A poor credit rating can feel like a stranglehold on your finances. You’re riddled with debt, but no loan agency will lend you more money to help clear it. It’s a vicious cycle that results in further defaults and a deeper debt circle. The worrying thing is that a poor credit rating can be sparked by a simple missed payment. With credit cards, overdrafts, mortgages, and loans to worry about, it’s easy to miss one monthly payment. Doing so can have a severe effect on your future finances and ability to borrow.
If you’ve found yourself in this position, there is a way to turn it around. If you’ve been turned down by lenders and refused further credit by your bank, there is a solution. It involves turning that poor credit history into a positive rating. It is by no means an easy feat and it will take some discipline. But, the important thing to understand is that it’s possible. Doing so could transform your life and lift that black cloud of debt dread from your mind.
Understand why you have a poor credit history
Before you can move forward, you need to understand the reasons for your poor credit. In all likelihood, it’s more complicated than you think. It’s not just a few missed payments, but your entire attitude to debt and finances. The big black marks against credit are CCJs (County Court Judgements) and late payments. This late payment could be anything from gas bills to mortgage payments to a phone contract. If you’ve defaulted, ie. built up three months of arrears, it’s particularly bad news. You will also build up poor credit by applying for too many loans or holding onto unused bank accounts and cards.
Consolidate debts and start repaying
The first step to your new fantastic credit rating is taking charge of your existing debts. You need to build up a strong reputation with regular payments. If this seems overwhelming, look for ways to help yourself. Get in touch with your lenders and negotiate a more manageable scheme. At the end of the day, they want their money back and will be happy to make an arrangement! You can also take advantage of UK bad credit remortgages. It’s a way of bringing your debts together and making them easier. Getting the debt down and making regular payments are your first step to turning the credit score around.
Cancel unused credit cards and close joint bank accounts
Next, it’s time to tidy up your finances. Get rid of the paper trail of destruction that defined your poor spending! If you own any credit cards that haven’t been used in three months, close them down. If you have a joint bank account, close it. The credit score of your partner may also have an effect on you.
Pay. On. Time.
It really is that simple. Lenders are looking for safe, reliable borrowers who will pay their bills on time. Get a handle of your finances and put a dedicated plan in place. Get rid of those debts with sensible payments and make a big change to your future.