Credit Scores – From Zero to Hero in 12-24 months
Credit scores are somewhat of a mystery to many, and all too often many have low scores due to accruing debt either needlessly or from necessity. It's actually easier done than most people think and can become quite debilitating.
I myself got into debt around 4-5 years ago, it started off as £100 here and there on a credit card while I was with my ex wife (who didn't work). Slowly this adds up, particularly when you're in a rented house where rent is already expensive and only one person working, throw in the loss of my own job. We had no money and I had to use credit cards to pay the rent, buy food and other general household items. These balances built up to several thousand pounds. I was unable to pay these for a long time and simply ignored all correspondence.
Fast forward to 2017 where I found out she was having an affair and threw hew out, then in April of 2017 I finally managed to break into the industry I'd been wanting to get work in for many years. It was a working from home role, paying not much more than I was already earning but I figured I had to start somewhere. My salary was £18k.
I began working hard from home and trying to get a handle on my finances, checking my credit score showed me a score of 400, I couldn't even open a high street bank account. I saved little and often, £20-£30 here and there, I didn't have much of a life but these payments slowly added up.
After around eight months in my job working from home, I was offered a relocation package and twice the salary. A break, real career progress and my dreams becoming a reality (even though my rent tripled). Again, I continued paying towards my various debts and formulating an action plan to rapidly increase credit rating. I already had an avid interest in Fintech and the general wider financial industry but had no experience professionally or personally of building credit ratings so to speak.
I began taking out credit builder cards, kicking things off with the Tesco Bank Foundation Card – it came with a measly £500 limit but it was enough to get started. I began putting a couple hundred pound on that every month and clearing in full, my rating increased 10-20 points here and there and my credit limit was increased.
I was then able to secure a further salary increase from work, which took me into figures I could have only dreamed of years before.
I decided now was the time to get two or three more credit cards and hammer them every month with as much as I can. I got a Vanquis Chrome Card and a Capital One. Vanquis gave me a £1000 limit and Capital One gave me £750. I figured the Tesco limit wasn't high enough to do much with so used Vanquis as the daily spend card, Capital One attached to the Uber and local taxi firm app and the Tesco card attached to my monthly train season ticket. Using this method I was putting a fair whack through each card, I would then pay all in full each month on receipt of the statement before the due date.
Using this method I was able to increase my rating 30-60 points every month and was given continual credit limit increases on all cards without asking for them. Essentially, my plan had worked with very visible results. I was building up trust with banks and lenders once again using what to me seemed like a pretty simple method. I estimate a total spend across the three cards of £1000-£2000 each month so it's not like I was putting through exceptional amounts.
Despite having settled defaults on my credit file (these stay on file for 6 years) I decided to apply to Amex and to my delight was approved. The card came with a limit higher than all of my cards combined and I began putting most of my spending through this card to further bolster my credit rating.
Today, I can happily say I'm debt free and finally in control of my finances and all it took was a few minor steps back when I was earning £18k. Calling those you owe money, speaking with them about your circumstances and paying £20-£30 (or whatever you can afford) to your debtors here and there will make a massive difference. Those payments add up, and you can make quite a dent in your debts in a short space of time. Once you start earning more begin paying them off as quickly as you can and at the same time accessing any available credit to use and then clear in full every month.
I'm no financial advisor, but my very simple plan that I pretty much just made as I went along started 24 months ago with bits and bobs here and there. The major work started 12 months ago, and since then I've doubled my score from ~400 to 850+ (and still climbing!) in a short amount of time.
Despite my wall of text I suppose what I'm trying to say is that there was a point I thought I'd never clear my debt, and that it'd just keep growing until a point and I'd go bankrupt. The small steps made at the very start were instrumental to my success. If I can do it, then anyone can.
Please find below apps/providers I found useful in my quest to improve my credit rating. Each of them do different things, but they all helped expose key financials at a deeper level and allowed me to analyse and track spending in a healthier way.
Starling Bank – https://starlingbank.com Curve – https://imaginecurve.com Revolut – https://revolut.com
I'm no writer, and fully understand that the above wall of text may not be of use to anyone, but I wanted to share it anyway.