We understand here at Wizzcash that for some individuals even hearing the term “credit score” or “credit check” can bring about feelings of nervousness. For others, especially those who currently have a bad credit score, or for those who have some negative reports or actions listed on their credit file even thinking about credit applications, loans or lenders can bring about moderate to severe feelings of stress, anxiety or worry. With that in mind, we have put this guide together for you. Having a bad credit score is not ideal however it is not something to fear. A credit score is not permanent and can improve over time so long as you adhere to best practices regarding credit and money management. We will therefore close out this guide with a section that will provide you with suggestions regarding the improvement of your credit score.
The Credit Scores
It is important to note that the three main providers of credit scores and credit checks (TransUnion, Experian, and Equifax) use slightly different calculations to arrive at their end result. This means that depending on which company you use to calculate your score; your results may vary.
Why Is My Credit Bad In The First Place?
This is a particularly complex issue and your credit score can be affected by a wide range of different things. We have compiled a list of just some of the reasons why you may currently have a bad or a poor credit score:
- You may have an account with debts attached, or a series of accounts with multiple debts attached that have suddenly or unexpectedly gone into arrears owing to missed payments. This is also referred to as defaulting.
- Declaring or filing for bankruptcy or having any County Court Judgements against your name will have a dramatic effect on your credit score.
- Missing any pre-agreed payments that were put in place by banks or lenders will have a negative impact on your credit score.
How Does Your Bad Credit Score Affect You?
Your credit score is a tool that all lenders, banks and financial institutions will use to assess your eligibility for credit. Therefore, your credit score is a very influential aspect of your financial life. We will summarise these for you below (this is not an exhaustive list and is simply representative of the way in which a bad credit score can impact you):
- Your career prospects may be affected negatively. Higher paid or more influential job roles will require you to display effective money management, especially if the job in question is in the finance industry or in the banking sector.
- You will find that certain lenders will be unwilling to provide you with a personal loan, or with a credit product of that ilk. They will usually gateway their best rates and services behind the passing of a credit check with a sufficiently high credit score. This means that if you are able to secure a loan, it will likely have high-interest rates or wholly unfavourable terms.
- As above, credit card providers will not be willing to offer you their best credit card products which have the best rates attached. The interest will be higher, and you are unlikely to get a 0% offer re interest rates, balance transfer or cash transfer offers.
- You will likely encounter trouble securing yourself any type of credit, except those specially designed for people with bad credit. For example, you will be unlikely to be able to secure yourself a car finance agreement for a new car as with a low credit score lenders and providers will deem you at a high risk of defaulting on the agreement.
As stated, the above examples are merely representational and the actual effects of bad credit will vary. How you are affected by a bad or a negative credit score will depend upon a number of different factors.
How To Improve Your Credit Score
If you currently have a bad credit score then our advice would firstly be this: do not panic. Credit scores are not permanent and are subject to change. If you manage your money effectively and actively engage with positive money management techniques then your credit score will improve over time. This will not be an instant change and prepare to commit to yourself to the cause of making your credit score better. Once it has begun to improve this might mean your access to loans and credit cards might widen and you will be able to access the best deals and rates. Below we have listed for you just some of the ways in which you may improve your credit score:
- If there are any mistakes on your credit report then make sure to fix them as soon as you can.
- If you are not currently on the electoral roll (registered to vote) then do so as a matter of urgency.
- Consider avoiding making multiple applications for credit in one go. Separate these over time if needs be, or, you can perhaps re-think your need for credit and make one application, rather than several.
- Instead of making applications in the first instance could use eligibility checkers or services that provide a soft search against your credit history rather than a hard search. A hard search is where a prospective lender takes a full look at your credit history in order to assess your eligibility for a loan or credit product. A soft search is where you assess yourself (via the manual input of your details) which credit product et al you are eligible for without leaving a history of this search against your credit file.
- If your name is not currently on any bills, in particular, utility bills or council tax bills, then you should try to get your name on these as soon as you can.
- Of all the bills you have currently, you should pay them on time and in full.
Here at Wizzcash, we are a responsible payday loan lender and as such we make sure to conduct credit checks on every applicant when they submit an application for a payday loan from us. We also run an affordability check as this allow us to feel confident that you are able to pay back your loan in full and on time. If your credit score is not high or is not particularly strong then you can still apply for a loan with us as having a less than ideal credit score will not automatically disqualify you. If you would like to learn more about us then you can do so here. If you would like to make an application for a payday loan, then you can visit our application page to get started.