How to create a good credit score or clear it of dark spots

Accredit score is appointed to a person according to his credit history. A credit history is information about an individual or legal entity that displays the history of his obligations to creditors. In fact, it displays the level of payment discipline of the borrower. Accordingly, if the credit history is long and positive, then the bank can predict that the risk of non-repayment or delay in payments of such customers will be minimal. Conversely, bad news will await those who have repeatedly delayed payments, not have repaid the debt for more than a month, or have prevented the collection of collateral.

How does the credit score influence loan approval

A loan to buy a home, a car, study, current needs and even medical treatment – all this can be erased by the poor financial reputation.Checking the credit history is one of the first steps when considering an application for a loan, and if everything is not going smoothly, it becomes a decisive stop factor for making a positive decision.

A good credit history, on the contrary, has a positive effect on the decision of the bank.If the borrower made payments on time on previously taken loans on time and does not have past due debts, this will undoubtedly affect the decision to approve a new loan.

Credit history contains information on the fulfillment by borrowers of their obligations, including:

  • under loan or credit agreements,
  • payment of utilities,
  • communication services,
  • alimony, etc.

It is stored in the credit history bureau, whichis officially registered in the UK. Information from them flows into the National credit bureau. Such bureaus operate on the basis ofcurrent legislation.

Financial literacy is one of the most important skills nowadays. As  gets more and more difficult to live without all sorts of loans: for studies, to buy a new car, house purchase or simple ick online loans. Online lending companies, which issue micro credits for a short period of time, seem to be the most loyal players at the market of lending money. If you need some quick cash and bank procedures with preparation tons of documents and low chances of being approved seem harsh and needless, you have another option at the moment. Minimal set of documents, convenience of application, quick processing of the application. This is the list of the basic advantages of such types of loans.

While small loans may not be worth turning to a bank, mortgage and other loans of big amounts are recommended to be taken at the bank. In such cases, lowest interest rate may be received at the bank. Besides, the terms of house loans require long-term investments and more financial capacity.

How to improve a bad credit history with low income level

To leave all the bad in the past, you need to work out the plan. And can help you do it. Information in the credit bureau is stored for 10 years from the date of the last change. The facts of delay and default will for sure be taken into account by creditors. Therefore, it is important to protect the financial reputation, try to prevent unjustified cases of violation of payment discipline.

If, nevertheless, this happened, it is best to correct the situation as soon as possible and to continue to be conscientious in fulfilling obligations.

Imagine a situation when a person with a bad credit score wants to get a mortgage. What can he do in order not to be denied of the home loan? In order to guarantee a mortgage, he can take up the correction of a damaged credit history in advance. He must do these steps in advance, before applying for a home loan. He can begin to take small loans from microfinance organizations and repay them in a timely manner. Loan companies are usually more loyal to the borrowers and approve loans even to people with a low credit score. Then a person can receive credit cards at three banks and also return money on time for purchases made on time. As a result, past credit history will not prevent this person from taking a mortgage loan and moving into a new comfortable apartment.

If the credit history is “bad”, then to correct it, you will need to pay off all overdue payments on loans, establish yourself as a bona fide payer and wait a while – as a rule, banks look at the credit history for the last year.

In some cases, the credit history can be damaged due to the fault of bank employees who sent incorrect information to the credit bureau. To remedy the situation, you need to send a statement to the appropriate bureau requesting changes. It should be considered within 30 days.