How to get credit when you’ve never borrowed before

People using our money tips service have been telling us how difficult it can be to get credit when you’ve never borrowed before.

A catch-22

No credit in the past, means no track record of payments. Because of this, it’s hard to get a loan.

It’s also unfair. You may have been extra careful in the past. Never needing to borrow. This is the first time you’ve needed credit.

Punished for being careful.

Having no credit is not the same as having bad credit. But the consequences can be the same; not being able to get a loan.

Here are four tips to get you accepted for credit for the first time

Brush up your credit score

Credit scores are mostly created using information about how you’ve paid back debt in the past. Despite this, there are factors that have nothing to do with your borrowing past. For example, moving home can reduce your score.

Being on the electoral roll will give your score a boost.  One of the first things a lender will check is if you’re on the electoral roll. Lenders may automatically refuse you credit if you’re not registered to vote. This is because they want to see proof that you are living at your declared address. It helps prevent fraud.

But remember: making lots of credit applications will reduce your credit score. This is because lots of searches reduce your score. Find out if you qualify for a loan using a soft, rather than hard, credit check.

Check your credit report for inconsistencies

Check your credit report. A statutory report is free. Make sure your details are consistent and correct. Lenders don’t like inconsistencies between applications. For example, your date of birth should match across all of your accounts. If it’s different on one – get that provider to correct the mistake.

Additionally, it’s always best to apply using one version of your name only. For example, Samuel Smith could also show as Sam Smith or S Smith or Mrs Smith.

Utilities and phones count

Many gas, electricity and water companies report to a Credit Reference Agency. If you’re paying these by direct debit the accounts may show on your credit report. If you’re not paying by Direct Debit – see if you can. As a result, this can provide a track record of repayment.

It’s the same for mobile phones if you have a contract. And mail order.

Try a credit builder loan or credit card

Some lenders, including credit unions, offer credit builder loans. These are loans that are typically only available to people who have saved. And those savings are held as security for the loan. It enables someone with very little credit to begin to build up a repayment history, because the loan element is reported to a Credit Reference Agency.

If you can’t find a credit builder loan, try a credit card. There are many ‘subprime’ credit cards that will lend to people with little credit history. Taking out a card and paying back in full each month will really help. However, be careful. If you don’t repay in full, this is a very expensive way of borrowing. Depsite this, a credit card can really help you get credit when you’ve never borrowed before.


About Adrian Davies

With a background in money advice, Adrian's been campaigning for fairer finance for 25 years.

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