The recent economic problems that have hit every country have meant that households have often been faced with financial problems, often unemployment and sometimes repossession. No one saw the problems coming in an environment where real estate value was rising and credit easy to come by. As it turned out this complacency was soon shattered.
While there continues to be demand for finance those who defaulted on any debt during recent years will only qualify for bad credit loans because those defaults hit the individual credit score by which the vast majority of applications are judged.
There is money available with many internet lenders happy to look at individual cases and provide bad credit loans as long as the applicant can show how he or she will pay the monthly installments. That is primarily by proof of employment, earnings and recent bank checking account statements which will show recent credit history.
Everyone’s aim must be to improve their credit score which can be done by paying off any bad credit loans promptly. As the credit score improves and it will improve not only by prompt payment of bad credit loans but also of utility bills or store card payments, then the interest rate on any future borrowings, including possibly a mortgage will come down. Every percentage point on a large loan like a mortgage can mean a considerable difference in the repayments.
It is worth asking for details of a credit score; sometimes there are errors which can be removed if there is evidence that can be shown. One thing that must not happen in the future is late payment so setting up automatic repayments, or getting auto reminders of when payments are due is advisable. While an automatic payment of the minimum on a credit card avoids a default it is still poor money management just to do that and extra repayment should follow.
There is nothing wrong with credit cards used responsibly; even multiple cards but those which have a facility but are not used will be closed eventually by the credit card company and that can adversely affect a credit score because it may just be marked closed, and that can create uncertainty therefore be an unnecessary black mark. Using a fairly dormant card periodically helps.
A credit score is affected by the amount owed against the overall facility a person has. That means reducing debt while still maintaining a high facility, for example with credit card limits, will be favourably interpreted in a credit score. Bad credit loans can gradually become a thing of the past.
Some things can stubbornly stay part of the detail that calculates credit score for some time but other responsible financial activity that is current can gradually improve the credit score. When interest rates and approvals are so dependent on a credit score repairing any damage is very important particularly for someone young who may not have yet applied for their first mortgage.
The financial environment is slowly improving. Improve with it!