Poor Credit History and Guarantor Loans


If you want to improve your poor credit history, it can be difficult because you can’t get credit. And you can’t get a better credit record without getting credit.

But there are ways to boost credit history.

Having a poor credit history and a thin history is slightly different. A poor credit rating might be caused by a missed payment (it happens – Clearscore claims that 43% of people in the UK missed a payment in 2018).

A thin credit rating is where you have no history of credit, or very little because you’ve not had the chance to build it up.

So that might be if you’re:


  • recently widowed or divorced
  • haven’t used credit for a while
  • new to the country
  • are young, or maybe a student, and haven’t had the chance to build a good credit history


If you have a thin credit rating a lender may not have enough background information to offer you a loan.

When You Have a Thin Credit Score?

Having a thin credit score could mean you’ll struggle to get access to certain things where you need to borrow money, or where a regular ongoing payment, such as rent, is involved. A car is a typical example where you might need credit and it’s one of the primary reasons customers choose guarantor loans. If you’ve been to university you might have good earning potential and can afford payments but can’t get a loan because of having any or previous credit history.

Lenders are looking for people who can manage debt well, so if you have a poor credit history or a thin credit score, rather than being a perfect customer you’re more likely regarded as a possible risk.

The reality is that to have a credit future, you need a credit past.


It’s also worth remembering there isn’t a universal credit score, so whoever you’re borrowing from will use their own choice of credit reference agency.

What Affects Your Credit Score?

When compiling your credit score, the agencies will look at some of the following areas:


  • Your payment history. For example, have you missed any payments?
  • Are you on the electoral roll? This is often overlooked, but it’s a consistency that lenders are looking for.
  • Have you recently made multiple credit applications? If you have this could reflect badly on our score.
  • Are you using all your credit? If your credit card is always maxed out then you will be seen as not necessarily managing your debt well.
  • Previous credit rating. Is your credit history of a good length to give lenders an idea of what kind of debtor you’ll be.
  • Can you afford the credit? Does the money coming in cover your expenses?


What is a Guarantor Loan?

A guarantor loan is a loan where the lender spreads the risk of lending to someone with a poor or thin credit background by having a guarantor. The guarantor agrees to pay the debt, or monthly payments, in the event that someone with a poor credit background can’t make the payment.

It’s an alternative way of borrowing and getting the chance to improve your credit score. If your guarantor believes in you, you can get your credit history up to scratch. With guarantor loans, and the support of a guarantor, you can start to build a financial history in plenty of time for when the bigger things, such as mortgages come along.

Guarantor loans are also sometimes known as a trust-based loan. They’re designed to help you make affordable repayments, backed up by someone who agrees to help if you run into difficulties. By making the payments on time you’ll be on your way along the road to an improved credit score.

When you approach a guarantor to ask for their support you should consider having a plan to show them how you’ll repay the loan and be prepared to answer any of their questions. It will help set their mind at rest if they know exactly what they are being asked.

Because at some point in life you might want to buy a house. You’re almost guaranteed to need to rent a place to live. You might need a car to get to work. You’ll want a mobile phone. You’ll want to pay utility bills. You’ll need a decent credit score to do these things.


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