Some people manage to go through much of their life without ever borrowing money or getting into debt. However, this may say less about their fiscal will power than it does their financial predicament, in that they may simply have never needed to borrow money before.
But regardless of the reasons for never having borrowed money, most people at some point in their lives will need to request a credit facility, be it a loan to buy a car to get to that new job, or a credit card for that year-out in Australia.
Many people think that having never been in debt, this shows they are good with money and therefore, when required, they will get credit no problem. As trustworthy as they may be, without a credit rating, many lenders and credit card providers will hesitate before giving any sort of credit. And this is the classic catch-22 situation: how can a credit rating be gained, without first having a credit-history?
Credit cards can come in handy in all sorts of situations: when travelling abroad, buying online or even leaving as security when checking in at hotels. So, they're not just for irresponsible people to go on spending sprees, they can serve a very useful function in all walks of life. Furthermore, with e-commerce becoming the norm, the UK is moving ever closer towards becoming a 'cashless' society - whereby more transactions than ever before are being carried out with plastic.
Fortunately, banks and credit-card providers can look at other aspects of an individual when assessing a credit application. Firstly, there is employment history. The ability to hold down a steady job can improve the likelihood of an application being approved. The same applies to residence history, whereby the fewer addresses an applicant has had, the better the application will look. Furthermore, whilst having their name on household utility bills may not help establish a credit score, it can still be very helpful when making that first credit card application.
But even though someone may be stuck between a rock and a hard place in the beginning, in terms of the available options they will be better placed in the future to search for a better deal - and subsequently find a credit card that suits them better.
Most people at some point in their life will require credit. But many people find themselves in a catch-22 situation, where they aren't able to build a credit rating because they have no credit history. Although it can be difficult, there are other ways to successfully apply for that credit card without a credit rating - meaning the options open to them in the future will be vastly improved.
