Being invisible to the financial system might not sound like a bad thing. But for some people, the consequences are significant, and can lead to not being able to access financial products or services. But what does it mean? And how can you make yourself more visible?
What does it mean to be ‘invisible’?
If you are invisible to the financial system, it means there is not enough information about you on your financial track record. It’s known as having a ‘thin’ or no credit file. This usually means that either you have very few credit accounts, haven’t used credit for a long time or have never used it at all.
As a result, people can find themselves unable to access things like mortgages, loans, credit cards and mobile phone contracts, or face paying higher costs than others.
Some people with thin credit files may also have problems accessing crucial public services. This is because some organisations use online identity verification checkers based on your credit report, and struggle to prove who you are if you have little or no credit history.
Who does it affect?
It’s not just people on the lowest incomes who this impacts - families on average incomes, middle-aged adults with low incomes and pre-retirement households are also at risk.
Food writer, Jack Monroe, found having a lack of financial data left them struggling to make ends meet. Find out more about her story, and hear from others who struggled to access the financial services they needed due to being financially invisible.
How to make yourself visible
If you have a limited credit history, or want to find out if you have, try these tips to build your credit history:
- Get on the electoral roll. This helps verify your name and address to banks and other lenders, and can also help your Experian Credit Score
- Open a current account – this will add an account record to your credit report and, as long as you manage the bank account responsibly, will support future credit score calculations
- Get a monthly mobile phone contract – phone providers register details on how you manage your account with the credit reference agencies, helping build your track record
- Arrange to have the regular household bills in your name, such as energy, water and broadband. For those paid via a monthly credit account (not prepaid), many providers now share payment information with the credit reference agencies, which can help further bolster your payment history
- For tenants, arrange for your monthly rental payments to appear on your Experian Credit Report to make sure your credit history includes this important financial commitment
- Space out any applications that involve a hard credit check. Applying for several new accounts within a short space of time could impact your credit score
- Whenever you’re planning to apply for credit, always use a comparison and eligibility service to help you shop around without damaging your credit score and reduce the chance of being refused
- Be patient. Building a credit history is a marathon not a sprint. Track your progress using free credit score services
Finally, it’s also essential to check for any mistakes on your credit report and to have them corrected as soon as possible.
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