Without seeming too political, the recent budget laid down a marker of the LibCon’s intent to assault state benefits and spending to reduce the deficit rather than raising taxes (aside from the regressive VAT increase that hits the poor harder than the well off since everyone has to buy stuff!) Apart from the fact that we’ll all be expected to work pretty much until we drop, low income or single parent families are going to face a pretty tight time over the next five years with various benefits frozen, reduced or abolished and lone parents expected to look for work when their youngest goes to school.
Getting credit will become even more important to these groups to stretch family budgets as life-saving benefits are cut or axed. But these same people are also likely to have a low income or work part time, perhaps with pro rata wages as little as £6,000 – £8,000 a year. Many will not even apply for a credit card because they believe they have a bad credit rating thanks to their low income.Obviously the ability to afford repayments is taken into account by most lenders, but because each lender uses different credit scoring criteria, how important income becomes can vary tremendously.
For many lenders, it’s your credit history rather than your wages that’s important in deciding whether you’ll get a credit card. Poor credit credit cards are available from some lenders and a good start to making sure you can get credit on a low income is to ensure that your credit report is accurate and as attractive as possible to potential lenders. How to improve credit rating guides abound on the Internet, but basically if you can show that you are managing your existing credit (even if it’s not huge amounts) responsibly, that may carry more weight than any older adverse items on your record. For some lenders, a year or two of positive detail on your Credit Report will go a long way to improving your score and your credit risk, irrespective of what your earnings may be, so make sure you pay any bills regularly and on time.
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