Back in the day credit was issues by your bank or a loan company based on your income and collateral but technology and a range of other clever factors has meant that our rating is worked out intricately and precisely. Although this may have made it a lot quicker and easier for lenders to see if you are an appropriate customers, it has made it harder for lenders across the UK, especially if they have experienced problems. So, Bamboo Finance have looked in to what you can do to make sure you don't fall foul of this system and ensure we get the answer we are looking for when it comes to loans, store cards and even mortgages?
1. Borrow Responsibly
Although it sounds a bit daft at first, this one makes a lot of sense. If you have always earned a lot of money or never needed any credit, then you have no financial footprint. This means that although you have never been in debt, the lender cannot see how good you are at repaying your debts. This can often lead to troubles when applying for major credit such as mortgages. So, even if you don't really need to it could be in your interest to take out a credit card or similar and pay it all off on time so you can prove you are a responsible borrower. This is sometimes referred to as credit building.
2. Avoid Applying If You Have Been Rejected
Unfortunately this can all be a bit of a catch if you have been in debt in the past. If you are being rejected for credit then the more you apply and get a no, the worse it will be for your credit rating. If you are being rejected then it's a good idea to get it all paid off and apply with some subprime lenders first, once you have got yourself back in the black and improved your rating then you should see a lot more success. Don't go applying for finance all over the place in the hope that someone will just say yes as they most probably will not.
3. Seek Advice before Applying
If you are young and need to borrow, be very careful before you start asking for credit. Many of the aforementioned issues arise because people get into a lot of bother when they are young and a little irresponsible. It is a big commitment and if taken lightly you can irreparably damage your credit rating meaning you will struggle to get things such as mortgages when you are older. Ask family, friends or even a financial advisor if you are not quite sure and your bank is always on hand as well.
4. Get Voting
Are you on the electoral roll? If not then you should sign up immediately as it gives your credit rating a nice little boost. Although this means that every company you may owe money too will get your address, this will be a blessing in disguise in the long run. Even if you plan to abstain from voting, getting on the electoral register is a good idea.
5. Apply To the Right Lenders
Finally, many people get into trouble because they are applying to the wrong companies. This can result in negatively affecting your credit rating for no reason. Different companies have different socio-economic profiles and demographics they target so do your research and perhaps speak to the lenders before you actually apply.
