Do I Really Need Credit and a Good Credit Score?

Do I Really Need Credit and a Good Credit Score?

This is a good question, and one that can be answered very easily, but it can also get complicated.

How’s that for speaking like a politician:)

The question is:

Do I really need credit and a good credit score?

The answer is:

Technically no, as long as you never need a loan, which means paying cash for most things….well…everything.

That means paying cash, or using a bank card, for any purchases you may make, of any cost or size.

You will need to pay cash for furniture, white goods, a car, a house, everything.

Remember, large purchases that we cannot save up for, will require a loan. And loans mean an extension of credit, which means having a credit score.

As I stated, you really do not need credit as long as you can pay for all your purchases.

However, all may not be as it seems.

Credit Scores Used Outside of Borrowing Money

So let’s just say you don’t need to borrow money, ever, and you have never borrowed money, or had a loan.

Odds are you may not have a credit history, which means you may have a low credit score. Just by not having ever had credit does not mean you would have a low credit score. Usually low credit scores are associated with someone in debt, who pay bills and accounts late, and in general has bad credit.

But having no credit does not give the scoring models for credit scoring anything to go on:

* You have no payment history

* You do not owe any money

* You do not apply for credit

* You have no accounts

So there is no basis to create a good or high credit score.

But what do you care? You don’t need credit or a credit score.

Wrong, sometimes you do need a credit score.

Credit scores are used in other aspects and parts of our lives, besides the granting of credit/loans.

Jobs: There are some jobs, and some employers that use credit checks as a part of the hiring process.

Having no credit or no credit file, may seem OK, as there is nothing negative showing, but this also fails to show important things about you.

Paying cash and saving for everything shows something about you as well, you are good with money. However, an employer cannot see or view that, they can only view your credit file.

Insurances: Some insurers use credit scores and credit history as a part of the underwriting process to issue insurance policies, and also in determining premiums.

Having no credit history may be detrimental in getting a policy issued, or more costly in the end due to higher premiums.

So do you really need credit, maybe not, but there can be areas of our lives impacted by not having a credit history and credit score, and these are outside borrowing money and getting a loan.

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<strong>What is Our Criteria For Applying?</strong> 
Every lender on our website has their own specific criteria by the basics are mentioned below and you must have a guarantor to be eligible. Simply select the lender of your choice and you will be taken directly to their website where you can apply. You will be required to submit your details including:<li style=”text-align: center;” data-mce-style=”text-align: center;”>Name (must be over 18 as the borrow, 21 or 25 as the guarantor)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Residence (your chances will improve if your guarantor is a homeowner)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Employment status (must be employed or on a pension)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Income (earning at least £600 per month and able to make repayments)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Monthly expenses (not have too many loans open or in major debt)</li>
You will then be asked to include the details of your guarantor and as mentioned above, this is usually someone who you know and trust and wants to help you with your personal finances. Ideally, a guarantor with good credit will maximise your chances of being approved based on the idea of ‘if someone with good credit trusts you, well we can too.'<strong>How Much Can I Borrow From Guarantor Loans?</strong>Guarantor Loans gives applicants the chance to borrow £500 to £15,000 depending on the lender. Some lenders we feature like Buddy Loans only have a maximum loan value of £7,500 and TFS Loans is the only lender that stretches up to £15,000.Factors that can influence the amount you can borrow revolve around having a good guarantor. One that is a homeowner, with solid employment, income and good credit rating will maximise your chances of borrowing the largest drawdown possible.The lenders featured on Guarantor Loans see a homeowner as someone who has already gone through the rigorous process of credit checking and affordability and if they can afford a house, they should be able to act as a guarantor for you.By comparison, having a guarantor that is not a homeowner offers slightly less security and means that amount you can borrow is slightly less too.Higher amounts may be available to those who already have a better than average credit rating, are homeowners themselves and a repeat customer with the lender who has already paid their loan on time. To apply directly with your lender of choice see <a href=”” data-mce-href=””>direct lenders</a>.<strong>What Does The Guarantor Have To Do?</strong>Upon completing an application, the lender will typically send you a <a href=”” data-mce-href=””>pre-contract loan agreement</a> and SECCI (Standard European Consumer Credit Information form) which will highlight the terms of your loan. You and your guarantor will be required to review the terms of the loan, including the loan drawdown, fees, repayment dates and responsibilities – and this can be signed via an online verification process using your email and mobile phone.The lender will usually carry out an individual phone call with you and your guarantor to ensure that you both understand the responsibilities and what is required of you – notably that if you cannot make repayment, your guarantor will be required to pay on your behalf. Further to some additional credit and affordability checks, funds can typically be transferred within 24 to 48 hours (or sometimes on the same day).<strong>Are Guarantor Loans Available For Bad Credit Customers?</strong>Yes, even if you have a history of adverse credit, <a href=”” data-mce-href=””>CCJs</a>, bankruptcy or IVAs several years ago, you can still be eligible. The idea is that you are using your guarantor and their financial history to ‘back you up’ and give your loan extra security. However, it is noted that your guarantor should have a good credit score and consent to co-signing your loan agreement.<strong>How Soon Can I Receive Funds?</strong>Guarantor Loans works with lenders that can facilitate funds within 24 to 48 hours of approval, or sometimes on the same day.When your funds are successfully transferred, most lenders working with Guarantor Loans will send the full amount to the guarantor’s debit account first. This is a standard security measure carried out by lenders to ensure that the funds are going to the right person and confirms the involvement of the guarantor. The guarantor usually has a ‘two week cooling off period’ where they can decide to pass on the money to the main borrower or they can change their mind and return the funds with no extra charges.