First Direct To Relax Its Credit Requirements For Customers With Bad Credit Score | Credit Raters post

First Direct To Relax Its Credit Requirements For Customers With Bad Credit Score

18 Oct 2019
Approx Reading time: 3 minutes

Internet-based bank First Direct will start allowing customers with bad credit histories to open accounts. This is in a bid to help them in boosting their credit scores going forward. The bank plans to have a makeover so that it can be accessible to many people. This will thus help the bank to take on digital competitors like Monzo.

First Direct to relax credit requirements

Joe Gordon the CEO of the HSBC owned bank indicated that they want to expand their offering. Therefore they are considering relaxing the bank’s credit requirements as part of the revamp process. The CEO has also indicated that over the next year they plan to introduce other new features. Most importantly this will include an AI “financial autopilot” that can make customized recommendations.

However, the First Direct has not indicated how the changes will improve credit records. For now, the bank can take you in after your credit score has reached a certain limit. Though the bank didn't specify its threshold it nonetheless said that it uses credit scores from a credit reference agency. Using a credit score to approve and application usually disadvantages the client because it does not specify the reason for the declining of the application.

First Direct implementing new features

For starters, Gordon asserts that the conception of First Direct was not for a specific demographic. It was thus for individuals who had a vision of doing things in a different way. However, according to the CEO, the approach to credit scoring might have made people reconsider. As a result of time, some felt that they could no longer be part of First Direct. If the implementation of the features is successful, HSBC will also adopt them.

Over the past few years, internet-focused banks such as Revolut and Monzo have been signing clients aggressively. As a result, large banks are following suit to modernize their brands. Following this First Direct made changes last month by scrapping the £10 per month fee on the first Account current account.

Improving your credit score

To begin with, you should ensure that you are among the registered voter at your present address. This is because lenders usually refer to your current address from the electoral poll when you are applying for credit. However, you should not worry if you stay with someone with a bad credit history because it doesn't affect you. But, if you have a joint account their bad credit history may reflect on you.

If you have no borrowing history you can take special ‘credit builder' cars. This also applies to individuals that have not had credit problems in the past. Unfortunately, the cards charge a high rate and thus it is important to set direct debit to ensure the balance is repaid in full at the end of each month. And lastly, ensure your credit utilization minimal bat least below 25%.

It is also important to check your credit status with credit agencies such as Equifax Experian, Clearscore and Noddle.

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Rebecca White

Rebecca White is chief editor at Rebecca has an extensive amount of knowledge on financial subjects including short-term loans & debt consolidation in the UK and USA. Rebecca has wrote for many publishers such as Debt Secret, My Money, VL and more.