Climbing to the top of the Credit Score Ladder

Now, cast your mind back to the good old days when all you had to do was whisper the words “I think I will apply for a credit card”, and if by magic, you were inundated with application forms, everybody wanted you to have their credit card. Oh well, those days have gone (for the time being anyway) and because of the so-called credit crunch, credit is getting harder to come by. Now, for those of us that aren’t exactly squeaky clean or snow white as far as our credit history is concerned, there may well be problems ahead.
It’s not that those of us with a low credit rating are necessarily a bad risk, it’s just that we can’t prove it to those top end credit card providers and thus we can’t get our hands on the best credit card deals. Still all is not lost as there are a number of credit card providers just itching to sign you up, even though your credit history is not exactly 100%.
Even if it isn’t, it doesn’t mean that you are some hardened criminal, there could be any number of reasons why your credit history is not quite as high as some other people’s credit history.

No credit history means Low credit score

If you are a student and haven’t got a regular income, then look for a credit card provider that caters for the specific needs of students by offering a student credit card.

Maybe you never needed credit to finance your lifestyle (Wow!), and now times have changed, retired perhaps or been out of the UK for a while.

You could be self employed, with all the joy and heart break that goes with it, one month your are rich, the next month you are poor (that does your credit rating a lot of good!).

You might be retired, having worked all your life without borrowing a penny and you still end up with a low credit score.

Credit card companies like to know who they are dealing with, so they prefer to give credit to those of us who have borrowed before and paid it off, or have a mortgage with a good payment record. I know it seems strange to have a policy to lend more to people who are in debt than those who aren’t, but that’s the kind of world we live in today.

So, what do you do to climb the credit score ladder, well, the first thing to do is to get hold of your credit report, this will give a starting point to work up from.

Consider applying for a secured credit card, this will put you on the first rung of the ladder towards building up your credit score. This type of credit card requires a deposit and the spending limit is equal to the deposit. Providing you pay back on time and don’t go over the limit, you will begin to build or rebuild your credit rating, and after a while you can apply for an unsecured credit card.
You should also consider applying for a store credit card or petrol station credit card that has a low credit limit. However, to start climbing up the good credit ladder, you must make sure that you pay the balance of the store or petrol station card off every month.

A further way is to apply for a credit card designed for ‘high risk’ borrowers. At first this may not seem such a good idea, especially when you see the amount of interest they are charging. But rather than applying for a credit card from the so called ‘main stream providers’ and constantly being turned down, which incidentally not only lowers your credit rating, but also raises your blood pressure, you are far more likely to have your application accepted, and used carefully, they needn’t be that expensive to run. With a little forethought you can begin to repair your credit history and still have some of the benefits of having a credit card. If you only spend what you can afford on your ‘high risk’ credit card and always, but always pay the balance off every month, not only will you avoid paying the high interest rate associated with the card, but you will be earning brownie points which will go a long way towards  repairing your credit history.

After about twelve months or so, you should have gone up a few rungs of the credit score ladder which should enable you to apply for one of the ‘main stream’ credit cards, that offer goodies such as 0% balance transfers, interest free spending and other such perks.

Once you have been accepted for one of these credit cards, don’t think it time to stop repairing or rebuilding your credit history, on the contary, now that you have started climbing the credit rating ladder, why not climb further, you never know, you might even reach the top one day.

And whatever you do, don’t fall off again.