How to save money with a bad credit rating.
Hi, I’m Sarah from SarahBethBlogs, a lifestyle blog which also covers money, organisation and blogging.
Firstly, I just want to say a big thank you to Mel, for hosting post. Thanks, Mel!
Having bad credit can sometimes feel as though you’re dragging a ball and chain around with you, I know I’ve had bad credit!
But it doesn’t have to, there are opportunities to save money out there for every situation, you just need to look do a little research and ask.
We inherited a gas and electric prepayment meter when we moved into our rented house.
I asked the energy company if they would take them out, as it wasn’t us who’d had them installed. They said sure if we pass a credit check and pay £50 for each meters removal! I declined.
I then went and ran a comparison on MoneySupermarket.com to see if we could get our energy cheaper.
Did you know, just because one energy company has installed meters; so long as you aren’t in debt with them you can still swap and change energy companies.
The only problem is there aren’t as many providers and the deals aren’t as lucrative as when you have a credit meter but there are savings to be made.
We switched and saved £90 annually. However, we still have our prepayment meters!
What I also found out and I am currently looking into myself is, EDF energy will remove the prepayment meters for free after you have been a customer for 28 days.
They only refuse if you have been in debt with the energy company who installed them (over £500).
Speak to them!
One of the most important things I’ve learnt since having bad credit is it is much better to speak to someone on the phone instead of just trying to apply via their website.
Trust me I’ve got anxiety, I know how difficult it can be to just talk to someone over the phone but a good tip that was passed onto me was, before you ring them, note down briefly what you want to say, it can be just one word for each point, just something to stop you panicking and getting tongue-tied.
Computers can’t normally make deals or take things into account, advisers and sales staff can, over the phone.
So ring them up to speak someone about it.
Landlines & Internet
If you’re fed up with your current internet supplier and want to move, it can be difficult when you have bad credit as most companies do run credits checks, but it’s not impossible.
A few years ago I wanted to switch to BT (the company we were with were expensive and the connection was terrible!) but I had a bad credit rating. I spent a good half an hour on the phone trying to get it all set up, in this time I’d built a bit of rapport with the sales adviser.
When she ran the credit check it said no. So the adviser asked if I could put a £50 deposit down. I had to very quickly check our monthly budget and jiggle a few bits around, but we managed it!
At the time I was taking advantage of a free installation deal where you got a free hub too.
The £50 would be taken as security and given back to me in 3 months’ time, they’d knock it off my bill. They also capped my landline so I couldn’t run up a massive bill then not be able to pay it. I guessing the reason they hold the deposit for 3 months is to build trust in you and see if you pay your bill on time.
It all went ahead and ended up being better than I first thought. Yes, I’d paid a £50 deposit but I’d got free installation and hub, the plan was much cheaper than my previous one AND I got 6 months at half price!
Again I’d advise ringing the company you want to switch to and speak directly to them, there is no way I’d have been offered the £50 deposit had I applied online.
I would definitely ask if there is any way around the “no”, it’s unlikely to work if you’re applying for a credit card or loan, but utilities normally have something in place to help people with a bad credit rating. Don’t forget though, no company has to accept you, and they all have different criteria, so don’t take it personally if the final answer is still “no”, but that is the worst they can do is say “no”!
All companies are doing when dealing with someone with bad credit is managing risk. Some companies are willing to manage more risk than others and some companies have more things in place to help reduce the risk.
You can’t take decisions that go against you personally. It might just mean the company you are dealing with does not allow for much risk when dealing with customers.
Many things apply when it comes to being accepted for credit. Companies have certain criteria which needs to be met and if you don’t meet that criteria today there is nothing to say 1) the company might change their criteria (unlikely but not impossible!) or 2) your circumstances might change, credit files can change month to month.
Do remember to take into consideration that applying for lots of things that leave a footprint on your credit file can go against you in the long run, it makes you look like you’re going mad applying for credit everywhere, so just consider the effect of what you’re applying for in advanced.
A lot of companies now offer a “soft search” this search give the company and yourself an idea of if you’d be accepted but it doesn’t leave a mark on your credit file.
A good example is are pay monthly mobile providers, I won’t drone on about buying the phone outright (having saved up for it!) and having a SIM only contract as this way is much cheaper. I’ll just say that one company’s criteria are most likely different to others. So don’t feel all companies will refuse, do a little research and see if anyone has commented anywhere on a certain company accepting them with a less than perfect credit file.
A few myths about having bad credit
Blacklist – I’ve heard this so many times! I absolutely promise there is no “black list” containing names of people who should never be given credit. Every company’s criteria for lending is different.
Never had credit? – If you have never needed credit, this can be just as bad as having a bad credit rating. Why? Because the company you are applying to has no information about you and how you have previously managed your money so in their eyes your high risk.
Will you ALWAYS have bad credit? Not at all! If you have had or do have bad credit the best thing to do is work towards correcting your file as much as possible. Request a copy of your credit file, check it for errors, pay off any debt, if the creditor who you’ve paid off is slow at amending the details sending them a letter and politely requesting the information be amended can help speed up the process.
The only people with the power to amend an entry on your credit file is the company that put it there. Obviously, the credit referencing company can amend addresses, and non-financial entries but you have to have the creditor amend any other debt information.
Also, remember an entry on a credit file only last 6 years, from the date of first entry. Once the 6 years is up, even if the actual debt still isn’t paid. You will still have to pay the debt but it won’t be on your credit file.
Occasionally things do go a little wrong and an entry might not be removed, or the information might not be correct, this is why it is so important to get a copy of your file and check it for mistakes.
The below applies to everyone not just those with bad credit. If you’re trying to pay down debt, which in turn will improve your credit rating, things like these will help:
Writing a shopping list and stick to it!
Devise a budget and stick to it!
Use cashback apps – put money earned towards debt.
Use the cashback food apps such as Shopmium, ClickSnap and Checkoutsmart. Using the money you save towards your debt and getting some free food too.
Save for things like Christmas & birthdays – jot down what you need to save and divide that by how many weeks you have then set out to save it. I’ve found once I stick to my budget and I’ve got impulse spending out of my system I don’t go over budget and end up dipping into my saved money, this then leads into other problems such as not having the money saved for Christmas because you’ve had to dip into it.
However, people with bad credit should be utilising these tips because no matter how hard we try to save money and do everything those with good credit do, it can feel more difficult sometimes when you feel as though you’re having doors shut in your face time and again.
Even though we feel shut out sometimes, we must remember with a little effort and ingenuity we can get where we want to be! I hope you found the post informative and useful.
If you enjoyed this post then take a look at my other guest posts:-