Your credit score is like your financial shadow. It follows you wherever you go to get credit. There does not come a time when it leaves your side, and every credit application of yours is tainted by it.
A good score vouches for your reliability and low risk, while a bad one reflects high risk in lending money to you. Every conventional credit lending source relies on it to process the approval of your application. Not just that, you might not get hired for a job simply due to a poor credit rating.
Every UK adult would have faced difficulties in borrowing with a bad credit score (for those who did not know about bad credit loans online instant decision). She would know the benefit and importance of maintaining a high score for financial security.
But, credit building does not always come as an exercise of correcting past borrowing behaviour. It can also come as a need for credit creation. Repairing your score need not always mean going up the ladder. What if it never existed in the first place? That is, it can also mean starting from the scratch.
Am I Credit Invisible?
A person is tagged as invisible by the credit reporting agencies if they do not find any (or enough) relevant information related to her finances or credit. That would imply that sufficient data was not there with the agencies to create a credit file for the person.
This can be understood like this: If you never opted for a subject, you cannot be evaluated for it. Thus, if you never had a credit history, you cannot get a score for your performance.
A person usually falls under the category of being invisible due to following factors:
- Just turned 18 and became an adult UK citizen.
- No bank account.
- No credit card.
- No loan of any type.
- No mortgage.
- No rental or other utility payments.
How Do I Build Credit?
Since credit score is very important for a healthy and secure financial future, it is sensible to work upon taking your number higher. This can be achieved in many ways.
Get a Credit Card
The first step towards building credit is to borrow some. And credit card is the best way to establish it. Get a credit card and start using it. Though you may find some difficulty in getting approved for one, you may get lucky with some offer. Credit cards are the best option for working on your credit score.
Take a Bad Credit Loan
Use the internet to improve your score. Direct lenders provide bad credit loans with instant decision of your loan approval. Some of them even offer 100% guaranteed loans irrespective of your credit score or guarantor presence. Borrowing money and making responsible, timely repayments is what your credit file needs to come out of the shadows.
Use 10%-30% Credit
The best usage bracket of credit is 10-30 percent. This shows the bureaus that though you are borrowing money, you do not need much of it to cover your expenses. Your self-sufficiency of not needing much funds and responsible behaviour on repaying what you borrowed, has great effects on your credit report.
Do not Miss Payments
You do not want to do anything that takes your score down. Being late for your repayments, or missing them altogether is not a good exercise while building credit. Stay aware when your due date is about to come, and make sure you have enough money to afford them. Borrow only what you can easily repay.
Avoid Piling Debt
Delaying repayments will lead to piling up of your debt. When you go beyond your affordability, you always fall behind in being able to return what you owe. A stacked debt is another way to bring down your credit score when you are trying to take it up.
How Long Does It Take?
It is not an overnight, or even a month long process to build credit right from the bottom. It is a long investment and you would need to stay responsible for at least a year to see make major changes in your credit report.
Remember that overcoming your past and securing your future is an important step in your life. And, staying in the good books of the credit reporting agencies can be a big plus for you in the long run.