You need Credit to get Credit

We had just moved to the UK then with what we thought was the big bucks until experience showed us otherwise. For clarity, do  click here to get an idea of how funds can quickly deplete in the UK. Anyway, one of the surprising things that we discovered is that a whole lot more is spent on clothing and households than could ever have been imagined. The weather changes in the UK which most say is akin to a “woman’s mood” is not to be trifled with! Sorry women! I am a woman by the way!

Seriously, the weather can fluctuate from sunny to rainy to snowy all in one day and this affects clothing and bedding choices. It is therefore not surprising that one has to frequent shops each time there is a change in season looking for the most appropriate clothing for the particular temperature being experienced. More money is even spent where kids are concerned but this is a story for another day.

Now to the crux of the matter. Yours truly visited Marks and Spencer (M&S) to buy clothing but halfway through realised she needed more than she could afford. Upon discussing with a customer service representative, I was told that M&S have a store credit card. She explained that it would only take a few minutes to apply and get approval and I could do all my shopping at once. She mentioned that a credit check would be done to which I agreed, after all there was nothing to fear. Considering I had never borrowed before, I naturally assumed that my credit score would be high thereby making me credit worthy. I was smiling and nodding like a red neck lizard as she asked me a couple of questions. I only needed a credit of £300 – I was being conservative as I did not like borrowing – my reasoning was that I should take just enough to enable repayment the following month before interest kicked in.

The next few statements had me in shock. “Sorry madam, but your credit request has been declined”, “you have no credit history for the company to base its decision”. “It’s a lie”, I thought in my head! I told the lady that I had never borrowed before, I explained that I was a sensible person that lived within their means bla bla bla. The lady explained that not having ever borrowed was a minus and that without a credit history no bank would give me a loan. My voice was now rising as I was really confused and perplexed as to why my never borrowing should be a bad thing.  The lady with the characteristic stiff upper lip now firmly in place told me to try again in future. I left with my few purchases still as confused as ever.

I was my father’s child after-all. He had taught me not to borrow, “always live according to your pocket”, he had always stressed. However in the UK, it is virtually impossible, not with all the bills that keep coming in.

I went on the internet and researched and also spoke to a few experienced people and I was told that you need credit to establish your borrowing behaviour or history. Loans for school or housing will only go to those with a good credit rating. The only way to a good credit rating therefore is to actually borrow albeit sensibly. Credit scores depending on the agency runs from 0 to 999 and the 3 biggest Credit Reference Agencies in the UK are ExperianEquifaxCallcredit.  They have to have your “footprint” in other to reference you. As you borrow and repay, your credit rating goes up thereby making you attractive for lenders. This is where you want to be if you are ever to go at borrowing.

New to all of this? then do click on the links provided to investigate and ask questions if need be. Good luck.


Ps – that’s a red neck lizard below just in case you were interested.

Red Neck Lizard (picture credit: Flickriver)

2 thoughts on “You need Credit to get Credit

  1. Great write up. For those in the UK you can also try as they do free credit reports.

    I always stay on top my credit, but yes you need an active borrow, spend and repay (promptly) footprint to get any credit history.

    God help you though, if you miss (default) one simple payment. It can take months to recover. Consecutive defaults and/or a lender closing your account, you are looking at 6, yes six years to clear your credit file.

  2. Excellent write up. I had a similar experience but later I got a hang of it. But one has to be careful though.

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