​When we refer to a bad credit rating it means that you may have defaulted (missed payments) on your previous loans or accounts, had a court judgement against you, or had cheques bounce or been declared bankrupt.

Having a bad credit record or having no credit record has one vital thing in common – they both make it tricky to access a loan. When you have no credit record, it means you have no credit history to date. You have not taken out a loan, have no existing accounts or registered a credit card under your name. For many this might sound great and they will give you a pat on the back, but the reality is that it will keep you from being able to make important financial transactions, like buying your first home or car. Unless you have the cash lying around!

Many people think that having a credit history or buying things on credit is a bad thing. The reality is that we almost cannot escape it in the current state of the economy. The only bad thing is when people treat their credit and loan applications irresponsibly. This results in bad credit scores.

Lenders will often hold the above mentioned two records against you when applying for a loan. It will limit your options and you will generally be charged with higher interest rates and have access to less funds. For a first time borrower this will only be the case for your first loan. If you have the discipline to pay back all your instalments on time, your credit score will increase and you will gain a more favorable rate on your next loan.

Fincheck supports a healthy mindset towards having a credit score and we want to help you make decisions that build a great credit score with great tools like our loan comparison calculators!