Jun 10, 2013 Simon Williams
Consumer credit scores are the ranking systems that banks, financial institutions, credit card companies and other entities use to determine if an individual would be too risky to extend loans of any kind to. In the United Kingdom, these figures have become a source of worry for a lot of people over the last few years.
The numbers are static, and the global economic troubles that took place over the last five years or so have led to a large fluctuation in scores. So many people found it hard to make ends meet during these times, as a lot of expenses rose and numerous individuals were laid off. So some accounts went unpaid, and the scores to the corresponding people dropped.
But now that the fiscal situation seems to be picking back up, many people are again trying to get funding, as they're optimistic about continuing success. In the U.K., however, a lot of these consumers are finding that the money isn't there because of their traditional scores. As a result, many people are looking for quick fixes in order to raise the numbers and have ready access to credit.
Closing unused credit cards
One tactic many British consumers are taking is closing out credit cards they no longer use in order to find a quick fix for their score situation, according to The Telegraph. The news source reported that when lines of credit appear open on an individual's financial file, this raises a red flag for many lenders. They tend to worry that people with available credit like that could potentially max out their cards, leading to issues when it came to repayment.
So, companies often look for accounts that have been acknowledged as completely closed out, or at least lines that have been reduced by that lender, as maxing out such options wouldn't be so devastating.
Disassociate from others
MoneyFacts.co.uk also said that many U.K. consumers find it helpful to disassociate themselves from individuals who they held joint accounts with. The news source said that when two people are financially linked and one has a bad credit scores, lenders can take that to mean that the other consumer's score will be affected. This is because the person who has had money issues in the past might be the one in charge of making the payments now.
Regardless, MoneyFacts recommended that whenever a breakup occurs, it is often wise for the people to disassociate themselves financially.
If all else fails
The fact is, there is no quick fix that can boost credit scores in a short amount of time. Consumers that need funding immediately and are looking to traditional lenders who judge them based on such figures are probably going to run into many closed doors.
However, there is another possibility on the horizon for these individuals. The services of alternative finance companies can be invaluable during these tough times. Short term lenders have more flexibility than their larger counterparts and can judge creditworthiness on their own terms.
For example, many of these businesses have eschewed traditional credit scores in favor of others like the Payment Reporting Builds Credit ranking system. This figure takes data regarding an individual's positive history of repayment on utilities accounts into consideration, along with other financial factors. This way, they can have the most comprehensive picture of possible regarding a potential borrower possible, which tends to work out in the favor of all parties involved.
The one thing these lenders have to do is simply remind their clients that even when ends are hard to meet, they shouldn't ever sacrifice utilities payments for other expenses, or the results could be dire.