No Credit Can Mean Bad Credit! Truths that Could Change Your Views on Lending

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When people leave home and enter the wider world to fend for themselves, they are often given one sage piece of advice: never a borrower or lender be. Borrowing cash or lump sums of money from others is always painted as a negative and we are encouraged to only ever touch what is in our own personal bank accounts. Sure, the sentiment behind this is good. However, did you know that having no credit history at all can actually prove to be worse for you financially than having a bad credit history? It doesn’t seem to make sense, does it? However, unfortunately for those of us who have always kept our finances and spending to ourselves, our privacy and self-reliance could truly prove to be detrimental when it comes to making larger decisions later down the line. So, to clear things up, we’re here to help! Here’s everything you need to know about lending in order to improve your credit score, opening up new avenues for you in your financial future.


Acknowledging that Someday You will Need Credit


Sure, you may have got by just fine up until now without engaging with any professional lenders. But what about when you decide to buy your own property? With skyrocketing house prices, it’s virtually impossible to place down a full payment on a house unless you win an outstanding amount of cash. You’re going to need a mortgage. Now, a mortgage is perhaps the biggest loan that anyone will take out during their lifetime. But how are lenders meant to trust you with such a large amount if you don’t even have a record of an ability to pay back smaller sums? Looking at things this way helps us to understand the lender’s logic a little more, right?


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Initial Engagement with Credit


Now, you may feel a little lost when it comes to your journey towards engaging with credit on a small scale. But not to worry. Things are surprisingly simple. If you have been paying any phone contracts or bills by direct debit, you will have a stable base showing your ability to meet payment dates. This means that credit companies will be likely to offer you a starter card with a low credit limit. Find some of the best at For loans, you’re likely to either use partner finance schemes for products bought in retail stores or to engage directly with your bank.


Building a Strong Credit History


Once you have your first card or loan, it’s time to start using your credit responsibly. Make larger purchases with the credit available to you and pay off the full amount when it comes to the agreed repayment date. This will prevent large amounts of interest from accumulating, but will also create a record of you using your credit responsibly. If you have a loan, make sure that you don’t miss any repayment dates. This could result in fines, late payment penalties, and negative marks on your credit score.


Once you’ve proven that you’re capable of borrow money and repaying it as agreed on a small scale, you’ll be able to progress to larger scale lending. Perfect!

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