How to Improve your Credit Score Without a Credit Card

Posted by admin on June 23, 2020

Whatever the reason, most of us have had to secure credit at some point. To buy a new car, to pay for some emergency repairs - maybe even for a honeymoon holiday of a lifetime!

The problem is, most companies will want some kind of evidence that you are a safe investment. They want to know that they’ll receive their credit back at some point in future, and the easiest, most standardised way of doing this is to perform a credit search. Your credit score, to a lender, is a way of predicting your future behaviour. 

Unfortunately, if you are burdened with a poor credit score, then you can be passed up for favourable interest rates, or sometimes refused credit altogether. This can even be the case for people who have never had any form of credit in their life, and it can feel a little unfair to be refused despite no evidence indicating you’re a risk to the credit company. 

One surefire way of improving credit is to get a credit card and use it little and often, making sure you pay it back in full each month. But this isn’t for everyone, particularly if you struggle to live within your means. 

Luckily, owning a credit card isn’t the only way to improve your credit score. Read on to learn more…

Familiarise yourself with the big 3 credit scoring companies

 TransUnion, Equifax and Experian offer credit reports. You can create an account with one, and then monitor your credit score as and when you need to (although bear in mind that they do have small monthly fees).

These three companies hold an incredible amount of data on all of us; of course, with so much data it is not uncommon for them to make mistakes and these mistakes can stop a credit application in its tracks. Make sure you check your credit score regularly and, if you spot anything amis, get in touch with them to fix it.

Register to vote

No, we’re not your local political party member begging you to give them us your vote in the next election, but it is important to register to vote for your credit score. Even if voting isn’t for you (and you wouldn’t be alone, a third of UK voters don’t vote), the act of registering alone will make it easier for a lender to prove you live where you say you live.

If you’re not eligible to vote in the UK (for example, Commonwealth citizens) then send the credit scoring companies mentioned above your proof of residency, like a utility bill.

Remember, when the risk of you not being who you say you are decreases, you start to look like a safer option to lenders. 

Keep your finances separate

If you have debt in any form which you share with someone who is a credit risk, it can impact you negatively as well.

Let’s say you lived with Greg, Rob and Tom for two years back in 2017, and you decided to set up a joint bank account to cover the bills. Rob is notoriously bad with money, and this helps you make sure he pays his bills on time… but his bad spending habits could mean you, Greg and Tom get tarred with the same brush! 

The same applies to any ex-partners with whom you shared an account. If your finances are now separate, whether this be an ex-spouse or an ex-housemate, you can write to the big three credit scoring companies and ask for a ‘notice of dissociation’. 

If they aren’t separate, you’ll have to wait until you’ve closed the account down or converted it to an account with only your name. 

If you get rejected - don’t keep trying immediately after

Lenders will spot if you’ve made multiple applications in a short amount of time. So If you get rejected from one, don’t immediately apply for another. 

The message this gives to a lender is: I’m desperate for credit. And, sadly, people who are desperate for credit tend to be less able to pay it back. For the same reason: avoid payday loans. They make you look like a risky prospect for a lender. 

If you need credit and are worried about getting rejected, try asking the lender for a soft search. This will often give them enough information to give you an informed quote and chances of an application being successful, without appearing on your credit file. 

Consider securing a loan against an item

One of the appeals of pawnbrokers is they will lend money against a valuable item, even to people with poor credit histories. The reason for this is logical - they have the item as a guarantee the loan will be repaid. 

If you would like some friendly advice on how you can secure a loan against a valuable item, perhaps to help pay off a credit card, then look no further. Here at Cuttings we are an independent family-run business with decades of experience. Get in touch with our friendly team today.

 

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