Finance from scratch

It was amazing to me to find out that having no credit is just as bad as having low credit. In 2016 I had a credit score so low I had to check it thrice. I didn’t know scores went that low. But owing to personal situations I had no credit history for almost 10 years. The only thing I had going for me was being on the electoral register but other than that there was nothing.

Lenders like to see what you have been like with money. They are not going to know that you order things through your neighbours Littlewoods catalogue and never miss a payment. They wont know that you throw a hand and a half of pardna with the lady from church. Many of us live a cash lifestyle. I find this is typical of people with a low income. People living on benefits or working part time jobs usually just accept that credit is not for them. I was one of those people. When you are struggling just to put money on your meter and cook decent food from your basket of white and orange Sainsbury’s Basics good you are not thinking about increasing your credit worth. For me things like home insurance and credit cards were about as likely as going on one of those cruises advertised during Judge Judy.

In 2014 I decided that I never wanted to claim an income benefit again, regardless of the type of job I was able to get. I began working in my local Co-op supermarket. I also began attending college but that is a journey examined in my education blog. After a year or so of solid working I began to understand that I was limiting myself and although things may not come to me quickly if I have smaller goals I can get to the bigger ones.

Starting Small

Being on the electoral register is one thing but getting anyone to trust you is another. I had been using my partners bank account for some years previously and then I used my mothers. When lenders search your credit history one of the things they look at is how long you have been with your bank. Step one was to open an account. Not having a passport to drivers license made opening an account difficult. Also most banks ask for a bill. I had a gas meter and an electric key. My water bill was included in my rent and there was nothing else in my name.

European Identification Cards are widely accepted in the UK but it is little known the the UK has its own approved ID card. The CitizenCard is the national ID card for the UK.

 

CitizenCard

 

The CitizenCard was established in 1999 and is endorsed by the Home Office and the Chartered Trading Standards Institute. Applying for one of these cards is quite simple and currently costs just £15 for a standard application. Astoundingly there are many high street banks that are not familiar with the UK ID card and do not accept them as identification. Both Halifax and Barclays both accept this card as identification. I used my ID card and a Tax Credit letter and opened a Barclays Basic Account. This was my first small step.

My second step was to get my first line of credit. It may be tempting, once you have an account that you are getting regular benefits into or a wage, to get a loan in order to establish your first line of credit. This is not a good idea. Interest on these type of bad credit loans can be very high and penalties for missing payments can quickly accumulate and become astronomical giving you the wrong kind of credit history. What I did is get a Tesco Mobile 30 day rolling SIM only contract. Tesco Mobile offer capped contracts so you do not get an unexpected bill for any reason (like forgetting to turn your Wi-Fi on when you get home and watching Netflix on your phone). After a few months or regularly paying your SIM only contract Tesco Mobile will allow you to get a handset. The cost of this handset shows up on your credit history. Well done! you have your first line of credit.

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