Credit referencing – why my clean score goes against me

My parents didn’t give me a great deal of financial advice when I was younger and there really is a LOT they should have told me but hey ho. What they did raise me to understand was owing money is bad ie do not use credit, save up for what you want, pay for it in full. The only credit one should have is a mortgage and possibly a car loan.

HP for every day stuff was just becoming a thing as the 80’s surged forward, meaning that all of a sudden you could buy new furniture on 0% credit and deferred payments of months to a year. My father wholly disapproved of such spending habits so I was strongly discouraged from straying off the path of righteousness.

The upshot of this is that throughout my life I have rarely had debt apart from a mortgage, which is the big one obviously, and the debts I have had weren’t big debts.  These were all paid off as soon as possible because, quite honestly, I felt like a social pariah having debt to my name. Thanks to my parents.

In recent years however, my circumstances have changed considerably.  In fact so much so that I am now a credit risk. Let me explain.

Mortgage: I don’t have one any more and in fact, paid it off in full several years ago. A mortgage however demonstrates you exist, you have a life and ultimately your creditworthiness.

Place of residence: I have been living ‘under the radar’ as it were for quite some time. Once I sold my mortgaged house, I rented a home for a couple of years but then moved into housesharing accommodation. At none of these addresses was I registered on the electoral roll and nor did I have any utility payments in my name etc, nor did I have any kind of legal contract. In other words, I didn’t exist. If you don’t exist, you have no credit = credit risk.

Mobile phone: I haven’t had a contract on a mobile phone for a couple of years now. Since arriving back in the UK after my travels, I used GiffGaff and still do. Not having a phone contract affects your creditworthiness because you don’t owe anyone any money; a contract is essentially a loan for a phone for £x amount per month over the life of the contract making it a debt.

Car Ownership: Many of us get loans to buy cars and I’m going to guess that many of us also pay our insurance monthly too. Both these things demonstrate creditworthiness because you exist, you have an existing line of credit and it can be seen from that if you are prompt in your payments or not. Don’t forget, when you pay insurance monthly that is a loan from the insurance company.  Now I don’t own a car, haven’t done for 2.5 years now but when I did, I was in my early 20’s the last time I had a loan for one (which got paid off in full about 4 months after taking the loan out). Since then I’ve owned 9 cars, all paid for, in full, in cash; the insurance was also paid for in full.

Credit cards: I don’t like them. It is ingrained in my very core that they are only good IF you keep a rein on your own spending and pay off the full amount each month. Well this is now considered to heighten your risk credit wise becase you simply don’t have any or enough history for any company to assess you on. I make it worse because I just don’t have a credit card and haven’t had one for years. It seems that having a credit card and paying off only the minimum amount each month is better than being like me.

Why am I interested in this?

When I begain my new job back at the beginning of November last year, there was going to be quite a long gap between being paid from my previous employer to my new employer which worried me as I wasn’t sure my (then) current  balance would sustain me, so I wanted a loan. Plus I needed to buy new clothes and I wanted to buy a car (which would have saved me a lot of hassle with buses/trains to, from and round Bristol).

Off I troddled to my bank who did a credit score on me that came back as a big fat NO. I couldn’t understand. I mean I had no debts, I owed no one any money at all for anything, only to be told that all that equates to no credit history.

I had no idea about any of this but I really should have, especially at my age! You’d think I would know better but I had been pootling through life being a good girl, paying my bills, living within my means and polishing my halo. Little did I know that halo would trip me up!

So today I have added my name to the electoral roll. My bank have told me that simply by doing that, I will, over a period of time, affect my creditworthiness, allowing me to get a loan and a credit card.

I find it an odd turnaround that now, having debt equates to being a good credit risk. I suppose the key is that the debt is managable and managed, not spiralling out of control which would naturally make you a bad credit risk.

All I need to do now is acquire some debt.




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