Your credit score is based on your credit history. So if you've always made your credit repayments on time or never defaulted on debt, your score should be higher.
That’s because the higher your score, the lower the risk you pose to lenders. Having a limited or no credit history could result in the opposite. If you’ve never borrowed or had any bills to pay, your score may be lower. As such, lenders will have no information about your credit history.
Here, we explain what this could mean and how you might fix it.
How to check your credit history
If you're thinking of applying for a loan, you may want to check your credit score first. As mentioned above, having a healthier credit history could give you access to more favourable offers. There are three main credit reference agencies in the UK. They are Equifax, Experian, and TransUnion.
You can use these sites to find out the details of your report and credit history. Your credit score lets lenders know how well you can manage your money and any credit agreements.
You can check your credit history on these sites too:
- Clearscore - free access to your Equifax score and report
- Intuit Credit Karma - free access to your TransUnion score and report
- CreditExpert - free access to your Experian score and report for 30 days (after which time a monthly fee is charged)
To get a full idea of your credit history, you may need to sign up to Equifax, Experian and TransUnion together.
Applying for a Vanquis Loan
We may offer loans directly to eligible Vanquis credit card customers via email, SMS or through the Vanquis Bank App.
If you're new to Vanquis, you can use our online loan calculator to see if a loan would be right for you and if you're happy you can then apply online. To apply you'll need:
- your address details
- information on your income and outgoings
- details for any current credit agreements such as other personal loans or credit cards
Common reasons for no credit history
If you don't have a credit history, it might be a result of a few things. Here, we show the most common reasons for this:
Have you recently turned or are under the age of 18?
If you are under the age of 18, you won't be able to view your credit report. If you have just turned 18 though, there'll be little data on your report. This will start to change if you take on and use credit responsibly. Everything from a mobile phone contract to an overdraft will be on your file.
Every credit application should be carefully considered to ensure you can keep up with repayments.
Have you recently arrived in the UK?
If you're new to the UK, credit agencies will have no data for you. Even if you have a good score in the last country you lived in it won't count. This is because credit reports and scores cannot transfer between countries. It can take up to six months to create your first report and score.
No credit accounts in your name?
It may be that you've simply never used credit before. This might be because you're young or that you have never needed to. If you pay joint bills then it could be that your name isn't listed as the account holder. This is also true if you have a mobile phone contract in someone else's name.
Is it possible to get a loan with no credit history?
You may not have a lot of loan options if you have a bad or no credit history. While some lenders will consider lending to you, they could see you as a risk. This is because they'll have no idea of how well you can handle money. As a result, these loans can feature higher APRs.
Your credit score shows lenders how well (or not) you can manage a credit agreement. If you don't have one, you may struggle to get approved by lenders.
Here are some things you can do that may help build your credit history.
Open a bank account
Having a well-managed bank account can be a good way to build credit. If you can show lenders you can run it in a responsible way then they may lend to you. If you have an overdraft, it helps to stay below the limit and to pay it off as soon as possible.
Set up some Direct Debits
Once you have a bank account set up, it helps to arrange some Direct Debits. These are payments that'll be taken from your account on a set day each month. This could be for a utility or phone bill. Late or missed payments can lower your credit score and will stay on your report for six years.
Get a credit card
Getting a credit card can be a good way of boosting your score. But if you’ve never used one before there may be limits to what you can get. For instance, they may have low borrowing limits and high interest rates. Repayments on a credit card can be flexible though, meaning there's no set deadline to pay off the debt you owe.
But please note that this means it will take longer to repay the debt. If you pay it off in full and on time each month you'll start to build a positive credit history.
Take out a small loan from a trusted lender
Taking out a small loan can be a good way to build credit. This is because payments are fixed each month until the debt is repaid. Meaning you'll know exactly when the loan will be paid off. Once you've paid in full and on time your score may improve.
Please note that you should only take out a loan if you're sure you can meet the payments. You can use a loan calculator to work out the monthly fee.
Manage your bills
One of the best ways of building your credit is by managing your bills. Taking care of these will show lenders that you're responsible. Things such as paying rent can improve your score as long as it's on time and in full. Once you've shown you can do this over time your score will grow.