Avoid Bad Credit Record
1 February 2005
AVOID BAD CREDIT RECORD
We all know what the word 'credit' means and we know the doors it can open, but what does 'bad credit' mean, how do you get it and what do you do if the label applies to you?
Essentially, someone with bad credit is someone who, for whatever reason, continuously misses payments whether it is a utility bill, a mortgage payment or a credit card. As a general rule, lenders view 'poor payers' as someone who consistently doesn't have funds to pay scheduled payments and who tries, sometimes in vain to catch up later.
You're not a 'poor payer' if you have missed a payment once and then paid it, or have had a couple of hiccups in an otherwise healthy relationship with your lender. On the whole, lenders understand that there are various reasons why payments can default: losing your job, sickness, an unexpected debt, relationship break-ups, or even a simple oversight in account management. It can happen to anyone.
What is important is not to get into a cycle of missing payments and instead develop a sense of what your commitments are so you can flag any problems in advance with your credit provider.
If you do become a casualty of one of the many curve balls life throws us, the first thing you should do is contact your lender and have a chat about your situation.
Don't take the approach that you can get around it or catch up next month. It may well be the case that you can, but we can never really be sure what will happen in the future. If you call your lender, you can discuss options and talk about what other commitments you have and how you can meet them.
If you think you already have a bad credit report, the best thing to do is to take the plunge and investigate you credit history. Basically your credit report will show any defaults, for example. bills and payments that have either been paid late or not paid, and will list any organisations you have applied for credit through. If you suspect your credit report is in bad shape, the best thing to do is find out, then you can manage your situation.
The key thing to understand is that lenders know that life can deliver up difficulties and can help you talk through a solution.