What does Buying on Finance mean?
You could either purchase an item straightaway from a retailer, using cash or your debit or credit card; or you could purchase an item from certain retailers and pay in monthly or weekly instalments.
From washing machines and tumble dryers, to fridge freezers and cookers, to even carpets and vacuum cleaners, consumer items like these can all be bought on finance schemes directly from those retailers who have this provision.
This is what buying something on finance means.
Am I eligible to buy something on finance?
When you are buying something on finance, the retailer is entrusting you with this purchase by letting you pay the price in instalments directly to them, instead of you paying the total price of the item to the retailer through credit by using a credit card.
So, the retailer would need to know how creditworthy you are for it to decide on whether it can allow you to pay for the item in instalments.
One of the ways retailers gauge your creditworthiness is by running a credit check to see what your credit score is. The higher your credit score is, the better chances you have on being eligible for such buying on finance payment schemes.
How will a credit report help me buy something on finance?
By getting your credit report before even telling a retailer that you wish to buy something on a finance scheme with them, you can tell what chances you have to be allowed to make such a purchase.
You see, retailers who offer such ‘buying on finance’ payment schemes run a soft credit check to make sure that your level of creditworthiness is high enough – i.e. how likely you are to make the monthly or weekly payments on a regular basis.
So, when you get your credit report and if you find that you have a low credit score, or that the data in it is incorrect, you can get this sorted.
How would my credit score affect my eligibility for buying something on finance?
Using a mathematical calculation, a number between 0 to 999 or a rating between 0 to five (depending on which credit reference agency is processing your credit report) is derived that represents your credit score.
As mentioned earlier, the higher the numerical value, the better your credit score is, which means the more likely you are to be approved to buy something on finance.
On the flip side, if you have a low credit score or if you find that some of the data in the your credit report is wrong, then you can make the necessary changes to improve your credit score and make sure that your credit report is totally, factually accurate.
This can save you the distress of being declined from buying on finance from a retailer.
Your Credit Report Checklist
So, you have registered for your credit report, cleared the screening questions and have obtained your credit report - nice work!
The next thing you would need to do is to check whether you’re eligible for buying something on finance from a retailer.
To make your life just that much easier, we have put together a checklist for you to work through. Simply have your credit report to hand and read on…
How high or low is your credit score?
Are the following personal details on your credit report correct:
- Your name?
- Any previous names that you may have had (e.g. maiden name)?
- Your current address, including the postcode?
- Any previous addresses that you may have lived at?
- Your current bank account details, including the name/(s) on the account, the account number and the bank sort code?
- The details of any credit accounts – both currently open and previously settled – that you may already have (e.g. for any ‘pay monthly’ mobile phone contracts, or credit card accounts)?
Any previous credit searches that you may be aware of? If you had applied for credit recently, or if an employer or a landlord ran a background check, then this data will appear on your credit report.
Has the credit report picked up your listing in the following public records of information:
- The Electoral Roll?
- GAIN? Your name will only appear on this record if you have any unpaid debts listed to any previous addresses that you have lived at.
- CIFAS? Your name will only appear on this record if you have been a victim of identity fraud.
Have any notices of correction (NOCs) been issued in your name? If yes, then this data will also appear on your credit report. A notice of correction is a short note – a maximum of 200 words - that explains the background to a piece of information on your credit report. This enables anyone searching your credit report – both in the past 6 months and also in the future – to see the NOC and take it into consideration while dealing with your application for buying something on finance.
It is important to bear in mind that that you can notify the credit reference agency of any information that you find is incorrect. In fact, the sooner you do this the better.
What are the pros and cons of buying on finance?
Well, the obvious advantage of buying something on finance is that if you do not have money to buy an item at the full price upfront, but you need the item, then you can pay the price in instalments to the retailer. This is provided you clear the credit check, which means that you have a good credit score and a good credit history.
The thing you need to be wary of when buying on finance is not to default on your monthly or weekly payments and that you could also be charged additional interest. Find out what the terms and conditions are of the finance scheme before you sign on the dotted line.
What's Your Credit Score?
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