Having a good score makes your life easier; it, for instance, gives you a better chance of getting the best low-interest credit cards, qualifying for loans, better car insurance rates, et cetera. Unfortunately, if you have a low credit score, getting such financial services can be a little challenging. However, this shouldn’t give you sleepless nights, because you are not alone, and it is fairly easy to rebuild a credit score back up. In this article, I am going to tell you how I boosted my credit score safely by using credit catalogues.
You see a good credit score is like a professional network; you only care about it when you seriously need it. The unfortunate part is that a poor credit score isn’t one of those things you can fix overnight. It requires time, patience, perseverance, and discipline, which is why I will advise you to start repairing your rating now; not wait until you really need it. There are many ways to boost a credit score, but here, we’re going to look at how catalogues can help.
How Using Credit Catalogues Helped Boost My Credit Score
A few years ago my credit card had almost £2,300 in credit card debt three months after I had lost my job. While I finally did get another job, that credit card debt brought my credit score down significantly. I was researching ways to improve credit scores when I found an article talking about using credit catalogues. It occurred to me that, not only could I be able to improve my score, but I could also be able to purchase goods on credit even with my not-so-good credit rating.
So I looked credit catalogues up on Google and signed up with two. Here is how opening the catalogue credit accounts helped me to fix my credit score fairly and easily;
The catalogues offered me a chance to have a bit of a mix of credit;
You see one of the ways of improving a credit score is having some mix of credit which you handle responsibly. While a credit mix contributes to only 10% of the overall score, it can bump up a credit score from poor to average, or from good to excellent. Because I already had a credit card debt that I was clearing, getting goods on credit from catalogues was a great way to mix things up a little. Since I was paying off my bills as was required of me, this helped improve my rating gradually.
The catalogues gave me a regular line of credit
When you are trying to improve your credit score or when trying to build a credit history (in case you had none initially), you need to have a line of credit. A credit line offers consumer credit bureaus a chance to look at how you are handling credit. You also get the chance to prove that you can actually pay off your bills consistently and promptly. Using credit catalogues offered me this.
Often, when you don’t have any credit history, the simplest way to get a line of credit is opening a credit card. But I already had one-with a huge debt-and I didn’t want to open another one. So I decided to sign up with credit catalogues. And in any case, with my poor credit score, it would be difficult to get a good credit card. Catalogue credit was an easier form of credit for me, and by making on-time payments, my credit score improved.
I got an opportunity to prove I am financially responsible
Once you open an account with a catalogue, the catalogue company informs the major Consumer Credit Bureaus such as Experian, TransUnion, and Equifax about the account creation. The company shares your credit limits with them and reports your monthly payments. So I took this as an opportunity to prove to these Credit Reference Agencies and lenders that I was a financially responsible person capable of paying my monthly bills regularly and on time. While results were not immediate, making payments on time had a significant positive effect on my credit rating.
I chose payment options I was comfortable with
Most catalogues have multiple payment options to make repayment easier. While you can still pay off the entire costs at checkout, you have a range of other payment options. For instance, one can decide to delay payment for a specific period. This means that they can take the goods and pay for them at a later time (even after a year). I preferred spreading my costs over a few weeks (when the item wasn’t that expensive), or over many months. This way, I could pay in smaller affordable weekly or monthly instalments. Repayment was, therefore, easier.
Making multiple small payments regularly is, in fact, one of the best ways to improve your credit score since besides minimizing your chances of missing payment, it helps you prove that you can make multiple regular repayments promptly. Again, it helps you build trust, and the catalogue company can offer you more shopping opportunities. Spreading my costs also made it possible for me to buy the more expensive items on offer since I knew I could afford the smaller monthly instalments.
By using catalogues, I was avoiding the rejection spiral
The credit scoring system is such that it’s anti-shopping around. This means that too many applications for credit or loan (especially within a short space of time) has a negative effect on one’s credit score. You see when you get rejected, you might want to keep applying with other creditors to see if you are going to get a better deal, and this hurts your credit score. Many credit catalogues guarantee 100% approval, and so by using them, I was avoiding the rejection spiral which would have hurt my credit score even further.
My score improved as my catalogue credit limit grew
Asking for a credit limit increase is one of the ways that can help you improve your credit score when using a credit card. This is because as your credit limit increases and your utilization balance remains the same, your credit utilization ration drops. I realized that almost the same thing happens when using credit catalogues.
As my catalogue credit limit increased, my credit score also improved. Perhaps one of the factors this was the case is that I had proven I could pay my bills on time, so I built trust, and got more shopping opportunities, which meant more chances to improve my credit score further.
However, note that credit catalogues increase the credit limit for shoppers depending on how they make payments. If you make your payments regularly, over time, your catalogue is likely going to gradually increase your credit limit. This means more shopping opportunities and more chances to prove to consumer credit bureaus and lenders that you are creditworthy.
To sum this up, it would be important to mention a few things about credit catalogue’s interest rates;
The interest rates catalogues that accept bad credit vary widely with the highest in the market being about 60% per annum and the lowest 18% per annum. However, most catalogues use a 38% interest rate on average. The higher interest rates are mostly used by credit catalogues with long-term payment options (often lasting over 24 months), so I always avoided those.
What impressed me, though, is that many credit catalogues have interest-free periods that often last between 3 months and 12 months. This means that if a shopper completes payment within this space of time, then their monthly instalments do not include interest. Therefore, the total cost for the products would be the same as when the items are bought without credit. In case the shopper fails to complete payment within the grace period, then their instalments will include interest.
I learned to take advantage of the interest-free periods to avoid paying more for products. So essentially, I was getting products on credit, but always paid the same amount I would have paid at checkout.
You might also want to know that many credit catalogues offer shoppers a variety of incentives like free deliveries, huge discounts, and coupon codes for various items. Taking advantage of these incentives saved me a lot of cash. So while I was mainly using the catalogues to help me repair may score, I had a great shopping experience.
If you have had various delinquencies and you are looking to safely boost your credit score, then using catalogues is a great way to start. It is a proven way to improve ratings so long as payments are made on time on a regular basis. However, you need to understand that catalogues aren’t going to help fix your credit rating overnight. There is no such thing as a quick fix when it comes to repairing credit scores. So, you will need to be patient, buy regularly, and pay promptly as required of you. It may take a few months to over a year to see results, but surely, your credit score will improve eventually.