If you have been baffled by a refused loan or credit card application, because you thought you had an unblemished credit record, one of the reasons may be that you simply don’t have enough credit history. Lenders make their decisions based on evidence of your ability to meet repayments on time, and without enough information, they can’t form an opinion.
Not all lenders will use the same criteria to make their assessments, and it is still possible to access products such as mortgages, even if you have no credit history. However, it will take some extra legwork on your part, and you will probably need the services of a specialised mortgage broker, who will know the best lenders to approach.
There are a few circumstances in which an individual may have no credit record, which is sometimes referred to as being ‘credit invisible.’ The first is that the person has just recently left full-time education and entered the workplace, and have had no previous access or need to take out loans, or set up direct debits, because they lived with their parents.
It takes just two years of financial inactivity to be discounted from the credit scoring system, so those who are retired and have paid off existing debts, or those who have been financially supported by a spouse or partner in the past, may also find they have little or no credit history.
Recent immigrants, and other people with no employment history, no UK bank accounts, no long-term UK address, and who are not on the electoral roll, are also likely to have an invisible credit record. Two steps you can take immediately if you are in this situation is to open a UK bank account, and register yourself on the electoral roll.
There is a belief that it takes a long time to build up a credit history, but even six months of activity will satisfy the requirements of some lenders. You don’t need to take out a credit card either, unless you want to.
If you do go down the credit card route, manage it well, don’t overspend, and meet all your monthly repayments on time, or you will damage your credit record and make your situation much worse. Set up a direct debit to meet your monthly repayments, to avoid accidental missed payments, and keep total debt below 45% of your total income.
Evidence that you are a utility bill payer, or have a mobile phone contract, can also be used to support your credit file. If you don’t want to use a credit card and live with your parents, you could ask them to transfer one of the utility bills into your own name (and obviously make sure you set up a direct debit to pay it on time every month).
Building a credit history is not that difficult or time-consuming, but of course you should approach it carefully, and not miss any repayments, or you will create an adverse situation.
If you would like some further advice from a poor credit mortgage broker in the UK, please speak to us today.
Your home may be repossessed if you do not keep up with your mortgage repayments.
There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is £595.
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Create Finance Limited is an appointed representative of Mortgage Advice Bureau (Derby) Limited which is authorised and regulated by the Financial Conduct Authority.
Create Finance Limited. Registered Office: 35 Friar Gate Studios, Ford Street, Derby, Derbyshire, England, DE1 1EE. Registered in England Number: 09582938.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is £595.
The guidance and/or advice contained within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK. The actual rate available will depend upon your circumstances. Ask for a personalised illustration.
We may receive commission that will vary depending on the lender, product or permissible factors, The nature of any commission model will be confirmed to you before you proceed. Create Finance Ltd are a credit broker, not a lender.