Tips

How to keep your financial history clean and bright

Your financial history needs to be kept as clean and scrubbed as possible in the current economic landscape, so make sure you stay on top of it – or else!

Everyone has a financial history that follows them around in the form of a credit record, and just about everything you do will end up being reflected in it. In a way, it’s like a clean white shirt at first that can slowly accumulate muck and grime if you end up getting into the wrong things, so you need to take steps to keep it as clean as possible to make a good impression – especially when you’re trying to ask a lender for a large loan such as a mortgage.

KEEP YOUR NOSE CLEAN – AND YOUR SHIRT, TOO

We all start out with a clean slate once we become adults, and that can actually pose problems sometimes when it comes to trying to qualify for a loan. If you’re young, you probably haven’t had the opportunity to prove your financial responsibility, which means you’re just as much of a risk with someone with a poor credit record, as you’re an unknown entity. However, you can still prove yourself even if you’ve got nothing to back up your creditworthiness by starting small and working your way up.

You need to build a positive credit history, and for younger Brits the best way to do this is often to begin by applying for a single credit card and then only use in when you know you will without a doubt be able to pay the balance in full before the end of the month. Doing so for a few months will start your credit history off on the right foot and also keep it squeaky clean, as maintaining a zero balance on a credit card for an extended period of time sends a strong message to lenders that you can and are a responsible adult when it comes to financial matters.

STAY AWAY FROM PAYDAY LOANS

If there’s one thing that can leave the kind of stains on your credit history that not even bleach can get out, it’s most definitely relying too heavily on payday loan providers for instant cash loans. While it’s true that payday advance lenders do not require a borrower to submit to a credit check in many instances, if you miss a payment doing so leaves a black mark on your financial record that will stay with you for years, and with payday loan providers charging so much in fees and interest, it can take you quite a long time to clear that debt.

Even if you do use a payday lender responsibly and repay the loan in full and on time, the mere fact that you’ve used one can also lead to your downfall. In fact, many traditional lenders that offer big ticket items such as mortgages will deny anyone that has taken out so much as one payday loan in the last year because it betrays a so-called ‘financial irresponsibility’ on the part of the borrower, so play it safe and just avoid payday lending altogether!