Bad Credit Explained

If you have ever defaulted on a loan, been issued a CCJ or missed payments, you more than likely have what we call Bad credit. These aren’t the only ways you can get bad credit however, and it’s important that you’re able to identify whether or not you have bad credit before it makes a lasting impact on your ability to borrow money.

Creditplus Definition of Bad Credit

Your credit worthiness is calculated by credit reference agencies, and they collect all of the data from lenders you apply for loans or other types of credit through. If you struggle to make payments and eventually slip with repaying your credit, the lender will convey this back to the reference agencies and a mark will be made on your credit file as bad credit, which is what lenders look at to see if you’re their preferred type of customer. These marks are what lead to bad credit.

Another reason you might be seen as having bad credit could be a high amount of credit searches on your file in a short period of time. Every time you apply to a lender for credit, your file is marked with a search. If you apply to multiple places in a short space of time, it could be seen that you're credit hungry and lenders will be less likely to give you the credit you’re asking for. You should always look for companies who advertise “quotation credit searches” or "soft credit search", as these searches don’t leave footprints on your credit file or result in bad credit history. Creditplus are currently the sole car finance company to conduct soft credit searches.

Factors which can contribute to bad credit

•    Missed payments
•    Defaults
•    CCJs (County Court Judgements)
•    Being in an IVA
•    Being in a debt management programme
•    Bankruptcy
•    Being in arrears with your mortgage.

Having bad credit can be tough, but it is possible to fix it with a little forward planning and common sense reasoning. Creditplus can still provide car finance to those with bad credit. For more information, visit our dedicated bad credit car finance page.

To find out more information about what can contribute to a bad credit profile, see the common questions below.

Wikipedia Definition of Bad Credit

“A credit rating is an evaluation of the credit worthiness of a debtor, especially a business (company) or a government, but not individual consumers. The evaluation is made by a credit rating agency of the debtor's ability to pay back the debt and the likelihood of default. Evaluations of individuals credit worthiness is known as credit reporting and done by credit bureaus, or consumer credit reporting agencies, which issue credit scores.”

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