Borrowing money for the first time can be a nerve-wracking process. Maybe you’re a student and you’re going to need access to some extra cash to pay your way through university, or perhaps you simply want to build up your credit rating so that you’ve got a better chance of being accepted for a large financial product, such as a mortgage, in the future. After all, if you have no history of borrowing money, many lenders may be reluctant to accept you as they have no proof of your great financial management skills.
Here are some tips on borrowing money when you have no credit history.
Tip #1. Opt for a Small Financial Product:
When it comes to borrowing money for the first time, it’s unlikely that you’re going to get very far if the first thing that you apply for is a huge bank loan, mortgage, or an expensive car on finance. The best way to ensure that you are accepted when you borrow money is to start small and use that product to show your responsibility as a borrower and gradually work your way up to borrowing larger amounts if needed.
For example, you could take out a smartphone contract, open up a store card account, or even check out credit building credit cards at Bankrate, which are ideal for anyone with a bad or non-existent credit history.
Tip #2. Pay Your Bills on Time:
You might think that it’s just money that you’ve borrowed that influences your credit rating, however, your utility bills can also determine how good or bad your rating is. If you’re living in your own place and have monthly bills to pay for things such as gas and electricity, broadband, water, and TV, then ensuring that you pay them on time each month can go a long way towards increasing your chances of being accepted when you apply to borrow money for the first time.
Lenders will be able to see that you’ve been responsible and careful with your expenses so far, so they’ll be much more comfortable when it comes to allowing you to borrow from them.
Tip #3. Don’t Apply for Multiple Products:
If you’re not sure that you’re going to be accepted for a financial product or there’s a large chance that your application will be rejected, then it’s best to simply forget about it altogether. This is because declined credit applications on your account can go against you and cause your credit rating to fall, which is the last thing that you need when you’re applying to borrow money for the first time. If possible, use eligibility checkers – these tools are offered by several lenders and allow you to view your chances of being accepted before a credit check is carried out.
Tip #4. Get on the Electoral Roll:
Lastly, a simple step that you can take to improve your chance of being accepted to borrow money for the first time is getting on the electoral roll. This will prove to lenders that you have a stable address, and is easy to do with a simple online sign-up process that takes a matter of minutes.
Were these tips helpful? Let us know in the comments!