People are being warned to not underestimate the affect bad unsecured credit choices have on future potential secured loan decisions.

According to Confused.com, in the UK the closure of one in five credit card accounts by the provider was due to non-payment – people are getting so far into debt that the lenders are shutting the door on them – and that door can remain shut for a long time.

When you default on a credit card, you receive a black mark on your credit score. If you amass enough of those black marks the banks and building societies will simply see you as too big a risk to lend to in the future.

Joanne Garcia, head of credit cards at Confused.com says: "Credit card users in all regions need to understand how damaging it can be to miss repayments. While it may not seem like a big deal to miss a few payments here and there, credit providers – which include mortgage lenders – leave no stone unturned when it comes to checking a person's credit worthiness. It they see a history of non-payments it makes it much more difficult to borrow money."

A door in the face now may mean that you cannot secure a mortgage, a remortgage or a secured loan for many years to come. It takes a long time to rebuild credit scores, but you may need some sensible, safe secured credit much sooner than you can clean your black marks.

So avoid unsecured debt, and if you do have credit cards make sure they are under control. Talk to a financial professional about controlling your finances and looking to the long-term for secured success.

SOURCE: Confused.com, 18/11/09

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