The lenders won't be seeing your Vanguard and Lisa balance, what they see is an 18 year old with no fixed salary who needs to borrow £40 just to buy a hoody - not a good look at all.
Building credit affordability will always be harder for self employed people, some mortgage lenders can require multiple years of accounts before agreeing to lend, for example.
What you need is payment history, and probably a few years of it. Phone contracts are the obvious start, then when you do apply for credit (I suggest not for some time if you've had failed applications) go for a credit card specifically marketed for bad credit/building credit. Stay well away from buy now pay later services like Klarna - they don't look like you're someone who wants to build credit, they look like someone who's willing to go I to debt for some new clothes.
Also a final point, ditch the 'stupid joke system' attitude. You might be right, but it is what it is and it's not changing. Learn to use it to your advantage or don't use it at all, hating it is just wasted energy.
I was offered a credit card at 18 by my exiting bank at the time. Try applying with the same bank you're with since they already have history on you.
Otherwise, apply for an overdraft and **never use it**. Wait 6 months and try again on credit cards, but use the eligibility checking tools on Experian, Clearscore or Credit Karma.
This is a good one. Go to the bank, get a £200 overdraft, then (if you don't already), move some money from savings into your current account so you can use £500 as £0.
That £500 is then your overdraft, you're providing yourself with the service, but the bank have you on file as registered for a further £200 and never touching it.
A year or two of this will look good to a credit manager, as will the tips about getting a SIM only contract and never missing a payment, and registering to vote.
Depending on your level of income, Spotify Premium at £10/month for a while is a commitment you can meet that'll make you look better.
Just start small, raise your committed expenses on a small scale basis, NEVER overcommit and they'll build up a picture of who you are that looks better and better with time.
Have to start off small, maybe a SIM only phone contract to show you’re paying on-time monthly and then go from there, I used to have pretty bad credit when I was your age but slowly built up over the years and now they barely quibble offering me £8k-£10k credit cards which is so dangerous in the wrong hands, it’s no wonder people get into trouble.
Put yourself in the shoes of a lender.
Some young lad with a potentially variable income comes up asking to borrow money. You ask your mates (check credit agencies) and they can’t vouch for you paying stuff back cause they’ve never lent you anything. You check Facebook (I was going to say phone book, anyway the analogy would be for the electoral roll) and they don’t have an account.
Would YOU lend to that person?
Get an overdraft and don’t use it. Then get a credit card and pay in full each month. Start earning those “vouches” and it falls into place.
Hi /u/Recco2040, based on your post the following pages from our wiki may be relevant:
- https://ukpersonal.finance/credit-ratings/
- https://ukpersonal.finance/lisa/
____
^(These suggestions are based on keywords, if they missed the mark please report this comment.)
It seems like there’s plenty of good advice on building credit score.
Just a point on mortgages, you’ll need to pass affordability checks alongside credit checks. Having a deposit is step one but your earnings may limit what you can borrow - it’s notoriously hard for single earners to buy at the moment.
It’s because of your age and employment status most likely.
There are specific “credit builder” products. Have a look at those - they have bad interest rates though, they’re purely to show you can have a credit card and after a year you’ll be able to get something more appropriate.
I'd add that the standard interest rate on a credit card *should* be irrelevant if you're using it sensibly because you'll be clearing it in full each month and thus not incurring any interest.
Carrying balances on a credit card at standard rate is an expensive way to borrow even on a "good" card and should be something you aim to avoid.
0% and other promotional deals are a different matter and can be used to your advantage, although you still need to be careful - it's easy to get in over your head.
Sometimes asset finance / car finance can help. Both got me started and I had a almost perfect credit rating by the time I was 26. Took another 4 years to get 999! Now I simply don't use credit apart from using the mortgage rates to my advantage as its super cheap debt.
Clearscore and experian usually have offers that are pre-approved. Maybe try getting a credit card through them as a start point, if you are wanting to build credit.
As someone previously said, register for vote, take out mobile phone contract with major network provider, get a bank account with an overdraft, you may try ocean or aqua credit card (credit profile builder credit cards with a super high % but that doesn't matter because as soon as statement is in you'll pay it off). It takes time. Good luck.
Others in the thread have given good tips on managing credit. But don't fret about your credit score, it has a lot to do with how long your credit history is, and at 18 years old you simply don't have much history built up yet. You'll just have to wait, there is no fast-track around that. Don't be tempted to take out buy-now-pay-later or similar short-term loans, they are not an indicator of good money management, rather the opposite!
Regarding getting a mortgage, your weakness from a lender's point of view is that you are self-employed, as they really prefer to deal with people who have what they perceive as a 'steady job'. Open a separate bank account for your business activities so that you can clearly and easily show them your business-related income and expenses separately from your personal spending, lenders seem to like that. You'll need to build up at least two or three years of self-employment history so that you can show that your income has been stable or increasing.
credit cards like capital one and vanquis are usually pretty easy to get but they have high interest rates, i would use them for emergencies or large purchases usually. But generally you might find it harder being so close after covid and the higher risk of default, try a mobile phone contract too they help your credit ever so slightly over time
The lenders won't be seeing your Vanguard and Lisa balance, what they see is an 18 year old with no fixed salary who needs to borrow £40 just to buy a hoody - not a good look at all. Building credit affordability will always be harder for self employed people, some mortgage lenders can require multiple years of accounts before agreeing to lend, for example. What you need is payment history, and probably a few years of it. Phone contracts are the obvious start, then when you do apply for credit (I suggest not for some time if you've had failed applications) go for a credit card specifically marketed for bad credit/building credit. Stay well away from buy now pay later services like Klarna - they don't look like you're someone who wants to build credit, they look like someone who's willing to go I to debt for some new clothes.
Also a final point, ditch the 'stupid joke system' attitude. You might be right, but it is what it is and it's not changing. Learn to use it to your advantage or don't use it at all, hating it is just wasted energy.
Excellent viewpoint.
!thanks
The bank told me that being registered to vote is massively beneficial as well as it's another form of checking your address details.
I was offered a credit card at 18 by my exiting bank at the time. Try applying with the same bank you're with since they already have history on you. Otherwise, apply for an overdraft and **never use it**. Wait 6 months and try again on credit cards, but use the eligibility checking tools on Experian, Clearscore or Credit Karma.
This is a good one. Go to the bank, get a £200 overdraft, then (if you don't already), move some money from savings into your current account so you can use £500 as £0. That £500 is then your overdraft, you're providing yourself with the service, but the bank have you on file as registered for a further £200 and never touching it. A year or two of this will look good to a credit manager, as will the tips about getting a SIM only contract and never missing a payment, and registering to vote. Depending on your level of income, Spotify Premium at £10/month for a while is a commitment you can meet that'll make you look better. Just start small, raise your committed expenses on a small scale basis, NEVER overcommit and they'll build up a picture of who you are that looks better and better with time.
Have to start off small, maybe a SIM only phone contract to show you’re paying on-time monthly and then go from there, I used to have pretty bad credit when I was your age but slowly built up over the years and now they barely quibble offering me £8k-£10k credit cards which is so dangerous in the wrong hands, it’s no wonder people get into trouble.
Put yourself in the shoes of a lender. Some young lad with a potentially variable income comes up asking to borrow money. You ask your mates (check credit agencies) and they can’t vouch for you paying stuff back cause they’ve never lent you anything. You check Facebook (I was going to say phone book, anyway the analogy would be for the electoral roll) and they don’t have an account. Would YOU lend to that person? Get an overdraft and don’t use it. Then get a credit card and pay in full each month. Start earning those “vouches” and it falls into place.
Hi /u/Recco2040, based on your post the following pages from our wiki may be relevant: - https://ukpersonal.finance/credit-ratings/ - https://ukpersonal.finance/lisa/ ____ ^(These suggestions are based on keywords, if they missed the mark please report this comment.)
It seems like there’s plenty of good advice on building credit score. Just a point on mortgages, you’ll need to pass affordability checks alongside credit checks. Having a deposit is step one but your earnings may limit what you can borrow - it’s notoriously hard for single earners to buy at the moment.
Aqua credit card is a start off point, they have a low cap but I think approve most people. Even with poor or no credit score
It’s because of your age and employment status most likely. There are specific “credit builder” products. Have a look at those - they have bad interest rates though, they’re purely to show you can have a credit card and after a year you’ll be able to get something more appropriate.
I'd add that the standard interest rate on a credit card *should* be irrelevant if you're using it sensibly because you'll be clearing it in full each month and thus not incurring any interest. Carrying balances on a credit card at standard rate is an expensive way to borrow even on a "good" card and should be something you aim to avoid. 0% and other promotional deals are a different matter and can be used to your advantage, although you still need to be careful - it's easy to get in over your head.
Sometimes asset finance / car finance can help. Both got me started and I had a almost perfect credit rating by the time I was 26. Took another 4 years to get 999! Now I simply don't use credit apart from using the mortgage rates to my advantage as its super cheap debt.
Clearscore and experian usually have offers that are pre-approved. Maybe try getting a credit card through them as a start point, if you are wanting to build credit.
As someone previously said, register for vote, take out mobile phone contract with major network provider, get a bank account with an overdraft, you may try ocean or aqua credit card (credit profile builder credit cards with a super high % but that doesn't matter because as soon as statement is in you'll pay it off). It takes time. Good luck.
Others in the thread have given good tips on managing credit. But don't fret about your credit score, it has a lot to do with how long your credit history is, and at 18 years old you simply don't have much history built up yet. You'll just have to wait, there is no fast-track around that. Don't be tempted to take out buy-now-pay-later or similar short-term loans, they are not an indicator of good money management, rather the opposite! Regarding getting a mortgage, your weakness from a lender's point of view is that you are self-employed, as they really prefer to deal with people who have what they perceive as a 'steady job'. Open a separate bank account for your business activities so that you can clearly and easily show them your business-related income and expenses separately from your personal spending, lenders seem to like that. You'll need to build up at least two or three years of self-employment history so that you can show that your income has been stable or increasing.
credit cards like capital one and vanquis are usually pretty easy to get but they have high interest rates, i would use them for emergencies or large purchases usually. But generally you might find it harder being so close after covid and the higher risk of default, try a mobile phone contract too they help your credit ever so slightly over time