Credit buildersThere are several portals and memberships which allow you to monitor and keep track of your credit and its ups and downs. Whether it is Noddle, Experian or Check My File, you are able to see your credit score, usually for free, and then sign up to a membership to see any changes to your credit rating. Portals will also give you some suggestions to improve your score including closing some accounts, paying off your debts and joining the electoral roll. Over time, this allows someone with bad credit to build up their credit score and gain better access to financial products and more affordable rates.
Eligibility calculatorsTo accommodate those with bad credit, several comparison websites and credit providers have started offering “eligibility calculators” on their websites. This allows an individual to enter their details online as though they were applying for a loan or credit and receive a list of companies that may be willing to accept their criteria and circumstances. This is currently being used by several finance comparisons including Money Saving Expert, Totally Money and All The Lenders. The eligibility calculator is obligation-free and only performs a ‘soft credit search’ on the individual’s credit file, therefore it will not have any impact on their credit score or impact their chances of receiving credit elsewhere. Typically, when lenders see a lot of hard credit searches on a person’s credit file, they consider that they are desperate financially and may be a risk to lend to.
BlockchainWhilst blockchain is still very much in its infancy, it has attracted significant investment from international banks and venture capitalists. The use of a distributed ledger and decentralised bank opens a lot of opportunities for customers with subprime credit. Medium explains that the use of credit scoring, pay slips and bank statements may become increasingly less important to approve a loan. Thanks to smart contracts, lenders are able to validate transactions and verify the legitimacy of counterparties more effectively, which could help those who are turned down by traditional methods.
CanopyCanopy is a new app that allows tenants to build up their credit score by paying their rent on time. Connecting tenants, landlords and credit reference agencies, it follows the principle that individuals consistently repaying their rent on time can be acknowledged and rewarded with a higher credit score. Whilst some UK households may never be homeowners or restricted to some financial products because they are tenants, this tool can help renters to build up their credit score in another way – even if they have bad credit historically.
SALT LendingA very new concept, SALT offers a way for those with good and bad credit to borrow money, using their cryptocurrency as collateral. SALT takes hold of your crypto assets and then releases them once your interest and loan has been repaid. The fintech company hopes that the cryptocurrencies go up in value, helping them maximise their return and they will notify you in advance if they can see the currencies falling significantly. This type of lending is unregulated and completely decentralised from the traditional banking system and for those looking for finance with a bad credit history, it provides one of the most unique and alternative ways to borrow.
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