Understanding what a credit report really is and what kind of information it holds on your financial past is very important before applying or even considering applying for a loan of any kind. People are often caught out by thinking that because they have never taken any credit or had any previous debt that getting a loan will be an easy task simply because they do not have a bad credit history. However, having no credit history is sometimes harder to overcome than having a poor credit history.
Every time you apply for credit, whether it be a bank loan, business grant or even a mobile phone contract, information is sought from your credit report to check how reliable your re-payment history is; but not only this, at the time when you apply for credit, information is also entered to your credit file, and if your application is denied, this is reflected negatively in your credit file, even though the reason you have been declined is simply the fact that you have no credit history.
So, how do you build a credit history when no one will give you any credit in order to build one? This is a very common and frustrating problem that is often presented to first-time buyers looking for a mortgage, or looking to go into business for themselves. With this article, we hope to be able to answer the questions you have, and clear up some misconceptions so that you can make the right decision and ensure that your credit report remains attractive to your bank manager:
Governments are now also taking notice of the problem and recently announced a new scheme to be put in place that rewards renters who consistently pay their rent on time to receive a positive entry on their credit reports; which is great news if you’re hoping to apply for mortgage but don’t want to take out credit cards or overdrafts to build a credit history.