I think this is the downside to being debt-free: applying for something and then being told they don’t know whether it’s a good idea to approve your application because you have a low credit score.
This has happened to me twice since December 2020.
Storytime: Getting rejected
Firstly, I had applied for places to rent and one of the landlords told me that she’s concerned that I don’t have a good credit score. She said she’ll think about it – apparently, she had a previous tenant still owing her money.
By the time she approved my application (a week later), I had applied to two other places and the third option approved me. I think the one that approved me didn’t care about the credit score, they were just excited that I had the money for rent and the deposit ready.
We went for the third option.
The second experience was when I applied for fibre – in February. The consultant who assisted me said fibre installation normally takes up to a month. So I didn’t hear from him for a month, I thought it was just part of the process. Then this guy disappeared and I found out that my application was never even logged on the system.
His colleague assisted me and I would check up every week (after already waiting a month). Then in between two weeks, the colleague mentioned that my credit score is bad.
Eventually after the third week, I decided to apply at two other companies. The first one came back the first day. I got a phone call on this particular Saturday (same day I applied) and I signed forms. They also said it might take four weeks or more to get fibre installed, BUT the next week my fibre was installed. Sorted!
Moral of the story: there are so many options available, sometimes you just have to apply elsewhere until you get help.
Another lesson: you first option is not necessary the right option. (Or maybe it is the right option but it’s their loss for not assisting me.)
What happens if you have a low credit score?
A lower credit score means you might be seen as a high-risk borrower, says Clearscore. [I check my credit record at least once a year online at Clearscore.]
Let me tell you, it hurt when I was told that I’m not considered because of my credit score. I mean, I even gave my previous landlords as reference, who would tell you I’m a good tenant.
However, the situation has made me consider to take on debt. I want to take on debt because I might want to purchase a house some day.
We might decide to move to another place (to rent) because I’d like to live close to where my kid attends school, or whatever.
My first option was to take out a personal loan, but then I heard that personal loans are bad for your credit score – apparently it makes you look high risk.
Then I’ve considered something like a credit card for groceries or clothing. This seems like a better option.
The reason I have resisted debt
The thing is, I have been a little scared of taking on debt again, because I’ve been debt-free since 2019. I was scared of not having enough money, scared of not having freedom.
One thing I know for sure is that I do feel I can handle credit now, because I feel in control of my finances, I do budgeting on a regular basis.
However, I wish things like swimming lessons, my monthly domain hosting, rental payments and the online classes I pay for could show up on my credit profile and boost my credit score.
Can anyone relate? Also, please share any ideas you have on taking on debt.
Thank you for reading!