When A Good Credit Rating Turns Into A Bad Credit Rating

Posted in Bad Credit, Debt Consolidation Loans

Bad Credit Score ? A Debt Consolidation Loan, Could Be A Great Solution

With UK borrowers owing creditors over £178 million by way of mortgages, loans, credit cards by the end of November 2015, there are many repaying their debts each month and maintaining their good credit rating. Some are so good at repaying their debts that they do not realise the consequences of missing and / or late payments, essentially they take their credit rating for granted. It doesn’t matter how long you have been repaying your debts successfully, if you then come to have one debt that is not taken care of, settled or ignored the lender will alert the credit reference agencies and this will have an impact on your credit rating.

In some cases borrowers have been known to have an outstanding relatively small debt, (such as a mobile phone contract) which has grown due to charges and then been ignored by the borrower as it hasn’t been deemed important enough at the time – which has then resulted in a CCJ. The problem with CCJ’s is that they remain on a borrower’s credit file for 6 years, which negatively impacts the borrower’s credit rating and has a serious effect on future borrowing, some people only realise this when they are declined. Therefore it is imperative, that no matter what your earnings are and no matter if you’re successfully paying your big debts, that you ensure that you settle your small debts and do not ignore them, as the risk to your credit rating is not worth it.

If you come to realise that you could be taking care of your debts more efficiently there are options available to you if you take action soon enough, before your credit rating suffers to much of a hit. A debt consolidation loan, can be a great solution to manage your debts, this is because the loan is used to pay off the balances of your credit cards and loans, and will leave you with just one amount to repay each month. This is a good way to help to safe guard your credit rating, however it is important to note that any missed payments on the debt consolidation loan will also have a negative effect on your credit rating.

Debt Consolidation Loans Range in Amounts, and are at various interest rates.

The interest rate is based on your credit rating, so if you haven’t yet missed any repayments on current debts it is likely that you will be offered a good interest rate. However if you have already missed repayments and your credit rating is on the decline, you will be limited in the amount of lenders that will accept your application, and if they do accept your application the interest rates available to you will be higher meaning that in the long run you will pay back much more.

Either way, if you are approved for a debt consolidation loan and you ensure that you pay it on time every month then it is likely that your credit rating will remain the same (if it is already good) or improve (if it is currently on the decline).

PLEASE THINK CAREFULLY BEFORE SECURING LOANS AND OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
ALL RATES VARY SUBJECT TO LOAN AMOUNT, LOAN TYPE AND STATUS.
REPAYING YOUR DEBT OVER A LONGER PERIOD OF TIME MAY INCREASE THE AMOUNT YOU PAY.
WARNING – LATE REPAYMENTS CAN CAUSE YOU SERIOUS MONEY PROBLEMS. FOR HELP GO TO MONEYADVICESERVICE.ORG.UK.

 

 

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