Consequences Defaulting On A Loan
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When you fill out an application for any sort of credit, whether it's a bank credit card or store card, a loan or a mortgage, for instance, you will have to go through a credit check by the lender that you are applying to for credit.
A credit check helps a financial organisation to look at your previous and present financial history, including whether you pay off your debts on time, make overdue payments, or have neglected payments. A credit check also reveals any outstanding amounts and any County Court Judgements (CCJ's) and additional defaults.
This offers the lender a picture of what kind of financial risk you present if they choose to give you a loan - and what chances they have of getting the loan paid back! Of course, no one wants to offer money to someone who won't pay it back on time or doesn't pay at all! This checking procedure is referred to as credit rating.
There is a number of organisations who have this information about you - the most widely known are Equifax and Experian.
If you are in the process of considering applying for credit, get hold of a copy of your credit file beforehand. This means that you can confirm that all the data on it is accurate and point out anything that looks wrong. For example, even just one bit of distorted information - maybe your report records an existing debt that has been paid - could be the difference between being granted some kind of credit - or not.
In order to get a copy of your credit file you can get in touch with one of the credit reference agencies. You will be required to pay a small fee (approximately £2) and they will send you a copy for your perusal.
Check that your record shows you on the electoral roll - if you are not there, this will have a negative influence on your credit rating. Also, financial 'associations' - where perhaps someone else who is living with you or has lived at your address previously has an inadequate credit score - will influence your likelihood of getting credit.
If you find information that is wrong on your credit record, report it, in writing, to the organisation who has given inaccurate data regarding you, and forward a copy to the credit reference agency too.
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