Understanding the Issue
Millions of borrowers face high costs or rejection from lenders due to poor credit scores. A good credit history is essential for getting approved and borrowing affordably, whether it's for a mobile phone contract, credit card, or a home purchase.
The Impact of Poor Credit
Lenders conduct "hard" credit searches to assess borrowers' affordability. Rejection can harm your score and require a six-month wait before reapplying. Poor credit leads to higher borrowing costs, with rates up to 1-2% higher for mortgages and significantly more in interest payments on loans and credit cards.
Building Your Credit
If you lack credit history, it's possible to build a score without going into debt. Credit builder cards and responsible borrowing can help improve your creditworthiness over time. Missed payments can negatively impact your credit file, so it's crucial to borrow only what you can repay.
Tips to Improve Your Chances
Registering to vote, limiting credit applications, and making timely payments on existing credit accounts are key steps to enhance your credit score. Rent reporting, using services like CreditLadder or Loqbox, and avoiding payday loans can also help boost your creditworthiness.
Navigating the Application Process
When applying for credit, lenders assess your application and credit check information to make a lending decision. Using eligibility calculators can help you gauge your likelihood of approval without affecting your credit score. Soft searches and eligibility checkers from major lenders and comparison sites can provide valuable insights.
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