Credit Report - Templar Mortgages

What is Bad Credit and How Do You Know if You Have It?

Understanding Bad Credit:

Bad credit can stem from several sources. Common causes include late payments, defaults, County Court Judgments (CCJs), and debt arrangements. Many people are unaware they have bad credit until they apply for a credit card, loan, or mortgage. Often, clients come to us with a property in mind, only to discover that their credit history might prevent them from purchasing that home.

Different Views on Bad Credit:

There’s often a difference between what clients think is bad credit and what lenders consider bad credit. For example, one missed payment is less serious than having a CCJ on your file. Understanding these differences can help you better manage your credit and increase your chances of securing a loan or mortgage.

How to Repair Your Credit in the UK:

1. Check Your Credit Report: Regularly review your credit report to spot any inaccuracies or issues that need addressing. You can get a free copy of your credit report from agencies like Experian, Equifax, or TransUnion.

2. Pay Bills on Time: Ensure all your bills, including credit cards and utilities, are paid on time. Setting up direct debits can help you
avoid late payments.

3. Reduce Outstanding Debt: Try to pay off existing debts as quickly as possible. Focus on clearing high-interest debts first.

4. Avoid Applying for New Credit: Each credit application leaves a mark on your report. Multiple applications in a short period can negatively impact your score.

5. Register to Vote: Being on the electoral roll improves your credit score and makes you more attractive to lenders.

6. Manage Credit Cards: Keep your credit card balances low relative to your credit limits. Ideally, try to use less than 30% of your available credit.

7. Consider a Credit Builder Card: If you have bad credit, a credit builder card can help you rebuild your credit. These cards typically have higher interest rates, so it’s crucial to pay off the balance in full each month.

8. Seek Professional Advice: If you’re struggling with debt, consider speaking to a financial advisor or a debt charity like StepChange or Citizens Advice.

In terms of knowing whether you’ve got bad credit, the main way to find out is with credit reports. It’s important to check your credit files. Clients often use Clear Score or Experian and you can check these online yourself. But the best credit report to get is CheckmyFile, which combines all three credit agencies: Experian, TransUnion and Equifax all in one report. That’s important when going for a mortgage, because each lender will check different credit references and credit agencies.

Templar Mortgages and Protection have an affiliate relationship with Check My File, where you can get a 30-day free trial. Check My File sees your data from all 3 credit reference agencies, not just one, and is consistently rated excellent on Trustpilot. Your trial, and the subscription, can be cancelled at any time. Beyond the 30 day free trial the service is charged at £14.99 per month. Please click on this link – AD https://www.checkmyfile.partners/BFC51HS/2CTPL/