Credit history plays a significant role in the world we live in. Financial lending has long been institutionalised and all secured loans as well as some unsecured loans depend heavily on the credit score. There is an inherent problem in the way credit score is determined.
The Never Ending Cycle of Bad Credit
Let us imagine a scenario that is far too common. An individual with an ordinary lifestyle managing to save a few bucks from every paycheck has a financial misfortune and runs into a debt. It could be as simple as failing to repay a small loan, defaulting on monthly installments towards the purchase of an appliance or borrowing too heavily for some purpose and running into bad debt. Whatever be the reason, the result is the same. There will be an adverse impact on the credit score. This credit score will now disqualify the individual from borrowing from banks and financial institutions. The only option for the person is to go for unsecured short term loans or loans for bad credit.
Now, here is where the whole system goes kaput. When someone has bad credit or has a poor credit history, the only way he or she can redeem the credit history is by borrowing and repaying. Normal purchases don’t have any effect on credit score. It is only a loan, line of credit or installments that have an impact on the credit score. Installments are rare for those who don’t have a good credit. Small purchases and splitting them into installments don’t help much. Those who have credit card debt are anyway not qualified for a new card so they have to struggle with the existing debt while not getting any credit from any source. This is the primary reason why special unsecured loans for bad credit like payday loans or short term loans with three months to repay have become so popular.
With no credit from banks and financial institutions, no new credit card and no loan to procure anything worthwhile, the individual with bad credit would continue to have poor credit history. This cycle is never ending and it may take a lifetime to repair the damage. However, there are ways to repair credit score or credit history and that is through short term loans for bad credit facilitated by Flex Repay UK.
A Stepwise Guide to Repairing your Credit History
The whole purpose of the credit history is to ascertain if you are credit worthy. If you are trusted borrower, responsible and committed to your repayments, don’t default and finish repaying the loan with its interest, then you would be prompted to borrow again. Else, you would be deemed less worthy of credit and that would reflect on your credit score.
- Once you have bad credit, you would not get a credit card, you wouldn’t qualify for a home loan or a car loan. Even business loans and personal loans will be unassailable. The only option would be unsecured short term loans or unsecured loans for bad credit, the likes that Flex Repay UK offers. Go for small loans, a few hundred or a few thousand pounds if you need and can afford to repay. Take these loans for personal purposes or to procure something you would use and benefit from. For instance, you can use the money to fund your business, to buy useful equipments or you can use the money to manage your debts.
- Have a lucid repayment plan and follow through. As you repay the small short term loans, you would be deemed credit worthy. Initially, you would be deemed reliable by the lender. But the lender will also report your repayment to the credit bureaus. Over time your credit history will improve. Now, a hundred points or more would not get redeemed in a month or six months. But you would get there in a year or two. Very poor credit histories are harder to repair and they may take five years or so of borrowing and repaying.
Not borrowing is not the solution to repair your credit history. Your credit score would remain unaffected for ten years and longer if you don’t have any borrowing history.