When it comes to things like borrowing money on credit, getting credit cards, loans, and even mobile phone contracts, many people are still somewhat confused about their credit score and what impact it actually has on their ability to lend, so I just want to shed some light on to this, and also what steps you can take to actively improve your credit score.
First, I just want to debunk a common myth that if you have a bad credit score or no credit score then you’re never going to be given credit for anything – this simply isn’t true.
Ultimately you credit score is not set in stone. It’s simply used as an indicator for lenders who do a search when you apply for credit for them to determine if you’re actually able to pay the money back. Now, as I said – it’s not set in stone, so you could have a great job and regular income, but the credit scoring system uses many algorithms and factors to determine the risk, and not all companies are given the same results, so you may get credit with one company, but not another.
The point is: your credit score counts, but it doesn’t count for everything.
So, let’s look at some different ways you can actually start improving your credit score if you have a bad credit score or no credit history.
Obviously if you have a poor track record of paying back what you owe and you know that you’re not very good with money, then borrowing until you’re in a place where you can afford to pay it back is not a good idea and will just make things worse.
If, on the other hand, you can afford to, and you know you’ll make the repayments on time, then you can actually improve your credit score by taking out some smaller credits, such as a loan through Enness Bridging Finance and then paying them back, either in full, or on time.
A great way to start with re-building is to first get to know what your current credit score actually looks like so you know where you’re starting from.
You can easily access this information by signing up for accounts with the credit reference agencies who hold information about your financial history.
Once you have this, you can then have a look for companies who offer, what are known as, bad credit history credit cards.
These are not at all shady, but they’re simply companies who will provide you with a credit card that carries a very low limit if you have bad or no credit history and allow you to make repayments to show that you can manage your card well.
These repayments count towards your credit score and will show up. Once you’ve been able to get your score improved, then you can apply for another card at a lower rate of interest.
The best way to see what you’re eligible for, is to do a soft search which just shows you which companies are most likely to accept you, and then you can apply. Soft searches don’t impact your credit score and won’t show up on your file.
The final thing you have to be careful of, is applying for too much credit over a short period of time.
If you apply for one card and are rejected, then you should wait a month or so before applying for another, or until you’ve improved your score a little, as these show up to lenders and could look like you’re overborrowing.
