Refused credit? What to do and finance for bad credit
Why have I been refused credit? When you apply for credit in the form of a credit card, loan or mortgage, your credit provider will run a credit check to check your history of repayments. For instance, if you have borrowed £1,000 on your credit card, your bank provider will expect you to make a certain monthly minimum repayment – say £100 a month.
If you miss one of those repayments your credit provider will mark a point against you, which in turn is reported to the credit reference agencies.
Then, next time you want to borrow money from another provider, say from a mortgage provider, they will run a credit search, see that you’ve missed a repayment, and use that to factor in how likely you are to make your future repayments if they offered you credit.
The more missed repayments you have, the worse your credit file and the less likely you are to be offered credit in others.
It’s not just missed repayments though. Whether you are registered on your local electoral roll, and for how long, tells your credit provider that you live where you say you do and ensures against fraud.
Your credit file also contains public records showing whether you have any county court judgments against you, or whether you have filed for bankruptcy.
Obviously if you do your creditor will be less likely to offer you credit, although there are things you can do to alleviate this (see ‘How you can improve your credit rating’ below).
It will also show how many bank accounts you have and how much debt you currently hold, as well as anyone you are financially associated with like a parent, spouse or child.
Refused credit and fraud
Being a victim of fraud is not only a traumatic, and potentially expensive, event. It can also have a lasting impact on your ability to obtain credit by damaging your credit file.
For instance, if a fraudster takes out a credit card in your name and spends heavily you may not learn about it until the debt collector tracks you down, which will count heavily against you on your credit file.
If you find that you have been a victim of fraud you can report it to the credit agencies who will put a mark against your name to alert potential creditors.
Any information on your file is usually held
for between five and six years, although items like court or bankruptcy rulings, which exceed this period, may stay on your file for longer. Source uswitch
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