From time to time, most of us will require some financing. Whether it be for large purchases like a car or to pay for a wedding or smaller everyday things like groceries, getting a loan or using a credit card can be very helpful. But if you have a low credit score it can be increasingly difficult to get the financing you need.
Credit scores have been on the rise in the last few years. According to one of the leading credit reference agencies in the UK, Experian, The UK average credit score hovers in the ‘fair’ category, or around 700, but for those with a 500 credit score, how can you get financing?
How bad is 500 Experian score
Simply put, a 500 credit score is bad. If your credit score falls within the range of 300 to 579, it is considered to be ‘Very Poor’ and falls well below the average UK credit rating. Having a 500 credit score makes you unfavourable to financial institutions. A 500 credit score will mean you incur deposit charges or high interest rates when you apply for credit cards, sign up to utility providers or lease a car or smartphone.
How to get financed with bad credit
Unfortunately, it is extremely difficult to get financing when your credit rating falls into the ‘Very Poor’ category, under 579. Most traditional financial institutions such as banks and building societies will not want to risk lending money to those who have not proven their ability to pay loans back on time or at all.
However, you can still get credit if you are in the process of building your credit, although it is likely you will have shorter repayment terms and higher interest rates. You can find bad credit car finance and other loans from a variety of providers if you need some short-term financing to improve your financial health.
Things to improve your chances of getting finance
Luckily, there are plenty of small ways you can make improvements to your credit score and increase your chances of getting the financing you need. First, you should use a credit referencing agency to obtain your full credit report for free. Once you know what your credit score is you will then know how to improve it.
It is important to stay vigilant with your finances to avoid damage to your credit score. Make all your payments on time and avoid taking out new credit for six months to a year. Also, signing your name on the electoral roll in your local area will help your score, the longer you stay on the electoral roll the better. If you can, pay off existing debt as quick as possible too.
