If you’ve run into financial difficulty in the past then it might have left its mark on your credit file: defaulted payments are visible on your record for a number of years, and might lead to you being turned down if you apply for further credit in the future.
Particularly bad circumstances might even have led to what’s commonly known as adverse credit: this could mean, for instance, a County Court Judgement (these stay on your record for 6 years), foreclosure or bankruptcy.
No judgement here – if you’ve struggled with debt in the past or found yourself unable to make bills then the most important thing is to find a strategy to get yourself back into the black.
Unfortunately, though, even if you’ve managed to put yourself into a better situation, these black marks can stick around and affect your ability to apply for a mortgage or rent a flat.
What to do: severe credit problems
When you’re dealing with credit difficulties that are still affecting your bank balance, then the unfortunate truth is that there’s not much that can be done.
While this probably isn’t what you want to hear, it can also be a good thing: by denying your credit application, lenders are stopping you from taking on another debt.
Of course, we know that it doesn’t feel that way when you need money to make essential purchases or are trying to put a roof over your head. In this instance, the best step that you can take is reaching out to a debt charity to get tailored advice and a strategy.
What to do: smaller concerns or issues from the past
In many cases, though, the credit issues that crawl up and bite you in the back are smaller problems from the past.
You might, for instance, have received a County Court Judgement for some badly handled credit card debt five years ago and since turned things around completely. In these cases, you may have a little wriggle room so long as you’re able to explain yourself well.
Your best course of action will be to write a letter (or email) to the credit provider which states your case. Here are our tips:
- Be honest. The moment that you start making up a story is the moment that it becomes unbelievable. This might also mean owning up to past mistakes – but as long as things have changed since, this should show that you’ve learned responsibility.
- Don’t write a rambling excuse. Long-winded stories about why it really wasn’t your fault are unlikely to have the desired impact. Instead, you’ll make yourself look immature. This is doubly true if you start blaming the creditor: even if they were at fault, the best course of action is to state the facts clearly and simply. This is a much stronger way to get your point across.
- Provide proof that things have changed. This might be as simple as outlining the steps that you’ve put in place to ensure that you don’t find yourself in a similar situation again. If, for instance, you’ve built up an emergency savings fund to avoid unexpected debt, you could explain that.
The important thing to remember is that there’s no rule saying that somebody can’t provide you with a loan or rent you a flat just because you have bad credit – it’s up to them.
So, if you can be polite and professional whilst also sticking up for your financial record then you may find you have more options than you thought.