How Will A Damaged Credit File Affect Your Way Of Life?

by Rebecca Hall on 13 Jul, 2012

It is a sad fact that the current economic climate has had an adverse effect on many people’s finances and as a consequence some have found that their credit record file has been damaged. This can have disastrous consequences if not dealt with properly.

However, people who have had credit problems can research different providers at and compare the financial products available to them to find one that suits.

Day-to-Day Finances

A person’s credit score as found on their credit record can have surprisingly far-reaching effects on everyday life. Simple things such as changing utility suppliers or bank accounts can suddenly become more difficult.

New providers will often check a potential customer’s credit file and may either not approve an account at all or if they are willing to do so impose harsh conditions such as higher charges. Utility companies may insist on pre-paid meters.

It is also common for a bond or deposit to be required to safeguard against future payment problems and this can be difficult for consumers to find. These things can make it difficult for people to get the best value.

Future Credit

The biggest way in which a bad credit rating can affect someone is if they are looking for any kind of credit in the future. Potential lenders will always check the credit files of potential customers and base a decision on future credit worthiness on it.

Credit-card and store-card providers will be unlikely to offer an account to anyone with a poor credit rating. Those providers that specialise in cards for people with a poor credit history tend to charge very high interest rates and are not able to offer good value for money.

Bank loans and mortgages are getting harder to come by for all consumers and this is never more so than if they have a poor credit history. Many of the mainstream lenders’ products will simply not be available to these people.

While there are providers who can offer loans under these circumstances, they tend to be for short periods of time, for lesser amounts of money and come with extremely high interest rates. These loans can, however, be used to repair credit ratings if they are paid back without any delays or problems.

When facing a credit crisis it is important that consumers take the time to assess their own credit rating and do everything possible to ensure that the information held is correct. They should also take steps to improve their rating when possible.

About the Author

Rebecca Hall

Rebecca Hall worked as an independent mortgage adviser for 10 years before turning to financial journalism full time. She has strong links to the CAB advising families on mortgage refinancing.