As many as one in five people face problems applying for a credit and it is not just the poor who can find lenders less than willing to help. Anyone who has had credit problems in the past will find their options severely limited. Others might never have had credit before, but that in itself can provide a barrier to obtaining credit.

When assessing a person’s application for credit, lenders, look at two areas: the person’s credit history and their credit score. Poor credit history will certainly amount to a low or poor credit rating, but a clean credit history or none at all, is no guarantee of a good credit score either.

As many as one in four people in the UK have some form of adverse credit history such as late bill payments, defaults, arrears, CCJs and bankruptcy. These people will have trouble satisfying the credit scoring criteria used by many lenders and individuals with a bad credit rating will be turned down for a loan by many lenders. However, this company specializes in arranging bad credit loans for people with a poor credit rating, they have access to a number of lenders who are sympathetic to people with impaired credit. As an independent broker they are not tied to any particular lender and can advise on the top deals available to you. Serious problems such as county court judgments (CCJ), bankruptcy or defaults on a loan will stay on file for six years; bankruptcies and CCJs are a matter of public record, with details held by the courts.

Less serious, but still problematic is a history of missing payments on a personal loan, credit card or a mortgage. Mortgage arrears are given particular weight by lenders. A default - where a lender has effectively given up chasing repayments - is also extremely serious. One or two late payments on a credit card might not be a problem. Typically, lenders will only contact credit reference agencies once an account has been in the red for some time, so being a day or two late with a monthly payment should not create a black mark. Lenders, though, are looking for habitual late payment: this suggests the borrower is struggling to cope.

Multiple applications for credit, successful or not, can be an issue. Each time someone applies for a card, personal loan or a store card, the lender undertakes a credit search. Each search leaves a "footprint" on the individual's credit reference file. This is not necessarily a problem, but too many footprints can trigger warning bells for lenders. A poor credit rating will cost you money. The best credit card deals are only open to people who meet the credit scoring requirements set down by the main lenders. People with a poor score, or a blemished credit record, will not be able to take out mainstream credit cards.

Improve Your Credit Rating

If you ensure you repay each month so there is no charge, after a year you will have built sufficient credit history to enable you to move to a card with a more competitive rate of interest. If used sensibly a credit can help you strengthen or rebuild your credit rating. A bad credit rating can limit your borrowing options. County court judgments, defaulted payments and bankruptcy orders leave a black mark against your name when trying to secure credit.