It can be frustrating to learn that having no credit history might be just as bad as having bad credit in the eyes of most agencies and lenders. This is especially true considering that your credit history can have a huge impact on your short-term, long-term and future plans.
Luckily, there are ways to access credit even if you don’t have a credit history. If you take out a loan with Salad Money, we won’t use your credit history at all - we use Open Banking instead.
How Do I know if I have any Credit History?
You can find out your credit score from online companies such as Experian, but you’ll want to make sure it’s a “soft check.” If it is a hard check, then the act of checking your credit score can negatively impact your credit history. We wrote a blog that goes into more detail about finding out your credit score which you can find in our news section.
Before you decide to make a request for credit, you may want to know a little bit about how many banks or lenders will make their decision. They will decide whether to lend you money using your credit report and your credit history, which is a record of your financial history and ability to repay credit.
Why don’t I have any credit history?
If you’re struggling with finding information on your credit history for a loan or mortgage application, it might be because there isn’t any. This can be frustrating and confusing, especially if you’re struggling to understand why this is the case. Let’s look at some of the most common reasons:
You’re Under 18
In the UK, you can set up a bank account and start earning money at 16, and in some cases, even earlier. However, when it comes to getting credit for the first time, you can’t legally accept a credit agreement until you turn 18. This means that you will be unable to build up a credit history before this time. Instead, concentrate on building your history by opening and managing a bank account and setting up some direct debits, which will help set you on the right track until you can legally enter into a credit agreement.
You’re New to the UK
Welcome to the UK. Unfortunately, while we’re really glad you’re here and welcome you as part of our amazing NHS, you might struggle to get credit. Even if your credit score was excellent in your home country, you’ll have to start from scratch when you move to the UK. As with a lot of people with no credit score, you’ll have to build up a credit score by opening up a bank account, paying your bills on time and getting on the electoral roll.
You’ve Never Had a Credit Account in Your Name
If you’ve never used credit before, or currently pay bills but your name doesn’t appear as one of the account holders, this line of credit won’t show on your credit report. This means that you won’t be able to build a credit history in your name, even though it could be you paying the majority of the bills.
Your Credit History is Too Old
We all know that bad credit history will go against you when attempting to access a new line of credit, but did you know that old credit history would go against you too? You may have had credit accounts in the past, but too much time may have passed since you last had an account open. A closed credit account will only remain on your credit report for around six years, which means that if you don’t open any new ones after this point, you might lose your credit score entirely.
Can I get a loan if I have no credit history?
There are lots of ways to get a loan if you have no credit history, but we wouldn’t necessarily recommend all of them. Here are some different ways you can access credit if you have no credit history:
Bad Credit Loans
If you’re unfortunate enough to have no credit history or even bad credit, you might not be able to access loans or mortgages unless you go through lenders that specifically offer credit to people with bad credit ratings.
While you can definitely build a credit history using these ‘bad credit loans,’ just as long as they are managed well, these loans typically have greater restrictions and higher interest rates than other providers. They are commonly referred to as ‘bad credit loans,’ and don’t always have the best reputation when it comes to fairness.
Payday Loans
There’s a reason why payday loans have such a bad reputation. The truth is that payday lending is an inherently unethical practice that seeks to offer short-term loans at astronomical interest rates, which more often than not, the borrower will struggle to repay. Payday loans are targeted towards people who are generally struggling financially, and usually have annual interest rates above a shocking 400%, which is why they’re often dubbed as unethical, dangerous and even immoral.
The Affordable Alternative
Unlike payday loans and bad credit lenders, Salad Money is a trusted lender that exists primarily to help thousands of NHS and public sector staff access affordable credit and avoid being ripped off with toxic loans. We’re the first truly responsible workforce lender, providing small, affordable loans that allow you to get access to credit quickly, even if you have no credit history.
Can I Get a Mortgage with No Credit History?
Credit lenders like to feel confident that if they decide to lend you money for a mortgage, you’ll definitely be able to pay it back. Unfortunately, if you don’t have a credit history, they can’t be sure how you’ll handle repayments, which means that they’ll probably decide to pass on allowing you to access their credit.
While it is possible to get a mortgage with no credit history, this could be a tedious process requiring you to produce lots of documents proving you can pay your bills on time. It may also require a lengthy hunt for a willing lender, which could mean that it would actually be quicker to try to build up your credit history instead. However, with the rise of Open Banking, mortgage lenders have also started using this method when they decide on whether to offer mortgages.
How Can I Get Credit History?
Whether you’ve never had a credit history or you’ve lost the credit history you painstakingly built up before, starting from scratch can be daunting. While building up a credit history might seem like a monumental task, there are some simple steps you can take to start the process. Here are some simple ways you can start building a healthy credit history:
• Open a bank account
• Set up some easy-to-manage direct debits
• Get a credit card
• Take out a small loan from a trusted lender
• Manage your bills well
Why does your credit history not matter with Open Banking?
Luckily, credit history isn’t really an issue if a loan provider uses open banking. Open banking is a UK wide Financial Conduct Authority regulated service that enables you to share your data securely with selected third parties, such as Salad Money. We use open banking to give you a fair assessment of your finances without editing your bank details or impacting your credit score in any way.
Are you interested in securing an affordable loan from Salad Money? Find out more about why we’re different and secure a loan today.
