How to Get Credit

Credit is required for a lot of things, to get car finance, to get certain types of loans, mortgages and a whole host of other things. Without credit, more often than not these things will not be available to you.

But many people have no credit, and, whilst buying things with cash is very sensible, it also prevents you from establishing a credit rating.

Here are some simple, safer ways to establish credit.

Get a credit card.

I know it sounds simple, but a lot of people refuse to have a credit card because either they feel the banks charge too much interest, or they feel that they would be too tempted to make unnecessary payments on it, such as shopping sprees.

Look for a 0% credit card (most card companies will give you this deal for your first year) and make small purchases with it, and make sure you pay at least the minimum payment due on time every month.

If you feel like you would be tempted to use it, do what I do, if you are going out shopping for clothes, leave it at home.

Bank.

It sounds obvious, but make sure you have a bank account and savings account.

If you have a current account, make sure you make regular deposits, this is particularly important if you are paid cash in hand. If you don't, they will refuse you a loan.

Direct debits.

Always ensure you have enough money in your account to cover any direct debits or standing orders that you may have.

Loans.

Once you have kept up your regular deposits into your current account, apply for a small loan at the bank (the smallest they offer) Ensure you pay off the full balance each month.

DO NOT.

Do not apply for a payday loan, these glorified loan sharks will charge you up to 300% interest!