Holding on to a perfect credit history indefinitely is becoming increasingly difficult. In fact, it is comparatively rare for any everyday consumer to have an entirely unblemished credit history.
Most major banks and High Street lenders use applicants’ credit histories as the primary eligibility check for loans and mortgages. Elsewhere, specialist lenders are more accommodating and flexible with their approach.
Though it is possible to damage your credit score in a variety of ways, the following seven issues inflict the most damage on consumer credit scores across the United Kingdom:
Each and every time you miss a payment, you are technically breaking your credit agreement with the service provider. This breach of contract is therefore recorded on your credit history, indicating that you have not fulfilled your obligations. The more severe or frequent the late/missed payments, the heavier their toll on your credit score.
Anyone who declares bankruptcy can expect significant and lasting credit score damage. Bankruptcy is usually removed from an individual’s credit history after six years, but lenders may still ask if you have ever declared bankruptcy at any point in the past. If so, you may find it difficult (or impossible) to qualify for a mortgage or loan with a conventional lender.
Exceeding the credit limit imposed on one or more credit cards can have a significant impact on your credit score. This is why it is important to ensure you choose a credit card that is suitable for your requirements. Likewise, maxing out one or more credit cards and simply paying the minimum monthly instalment without actually reducing the balance could adversely affect your credit report.
A county court judgement is issued in instances where individuals fall into severe issues with debt and are unable to repay their creditors. Like bankruptcy, CCJs usually remain visible on a credit rating for six years, though could impact your eligibility for certain financial products longer term.
Having multiple lines of credit and managing them responsibly could work in favour of your credit history. However, attempting to balance multiple unnecessary debts and struggling to meet your repayment obligations could have the exact opposite effect.
The growing threat posed by identity theft is one of many reasons why it is essential to inspect your credit report on a regular basis. This is one of the only ways of ensuring that nobody is using your personal information to apply for financial products and services in your name. If you suspect any such fraudulent activity has taken place, it is essential to report and address it as soon as possible.
Contrary to popular belief, having no credit history whatsoever can be just as challenging as having a poor credit history. Unless you have demonstrated your capacity to manage one or more debts responsibly, mainstream banks and lenders may be unwilling to do business with you. Building an initial credit history can be as simple as getting a credit card and ensuring you stay on top of your repayments.
If you suspect your credit history is not up to scratch and have any questions or concerns regarding your eligibility for a loan, consult with an independent broker for advice.
Even if you have been turned down elsewhere, you may be considered eligible by a specialist lender away from the usual High Street banks.