This article mentions a range of terms commonly used with this topic. Here are some definitions. A credit record is actually a record of what credit you have accessed as far back as the past six years. It reveals the amounts you have been lent and if you have neglected any payments etc. A credit record helps would-be lenders to investigate your financial history to help them make a determination as to whether to extend you a loan. The data on your file is assembled by credit reference agencies such as Experian and Equifax. They utilise statistics from public sources (e.g. the electoral roll, court judgments etc) and from loan providers as well as financial institutions: e.g. credit applications, credit accounts.
An arrear is a legal expression and is a way to explain where you are behind in monthly payments on a credit contract. A person is referred to as ?in arrears? as of the time their first expected payment is missed. This financial term is typically used when referring to late payment of mortgage, rent, personal loans or credit cards plus taxes and child support.
A ‘CCJ’ is actually short for County Court Judgement. A CCJ is a legal judgement pronounced by a County Court toward someone who is in debt to others (either an individual or company) or a case where they have violated the conditions of a credit arrangement. This judgement will determine a reasonable repayment strategy in order that the debtor will begin to give back what they have borrowed. CCJ’s are registered on official public record and will have an influence on the debtor’s chance of getting any further credit for the next 72 months.
A default is the term used to denote where you’ve not fulfilled your borrowing responsibilities. If you have skipped any payments on a mail in account, for instance, they may file a Notice of Default on your credit file. This will have an adverse impact on your credit report at a later date if you choose to get additional credit.
If you have a poor credit history, it doesn’t mean that it has to stay that way. It can take time, but you can rebuild your credit. The key is to show potential creditors that you really are serious about getting your credit back in shape.
Here are some steps to follow:
1. First of all, if you do have any credit currently, make sure that you keep all your payments up to date. Never make a late payment and certainly don?t miss one.
2. Open up a couple of new ’small’ accounts - and pay them off quickly. By showing that you can run a credit account and pay it off without problem will show as a positive on your credit file. However, do not apply for too many accounts. This could give the impression that you are ‘panic applying’ due to finance problems. Store cards are a good way to rebuild your credit rating.
3. Keep balances low on any credit and always pay back more than the minimum payment. Never have more than 30% of your credit limit as a balance as this will look like an excessive debt to creditors.
Finally, it will take time to rebuild your credit history, but you must be patient. By slowly rebuilding a ‘damaged’ credit file you can prove that you can make monthly payments and are credit worthy.
Leave a Reply