Credit scores are incredibly important – especially if you are considering having to borrow money in the future. If you have a bad credit rating then you need to do whatever you can to improve it. There are several things that could have caused this in the first place, which we have outlined below.
You are Late or Default on Payments
Your credit score looks at your credit history in great depth, in fact it accounts for around 35% of your overall score. This means if you make credit card payments late – the likelihood is this will affect your credit score. If whatever reason you don’t pay them, or default – this will ultimately lead to a poor score. Any unpaid accounts will also usually be charged off within a few months of non-payment which means that any prospective lenders would see that your intention isn’t to make payment on a balance. This is very harmful to your overall rating and would require some credit repair.
If you Have Filed for Bankruptcy
Nobody wants to file for bankruptcy, it is usually a last resort when all else fails. The 3 most common types of bankruptcy are chapter 7 which is when a liquidation proceeding takes place for any non-exempt assets. These are then issued to any outstanding creditors. There is also a chapter 11 which is typically for businesses or partnerships. Finally there is a chapter 13, where a payment plan is normally arranged, which can stop foreclosures. Bankruptcy is never what you want and is the most detrimental thing to your rating. A credit repair company like Go Clean Credit who offer a range of credit restoration services may still be able to help you out. They can help out with bankruptcy, identity theft, late payments and much more which is all outlined on their website.
If you Have a Loan you Have Defaulted on
When you default on a loan payment, this is fairly similar to a charge off when it’s obvious that you don’t plan on paying back the debt to your creditor. It gives off the signal that you are high risk, and have trouble sticking to your financial commitments. This is why it is imperative that you are sure you can keep up with any loan repayments you have agreed to, or that you at least speak to the provider and ask for a loan repayment break that is agreed.
If there are any Judgements Against you
Judgements are never a good thing, however if one is unpaid this is incredibly harmful to your credit rating. Effectively it means that you need to be forced by the court to pay back your debt. If at this point you still don’t pay it back – then this sends a bad message to any potential lenders. County court judgements can last 6 years on your credit score – so you need to avoid this wherever possible.
If you find yourself with a poor credit rating, and aren’t quite sure how that happened or how to repair credit – then hopefully this article will have helped you with some information.