What happens if you have a bad credit history or a bad credit score/rating and you want to shop online? Does it mean that you will always have to pay all the money up front each time?
There are thousands of retailers on the Internet worldwide offering consumers various types of credit deals. Some retailers refer to them as buy-now-pay-later payment options.
According to Finance.co.uk, which has a list of the best bad credit catalogues online, it is possible to buy things online on credit, even if you don’t have a good credit score.
Types of online catalogues that offer credit terms
Regarding buy-now-pay-later shopping catalogues, there are two main types:
- No credit check catalogues. They do not consider the consumer’s credit history.
- Bad credit catalogues. They consider the consumer’s credit history.
People who apply for a no credit check catalogue can buy products on credit. It is a great opportunity for those with low scores to rebuild them.
Only buy things on credit if you are sure you can afford them. If you cannot meet the monthly repayments, your will be ruining your credit score further.
If you manage to pay your monthly installments on time, after a while the retailer will probably raise your credit limit.
What is creditworthiness?
Creditworthiness reflects an individual’s, company’s, or other entity’s ability or likelihood to pay back a debt. In other words, what is the probability that they will repay a loan in full? The meaning also includes whether debtors are likely to pay their monthly repayment installments on time.
We can write the term as either one or two words, i.e., creditworthiness or credit worthiness.
The more creditworthy people are, the more banks will lend them money. Very creditworthy people are also likely to get lower interest rates on their loans than people with poor credit.
What can damage your creditworthiness?
Your creditworthiness suffers if:
- You have defaulted within the last six years. To default, in this context, means to fail to repay a loan.
- You defaulted earlier than six years ago and have not yet come to a settlement, arrangement, or agreement with the lender or a debt collection agency.
- The lender or a debt collection agency filed a CCJ against you. CCJ stands for County Court Judgement.
- You have submitted too many applications that require a credit check.
Credit Reports
Credit checks are made wtih Credit Report Services Companies such as Credit Angel, UK Credit Ratings, Equifax, Noddle, and Experian.
For a fee, these companies can send a Credit Report.
According to Finance.co.uk:
“A Credit Report is an analysis about your financial behaviour history. It is what lenders will use to help them decide whether to approve or reject your application for a bad credit loan, credit card or mortgage, amongst others.”
“This analysis is summarised by a Credit Score (or Rating), a numerical value. The higher your score is, the lower is your level of risk to the lender, who will also use that to determine the interest rate you pay.”
Check your credit rating
If you want to check your credit rating, you should ask at least two credit agencies to send you your Credit Report. Not all versions are identical. If you check with just one agency, it might not be the most accurate one.
Under the UK’s Consumer Credit Act, you have the right to obtain your full Credit Report from these agencies. They cannot charge more than £2 if you are checking your own credit rating. You can do this by normal (traditional) post or online.
What is Your Credit Core?
Your credit score tells lenders how creditworthy you are. In other words, how likely you are to repay a debt on time. If your score is high, lenders perceive you as a low-risk borrower. The term does not mean the same as credit risk, even though we use both terms in similar situations.