How Can You Improve Your Credit History?

Nov 30, 2012   //   by Keith McDonald   //   Lending Guide, Personal Debt  //  1 Comment
  • Which regions are susceptible to bad credit?
  • What puts people at risk of decline?
  • Why is your credit record important?
  • How can you improve your credit score?

Aqua Age Acceptance

We’ve all heard of the postcode lottery. But it seems that residents on our doorstep in Leicester are among the most likely to be rejected for their credit card or overdraft applications due to a poor credit score.

The ‘Mind the Credit Gap’ survey commissioned by Aqua, a provider of poor credit history cards, has determined that residents in the East Midlands are most at risk of rejection by lenders.

According to the survey, which asked participants questions that would help to constitute a credit report, almost two-thirds of people in the region (65%) are not expected to meet credit approval criteria.

The next most vulnerable areas are Wales and the North-West, where it is estimated that 63% would not meet creditors’ requirements.

Regions with more creditworthy residents include London, where 52% would apparently struggle to obtain credit, and Northern Ireland, the only region of the UK where the majority (albeit a small one) would expect to be successful in their application.

Aqua Survey Region

As might be expected, there are clear patterns involving age and gender. According to the survey, women are far more likely to be turned down for credit, with almost seven in ten nationwide (69%) at risk of being declined. By contrast, over half of men would expect to be accepted.

It is also evident that younger applicants, particularly those under the age of 25, are considerably less likely to be accepted for credit.

Less expected, perhaps, is the discovery that having a steady job – even a well-paid one – does not automatically grant someone access to credit. According to the sample, roughly one third of full-time workers and two thirds of part-time workers are likely to be rejected for credit.

Startlingly, around one third of those who earn over £50,000 are also at risk of rejection.

A typical credit application includes a variety of questions which all play a role in the decision to grant or decline credit. Things like being an expat or being new to the country, not being on the electoral roll or simply never having had credit in the past, could all mean a person is declined.

James Corcoran, Aqua CEO

What Puts People at Risk of Decline?

More often than not, Aqua suggests, it is only a minor issue that determines a rejected credit application, such as not being enlisted on the electoral roll.

The lack of a credit history can also influence lending decisions. According to the survey, a large number of people may struggle to secure credit just because they’ve never had it before.

Establishing a solid credit record allows a borrower’s good reputation to precede them.

The following list demonstrates the main reasons why lenders turn down an application (along with the proportion of the survey that could be vulnerable to each one).

  • Have not completed a payment agreement (72%)
  • Not homeowners (39%)
  • Taken out credit twice in last six months (30%)
  • Made over four applications in 12 months (24%)
  • Younger than 25 (14%)
  • Don’t already have at least two credit facilities (6%)
  • Not on electoral roll (6%)
  • Missed two or three consecutive payments in last year (5%)
  • No current credit history (2%)

Some of these are prejudiced against the younger generation, which is an unfortunate fact of life. What this means is that younger people have to take more care when building their credit profile to ensure that they don’t aggravate the risk of being declined in the future.

Why is a Credit Record Important?

Credit records have a much larger role to play in modern society and personal finance than simply securing a credit card. With credit checks required for banking services, contracts, insurance, housing services, and even jobs that include money-handling, a strong credit score is vital for a broad scope of applications.

It is also useful for money-saving opportunities. Good credit can make the cost of products and services cheaper. The ability to set up direct debit arrangements, for example, can reduce the cost of utility bills considerably. Good credit can also lower the rates received on credit cards and mortgages.

Applications that require a credit check include:

  • Credit cards
  • Bank accounts / overdrafts
  • Loans / Business loans / Mortgages
  • Renting property
  • Utility contracts (inc. Direct Debits)
  • Mobile phone contracts
  • Jobs involving money-handling

Most people assume that a credit score is used simply to access financial products like credit cards and loans, but that is far from the case. Credit is a pillar of 21st century life and increasingly a strong credit score is becoming the foundation. Everyday products and services, from broadband packages to monthly mobile phone contracts, become more difficult to obtain without a strong credit score, and often people are prevented from getting the best deals or rates.

James Corcoran, Aqua CEO


Despite the importance of a good credit score, there is still a lack of knowledge about how to establish a good credit score and how you can be negatively affected without one.

A quarter of people from the survey believe that no credit check is required to open a bank account. In fact, this is currently a serious issue because banks have become increasingly reluctant to offer accounts to bad credit applicants and recovering bankrupts.

Two thirds of respondents thought that utility firms were obliged to provide applicants with contracts and wouldn’t consider credit ratings before offering one.

Aqua Credit Myths

How to Improve Your Credit Score

Aqua has offered a list of recommendations for improving a credit score. Some require action, such as ensuring registration on the electoral roll and cancelling old debits, while others require inaction, such as not applying for credit unnecessarily or excessively.

  • Make sure you’re on the electoral roll.
  • Pay bills on time. Just a few days late can make a difference.
  • Check regularly for mistakes or incorrect details on your credit record.
  • Avoid using more than 75% of your available credit limit.
  • Consider specialist credit card providers which help people to improve a credit record.
  • Apply for credit only when you need it – applying for more than 4 forms of credit in a year can lower your credit score.
  • Do not apply for more than one credit product at a time. Each application can negatively impact your credit score.
  • Close old credit card accounts and cancel old direct debits.
  • End financial associations with ex-partners. Taking out a product jointly with them will affect your credit score.
  • Do not take out more than two forms of credit within a six month period.

Many creditworthy people have, for one reason or another, missed a few payments in the past and are looking for a second chance. As a result, a huge number of people who fall into this credit gap are being left unserved. These are responsible people who may deserve access to credit but have an unconventional credit history.

James Corcoran, Aqua CEO

After seeing earlier in the year that Leicester residents were bottom of the pile when it came to major cities using price-comparison websites, we have a vested interest in seeing our home city improve its financial reputation.


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