I was in a vicious circle – I couldn’t borrow...because I had NEVER borrowed
JANET McGaw was a mid-life ‘credit virgin’, having never used a credit card or any other form of loan in the UK before she moved to Spain more than 13 years ago. The 54-year-old cafe worker moved back to the UK last year and now rents a home near Fleet, Hampshire, but found laying financial foundations a challenge as she had no credit history. After living briefly with her daughter, Janet decided it was time to set up on her own again but found this tricky as she was ‘invisible’ to lenders. She says: ‘I had no credit rating, which is arguably worse than a poor rating. I even struggled to open a bank account for my wages because living at my daughter’s house meant I had no proof of a fixed address. It was like hitting a brick wall.’ Her partner Daz Murray, 44, was also turned away for a mobile phone contract for the same reasons. As a result of the difficulties they faced, Janet looked at her credit rating and discovered the vicious circle she was in – she could not borrow without a history of borrowing. After researching her options she took out a £2,000 loan, over three years, from Amigo. The company is a guarantor lender, which lends if a borrower is vouched for by a friend or relative. Janet’s daughter was her guarantor. With rates at 49.9 per cent a year, its loans are more expensive than deals available to people with full and excellent credit histories, but cheaper than those offered by some rivals to people with poor or no credit records.
Guarantors are ultimately responsible should a borrower fail to repay. So there needs to be a strong bond of trust between friends or relatives signing up to such a deal.
Other guarantor lenders include UK Credit and Buddy Loans.
Janet’s loan meant she could find a home to rent and buy furniture and appliances.
She adds: ‘I have been able to overpay on the loan without incurring charges and I am hoping to clear it early.
‘My credit rating has also improved as a result.’