Bad Credit Ratings

It seems that in England we are constantly obsessed with our credit rating and fear having bad credit ratings. A discussion with your friends about whose rating is higher is all too familiar. This is exactly the way of thinking that your Creditors want.

Often people are so concerned about their credit rating that they become scared to do anything that may lead to bad credit ratings, even though they have no intention to move house, buy a new car or take any further lending.

It is this obsession with our credit rating in isolation that got us all into this.

The truth is that even if you have always paid your debts on time, further lending is now based on ‘Affordability’. How much extra cash do you have each month after all your outgoings have been paid for? Can you afford the extra borrowing?

That means you could be earning a very large wage, pay all your debts on time and have a good credit rating, but still be refused further borrowing.

Banks and other lenders have been extremely quick to hand out loans, credit cards and overdrafts, even when we don't need them. They’ve done it quickly and ruthlessly, raising limits without us even asking. Why? The answer is simple. They want to increase their profits.

Believe it or not, they don’t actually want their customers to pay back that loan or credit card on time. They want you to borrow your maximum and only pay back the minimum balance, so that in 5 or 10 years' time, you will have paid these loans and credit cards back several times over and often still have some balance outstanding.

Over recent years we have all been conditioned into continually worrying about bad credit ratings and credit scores, above anything else. This is exactly what the banks and other lenders want you to believe.

Why is this?

To any UK consumer their credit rating has become a large stick held high over our heads, used by banks and other lending organisation to control us into acting properly and continuing to pay the money we have been lent, even though we are struggling. The banks even use it against people who have never taken borrowing or are ever likely to. We have little or no control over this tool which we are all fearful of. The company behind the concept is Expiren, which acts as the police for any credit to the banks and other creditors.

Without the illusion of fear there is very little your creditors can do to you to ensure that they recoup the money they have lent you. They can take you to court, but the UK courts are there to make sure the UK citizens can payback only what they can afford, not to increase the profits of risky lenders.

To become debt free quickly and cheaply, you must first stop being a slave to your fear of bad credit ratings and break the lending cycle. You will be debt free quicker and cheaper than any other way. Once you have achieved this goal, your credit rating will start to recover. Lenders will want to lend to you again as you are no longer encumbered by previous borrowing. You will be well on your way to being back in control of your finances.