have bad credit, it may seem like a trap you’ll be in forever. Sometimes it can be difficult to ascertain how you even got in this position. Creditors aren’t legally obligated to tell you why they’ve turned down a loan, so it can be tricky.
HOW DID I GET A BAD CREDIT SCORE?
If you have an existing credit agreement and didn’t stick to every single one of the terms and conditions, this will work against you. It’s not always clear what will give you a bad credit rating. The most obvious is making credit card or loan repayments late.
Here’s very common but little-known reason. If you’re only making the minimum repayment on your credit card each month, this will negatively affect your credit score. It implies to lenders that you struggle to clear your debts, or don’t prioritize repayment.
But no matter how bad your credit history seems, there are ways to work around it or fix it. It’s not a financial death sentence!
LENDERS WILL HAVE DIFFERENT CREDIT SCORES FOR YOU
It’s important to remember that lenders take a lot of factors into account when they consider your loan application. They will mostly use your credit report. This contains all sorts of information about your mortgage, credit cards and any other loans. They’ll also look at other information about your financial status, such as income and tax rate.
The first thing you should understand is that you do not have a single credit score. There’s also no such thing as a credit blacklist. Each lender has a different way of calculating the score, so if one turns you down, you may have better luck at another.
THERE ARE DIFFERENT TYPES OF LOANS FOR EACH PURPOSE
You may have heard the terms secured and unsecured loans before. You may also have assumed that one is worse that the other, but this isn’t necessarily true. They are simply tailored to different circumstances.
There are varying types of loans out there, each with different interest rates or initial fees. If you have a poor credit rating, these elements may cost you more money in the long run. But it’s important to remember that a loan is still possible, depending on what you aim for. Evolution Money homeowner loans are one example of a loan in which the lender will focus more on your property than your credit score.
FIXING YOUR CREDIT SCORE
Correcting your credit score will take time, patience and discipline. You don’t have to live like a monk, but you will have to make plans and sacrifices. Determine what expenses you absolutely need in your life, then try to limit your spending to those. Keep the luxury purchases at bay for a while.
If you tell others that you’re trying to save money, you’ll find it easier to stick to your decision. A lot of people spend more than they have to because friends and family invite them out. Those people will assume you’re good to buy food, drink, cinema tickets, etc. unless you tell them you’re not. As long as you’re making strong repayments on loans, your credit score will improve over time.
