Improving Bad Credit
Discussion
Long story short I have bad credit. I had a dispute with a business who claimed I owed them rent, I had documentation proving I didnt, was given bad advice, and ended up with a (satisfied, not that it makes a difference) CCJ. So now 2 years down the line i've started a job on a fairly average salery but my earning potential is set to double within the next 12 months.
The agreement I had with said business is one of only two credit arrangements I've had in my life, the other being a recent phone contract. My Attitude was i've been screwed over, stuff that industry cash is king. I've matured since then and realise that I need to do 'something'.
I fancy replacing my car, I have cash and the value of my current car to play with but got to thinking I could help build my credit rating back up and get myself a newer motor in one fell swoop. I have no legitimate reason to get a credit card other than to rebuild my status so would prefer a loan route as a loan is actually useful to me right now, however the only loans available to me seem to be payday or guarantor style loans. Neither of which im convinced actually do anything for my credit rating.
Whats my best option for borrowing say £2k? I have £2k in cash, would like to think I can get £1k on my car on a good day and am looking to spend £3k. The loan would basically be a safety net while purchasing the car should anything go wrong. If nothing goes wrong it'd sit untouched in my bank until its paid off. So I dont 'need' a loan but it'd be nice if that makes sence.
Am I being nieve in thinking I dont have any options or is there some sort of an arrangement out there that suits my needs? TIA
The agreement I had with said business is one of only two credit arrangements I've had in my life, the other being a recent phone contract. My Attitude was i've been screwed over, stuff that industry cash is king. I've matured since then and realise that I need to do 'something'.
I fancy replacing my car, I have cash and the value of my current car to play with but got to thinking I could help build my credit rating back up and get myself a newer motor in one fell swoop. I have no legitimate reason to get a credit card other than to rebuild my status so would prefer a loan route as a loan is actually useful to me right now, however the only loans available to me seem to be payday or guarantor style loans. Neither of which im convinced actually do anything for my credit rating.
Whats my best option for borrowing say £2k? I have £2k in cash, would like to think I can get £1k on my car on a good day and am looking to spend £3k. The loan would basically be a safety net while purchasing the car should anything go wrong. If nothing goes wrong it'd sit untouched in my bank until its paid off. So I dont 'need' a loan but it'd be nice if that makes sence.
Am I being nieve in thinking I dont have any options or is there some sort of an arrangement out there that suits my needs? TIA
Credit cards are available to me, i'm inundated with offers and can get cards approved. I'd be basically doing what I want to do with a car loan on a smaller scale. I'm financially secure just not in the eyes of lenders. Hense why I want to borrow an amount I have readily available as a lump sum, rather than messing about doing my car insurance on a credit card and paying it off in full every month. Im just not sure if such a service is actually available to me, I just thought it would be a nice idea to make the car buying process painless.
To improve my credit rating. As i'm aware no credit is worse than bad credit, and I have both. I never need to spend beyond my means so I never actually need credit. But a time will come when I cant cover every purchase in cash outright. I.e when I start thinking about Mortgages, or when I've got a family and then I have financial variables that i'm not fully in control of.
I had a CCJ which came off my file about 3 years ago. Also had other defaults that came off about 18 months ago. Best thing that ever happened to me, taught me that if i wanted something i would have to save and make sacrifices to get it. I realise yours is more due to bad luck than mine which was very much my own stupidity, but spend the small amount you do have on something you can own outright (spending 2 x as much will not get you a car you enjoy 2 x as much, sure it will get you something you prefer, but enjoyment of ownership vs money spent decreases exponentially the more you spend. you can always get at least 80% of the enjoyment when spending half as much. (do you think the person spending 20k on his Evo 9 MR bla bla bla is having twice as much fun as the guy spending 10k on a sorted Evo 5? or 4x the person spending £5k on a nice Evo 3 or 4?) Put the money you are wanting to spend on overpriced repayments for a car you think you want, into something that will make you money rather than costing you in (probably overinflated) APR. Even sticking it in the bank and earning 0.0whatever % is better than costing you what 12? 15? 18?%. when your CCJ comes off, the money you still have in your 2k car, plus what you've put away instead of making repayments on something at a stupid APR, plus what you can now borrow at an affordable rate due to your now clean credit rating will buy you something you wouldn't even dream you could afford now.
Let us know what you can realistically afford in cash, what you need the car to do, and I'm 100% positive the wonderful people of Pistonheads will give you plenty of recommendations that will make you smile.
Alternatively, you might get run over by a bus tomorrow, spend everything you have and everything you can (and can afford to borrow) on the car of your dreams as quick as you can.... If the worst does happen and you have no dependents, I can't imagine anything worse than dying with a load of money in the bank, in fact to be fair the ideal scenario would be to die with as much debt as possible. I'm sorry, I dont mean to be morbid, but that was very much my attitude to life until very recently.
How old are you by the way? own home? family? there's lots of factors which would change the advice i would give......and I'm by no means the best person to be giving financial advice to anyone
Let us know what you can realistically afford in cash, what you need the car to do, and I'm 100% positive the wonderful people of Pistonheads will give you plenty of recommendations that will make you smile.
Alternatively, you might get run over by a bus tomorrow, spend everything you have and everything you can (and can afford to borrow) on the car of your dreams as quick as you can.... If the worst does happen and you have no dependents, I can't imagine anything worse than dying with a load of money in the bank, in fact to be fair the ideal scenario would be to die with as much debt as possible. I'm sorry, I dont mean to be morbid, but that was very much my attitude to life until very recently.
How old are you by the way? own home? family? there's lots of factors which would change the advice i would give......and I'm by no means the best person to be giving financial advice to anyone
Cheers for the tips! Some further info i'm 25 and looking to spend £3000 on an E46 330d. That will be my cash budget of what I'll have available to me including £800 as what I value my car at via a quick sale and a £900 tax rebate. I'm subletting which I dont think counts for much in terms of establishing a secure basis for lending.
1. Sign up to experian to view your credit file. Remember to cancel your subscription within the first month. Ignore the actual score they give you, it doesn't mean anything and isn't used by creditors.
2. View how many credit applications you've made in the last 6 months. The fewer the better.
3. Get yourself on the electoral roll.
4. Ensure all your financial accounts are registered to the same address.
5. Apply for a credit card. Use it to buy fuel once a month and pay it off instantly.
6. It takes 6 months for new credit accounts opened to stop having a negative impact on future lenders decisions. It also takes 6 months to have a rejected or successful application to cease having a negative effect.
2. View how many credit applications you've made in the last 6 months. The fewer the better.
3. Get yourself on the electoral roll.
4. Ensure all your financial accounts are registered to the same address.
5. Apply for a credit card. Use it to buy fuel once a month and pay it off instantly.
6. It takes 6 months for new credit accounts opened to stop having a negative impact on future lenders decisions. It also takes 6 months to have a rejected or successful application to cease having a negative effect.
KM666 said:
Cheers for the tips! Some further info i'm 25 and looking to spend £3000 on an E46 330d. That will be my cash budget of what I'll have available to me including £800 as what I value my car at via a quick sale and a £900 tax rebate. I'm subletting which I dont think counts for much in terms of establishing a secure basis for lending.
This site works really well (and is free) for working out what you need to do. It will also give you indications of which cards/loans are available to you.https://www.clearscore.com/
DO NOT go the payday route. it will not help.
Do get a credit card, but only if you think you can get it. a refused one is not good for you. See if you can do a pre-check with the company before submitting the actual application.
Any time you get a credit card, always setup a direct debit to pay off the minimum. Then pay off all of the balance each month unless it is 0%, in which keep the amount of money you owe in an ISA if poss, so you know you can pay it off at the end of the 0% period. (Amex do a nice 21month credit card at the moment.)
Do save up. Having more savings than debts helps.
TBH though, until 6 years has elapsed from the CCJ, you will have a terrible credit score.
Cheers for the replies! I think trying to get a loan to buy a car I can afford is an idea i'll have to put to bed right now. I like to have the same again readily avaible when buying a car should it turn out to be amoney pit so ill just hang fire until the summer on that one.
The credit card route sounds like the best bet for improving my credit history. I registered to vote here before even transferring my bank account to this address so that side of things is sorted. I seem to be accepted for phones/finance on car insurance easily enough it just seems like anything more is off limits right now. I've always lived to my means so its no skin off my nose really. It was just a nice idea.
Thanks again!
The credit card route sounds like the best bet for improving my credit history. I registered to vote here before even transferring my bank account to this address so that side of things is sorted. I seem to be accepted for phones/finance on car insurance easily enough it just seems like anything more is off limits right now. I've always lived to my means so its no skin off my nose really. It was just a nice idea.
Thanks again!
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