What are the options if you have a bad credit history?

Big decision

If you have a bad credit history it can be more difficult to get credit cards, loans and mortgages. However this does not mean that your credit history can not be rebuilt providing that you do not have massive outstanding debts.

If you do have large outstanding debts and you are struggling to keep up with repayments and you are in fact missing repayments on a regular basis with numerous companies then this will probably be adversely affecting your credit rating in a big way. An option you may want to consider if you are in this position is a debt consolidation loan.

Debt consolidation loans providing you keep with monthly repayments can help rebuild your credit rating and turn your credit history from negative to a positive one. By taking a debt consolidation loan you are effectively replacing lots of smaller debts that you are struggling to keep on top of with one affordable monthly repayment. If you complete the full term of your debt consolidation loan then this will be seen largely as a positive mark on your credit history.

If you do not have large outstanding debts but you have missed repayments on borrowings in the past you may also have a bad credit history. This will most probably be preventing you from getting lower interest rate credit cards and loans from high street lenders. This is not the end of the world however as taking some of these higher interest credit options can in fact help to rebuild your credit history. Of course do this you will have to make sure you do not miss any minimum repayments, you should also make regular payments that are above the minimum amount.

Opening a variety of new accounts and paying them off rapidly is probably the quickest way to rebuild your credit rating and show your creditors that you have the ability to keep up with repayments and that you can borrow responsibly. Starting with high interest accounts you can eventually gain momentum transferring your high interest balances to lower interest accounts as your credit improves. Store cards can be useful for this or there are several credit cards with high interest rates such as “Vanquish”; or “Capital One” which accept people with less than perfect credit ratings.

You may wish to consider secured credit. Secured credit cards and loans offer lower interest rates but you will have to secure them against an asset such as your home or motor vehicle.

When you are looking to rebuild your credit rating you must ensure that the companies you are borrowing from send a report to one of the credit reference agencies. This way your positive payment history will show on up your credit report.

To keep an eye on your credit history you can view your report by going one of the credit reference agencies such as Credit Expert, where you can check your credit rating for free.

When you are rebuilding your credit history you are aiming to improve your credit report so that when a credit check is run on you by any prospective lenders they don't have any reason as to doubt your ability to pay back what you owe.

When a credit check is run against your name they will check your credit report and check that everything is in order. They will check your National Credit Score this consists of a number ranging from 0-1000 (a higher score generally indicates that lenders will consider it less risky to grant you credit.) They will also check your National Credit Score Category which will be excellent, good, fair, poor or very poor. Any recent credit searches carried out against your name will also appear on this report along with details of any missed repayments or defaults. Your aim is to out way the negative with the positive.

Once you are on the way to rebuilding your credit history it is important that you do not then go out and borrow left right and centre. Just because you have a better credit rating doesn't mean that you have to borrow. Your credit history take a lot longer to rebuild than it does to tarnish so you should always try to remember the reasons that resulted in you having a bad credit history in the first place

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