You and your colleague or friend whose income is little less than yours both went to a lender to apply for a loan. To your surprise, your friend got the approval but unfortunately not you. So, why did this happen or what sort of special trick does your friend played in front of the lender? The answer to all your questions is “Good credit profile”. Yes, you heard it right! The trick that you were thinking about that gave your friend approval of the loan is his credit profile.
Basically, when you visit a bank or any lender in the UK, then there are few things that they check about a borrower such as your source of income, credit profile, citizenship and something valuable to put as collateral if the loan is secured. So, the reason why you didn’t get the approval could be your bad credit profile. In plain and simple words, your credit profile act as an indicator for the lender how risky is to lend you a loan. If you have a good credit score, then chances are strong that you’ll really get a loan, but with a bad credit score getting a loan can be really difficult.
Now, you must be thinking “If I have a bad credit score that means I won’t be able to get loan ever?” well, this is not true! There are many lenders out there in the market who specialise in providing very bad credit loans which means that there is a possibility that you can get a loan if your credit score has hit the rock bottom. But the rates of interest charged on such loans are comparatively higher than other typical loans. In case of an emergency, where you are in a dire need of money and have no options left, then you can go for this loan.
However, it is advised that you keep improving your credit score so that you won’t have any difficulty in getting a loan next time. Also, this will ensure that you are offered a decent rate of interest next time when you apply for any type of loan. Now, the question is – how to do this? In this blog, we have mentioned some effective ways and tips that can help you improve your credit profile. So, let us get started.
Useful Tips That Can Help You Improve Your Bad Credit Profile
Get an accurate credit report
You know your credit profile is not that appealing but it is important to know exactly how bad it is. When you have no idea about your credit report, it becomes difficult for you to negotiate with the lender while applying for the loan. According to FCA guidelines, this is what means if your credit score is:
- Very poor: 0-560
- Poor: 561- 720
- Fair: 721-880
- Good: 881-960
- Excellent 961-999
Thus, the better your credit score is the higher are the chances of getting a loan from a bank, credit unions, private lenders or any other financial institution.
Mark the areas where you need to improve
After you have got your credit report, just analyse it thoroughly to spot for any error that is affecting your credit profile in a negative way and causing your credit score to dip. Well, just your name misspelt in any section of your credit report is not going to cause any harm to your credit report. But there are other factors that could affect such as:
- The personal information of your credit card is mixed with someone else who also possesses the same name.
- There was only one default that you couldn’t pay but it is shown multiple times on your credit report.
- Any bills of the past that your ex was supposed to pay, but it is still due.
- Someone has stolen your identity and now has started to misuse it.
Look for payments which are due
One of the biggest elements that affect a person’s credit profile is the payments which are still due. Thus, check your credit report thoroughly and see any late payments are due or not. If there are any payments, then it is recommended that you complete it as soon as possible. If the payments are small then try to get it done within days. And if there are some big payments for which you don’t have enough money in your pocket currently, then you can go for unsecured loans bad credit. This means that the lenders can provide you with a loan without asking you to put something as collateral and even at poor credit.
Wrapping up, having bad credit can be a headache when you are looking for a loan. By trying all the tips mentioned above, you will see a significant jump in your credit score provided you follow them correctly.