A No-Nonsense Guide To Borrowing When You Have a Poor Credit History

February 12, 2015 Updated: April 23, 2016

It can be exceedingly difficult to benefit from borrowing services when you have the rain cloud of a low credit rating hovering above your head. There are many explanations as to why there has been a negative impact on your ability to borrow, such as having large levels of existing debt or being viewed as an ‘irresponsible borrower’. If you find that your past credit mistakes are catching up to you, try not to lose hope because it is still possible to borrow despite having a poor credit history – and there are some ways to improve your overall rating.

Don’t Succeed? Try Again
Remember that if one lending company rejects you, it doesn’t mean that others will follow suit. It is possible to find a company who will not reject applications who were otherwise considered ‘unstable’ due to their credit history. A logbook loan may be your best option. How they work is simple, you basically withdraw money from your car and the process is usually quick and easy in comparison to most other types of loans.  

Electoral Register  
A sure way to boost your credit score is to sign up on the Electoral Register. Lenders will see this on your credit reference file and will lean more in your favour when it comes to deciding whether or not you are eligible for a loan.

Evidence of Stability
Lenders can be quite picky with who they deem worthy enough to qualify for a loan and one of the aspects of your file they will take particular interest in is your employment record.
For example, a person who is employed with a stable job is more likely to be eligible for a mortgage than someone who is self-employed.

Build your Credit
Sometimes you have to make things happen for yourself. The Telegraph agrees, stating that ‘those with little credit history, even if none is bad, are often rejected because they’re difficult to predict. If you don’t have a (good) credit history, build one.’ You can come one step closer to improving your record if you show that you are a responsible borrower.
Do this by spending small amounts on a credit card and making sure that all repayments are prompt and in full.

Be on Time
Punctuality is key when it comes to showing that you are a stable, responsible individual. Make sure that you pay your electricity and gas bills on time because if you have ever been given a County Court Judgement (CCJ) in the last six years (for any unpaid bills), this will remain on your file until the six years are up, making it more difficult for you to secure a loan.

Others can affect your Credit Rating     
If you are linked to someone else by a joint mortgage and the other person has a bad credit score, this can immediately affect your own chances of securing a loan. However there are ways in which to dodge this particular bullet. James Jones, the Head of Consumer Affairs at Experian advises that if you or your spouse find yourselves in this situation, finding a broker may be your best option as they will ‘review your financial circumstances and your credit history and then help you choose a mortgage deal you’re likely to be accepted for based on your personal circumstances.’