Every single person in the country has a credit file. This credit file includes a lot of data and information that has been collected about you by the credit agencies, such as TransUnion, Equifax, and Experian. They look at sources of information such as utility companies, banks, and other credit lenders, to see how you manage your financial accounts. From there a credit score is created that reflects how much of a risk you are deemed to be to potential lenders should you wish to apply for any form of credit in the future, whether this is a short-term payday loan, a credit card, or a mortgage.
A credit score is a vital component of any lenders process when considering an application a person has made. If you have a bad credit history, or no credit history at all, it becomes increasingly difficult to acquire credit in any form.
Each credit agency has a different way in which it calculates your credit score, so it is always beneficial to take a look (free of charge) at your credit reports from each agency on a regular basis. This way you can ensure there are no faults or missing bits of information that could cost you when it comes time to put in an application of any sort.
Once you know what your credit score is with each credit agency you can begin to notice patterns and put together a plan of action to ensure that you are following the right journey correctly with a view to building a good credit score. There are a few different things that you can do to ensure that you have a good credit score and the first one is mentioned above, always ensure your credit file is as accurate as possible and that you are enrolled on the electoral register at your current address (as all the credit agencies will check this, as do lenders when assessing an application from you).
Aside from that one of the important basic principles about borrowing money is to only ever borrow what you can definitely afford to pay back. You must always meet the minimum repayments at least when it comes to monthly repayments. If possible set up direct debits on your debt, to ensure that there is a regular payment made on a set date to your credit card providers, utility companies and mobile phone networks.
Whenever you have taken out credit, pay it off regularly, and if you can afford to pay a balance off in full, take that opportunity immediately. Keep a consistent account with your bank to showcase stability and don’t be afraid to open smaller lines of credit in multiple locations to demonstrate you can manage multiple lines of debt at any given time.
For some payday loan lenders they have taken a slightly different approach and do offer adverse payday loans to those applicants with a bad credit score. As long as you can demonstrate that you have a bank account and employment that provides you with enough income to support a repayment schedule based on the amount of money you wish to borrow, they can award you a payday loan. Why should someone be punished indefinitely for bad credit, when they are demonstrating willingness to overcome it and build a good credit score?