To receive a loan or any other form of credit, you will need to have a favourable credit score. A credit score is a number that reflects your money management skills. If you have a high credit score, your lender will regard you as low risk. This is because they will expect you to have no problem making your repayments. If you have a low credit score, your lender will regard you as high risk. This is because they will expect you to have problems meeting your repayments.
Your credit score is based partly on your credit history – a record of the amount of money you have borrowed in the past – and the way in which you have managed your debts. If you wish to borrow money from a loan provider selected by a broker such as SGE Loans, you will need to build your credit score before you file a loan application.
How do I start building a credit history?
Building a great score is simple. If you are able to set up and use a UK current account, you will be able to build your credit history by demonstrating that you have developed a responsible, on-going relationship with a financial institution.
You may also wish to start paying your bills by Direct Debit or standing order. This will not only help you to pay your bills on time, but it may also grant you the chance to acquire a discount on your payments.
Are there any other factors that may stop me from obtaining credit?
Beyond your credit history, a lender will look into a number of other factors when deciding whether to lend you money. If you live in the UK, your chosen loan provider will look to the electoral register to determine whether you are registered to vote in the UK. If your name does not feature on the electoral register, you should add it to the register as soon as you can. In doing so, you will enable your loan provider to verify your address, which will improve your chances of acquiring a loan.
Who works out my credit score?
When you apply for a loan through a broker such as SGE Loans, your loan provider will check your credit score through one or more of the UK’s credit reference agencies. Before you apply for a loan for the first time, you may wish to consider checking your credit report. All three of the UK’s main credit references agencies have a statutory obligation to provide you with the chance to view your credit report, which will show you a snapshot of your current credit history. If there are any unfavourable listings on your credit file, such as late repayments, you should use notices of corrections to put these issues into context.
Once you have built up a strong credit history over the course of a few months, you should try applying for the credit you desire.