What Are Your Options After Hitting a Bad Credit Score?
A poor credit score leads to bad experiences in financial matters, particularly if you have plans to take out loans anytime soon. Depending on how low the score is and what kind of marks have been added to the credit report, people can experience anything from being denied loans completely to being charged a much higher rate than usual for granting the loan. None of these impacts are desirable though, so let’s discuss what your options are once your credit score dips low enough.
Check to See If Everything is in Order
The very first thing you need to do is check your credit scores and the full accompanying reports for errors. It’s not uncommon for reports to contain wrong information, which would lead to unexpectedly poor credit scores.
In the UK, there are three companies that provide credit scores; Experian, Equifax, and Callcredit. While they should provide similar scores and reports, that may not always be the case, so it’s best to check your scores from all three sources. It will allow you to address mistakes and outdated marks on any or all of the reports, if present.
Find a Lender that’s Willing to See Past Your Bad Credit
In case you have been denied a small loan by the bank on account of a low credit score, it can be both disheartening and embarrassing, but that doesn’t mean you don’t have any other options though.
LoanPig are direct lenders for a short term loan, so it doesn’t matter if you have a poor credit score or not, they will arrange a short-term loan for you. The interest rates are going to be pretty high, but that’s largely because of how short-term loans work in general, and not because of your poor credit score.
Pay Off the Debts that You Can
If possible, pay off all the debts that you had missed payments on before or at least the ones that you can at the moment. When you pay off entire debts in their entirety, instead of just stretching them along by making just the minimum payments, it is viewed favourably by creditors. Closing debts are marked on credit scores, which will boost your credit score in the next report.
A Prepaid Credit Card Could Help
“ Prepaid Credit” is actually an oxymoronic phrase, but it’s a deliberate one. The idea is that the company provides you with a card which you have already paid for in full, but they charge you a very small fee each month, which goes towards repairing your credit score, as each of those payments is then registered on the system as timely debt repayments.
Even if you do not have a poor credit score yet, it makes sense to take heed and not miss those credit card and mortgage payments because that can lead to all sorts of unwanted complications in the future, not to mention the fact that you will always have to pay even more every time you are late.