Building credit score for 18yr old
Discussion
My son is 18 and wants to build up a credit score for himself. He was recently turned down by Apple when trying to buy an iPhone from them on 0% interest over 18 months as he didn't have any credit score. Would be nice for him to get a credit card soon too.
He started employment a few weeks ago so he has a wage, and he lives at home with us. Would setting up a direct debit for something help obtain a credit score?
He started employment a few weeks ago so he has a wage, and he lives at home with us. Would setting up a direct debit for something help obtain a credit score?
The Gauge said:
My son is 18 and wants to build up a credit score for himself. He was recently turned down by Apple when trying to buy an iPhone from them on 0% interest over 18 months as he didn't have any credit score. Would be nice for him to get a credit card soon too.
He started employment a few weeks ago so he has a wage, and he lives at home with us. Would setting up a direct debit for something help obtain a credit score?
Starting a line of credit and servicing it regularly will start to build up a credit score.He started employment a few weeks ago so he has a wage, and he lives at home with us. Would setting up a direct debit for something help obtain a credit score?
Quickest way of doing this would be to get a credit card and making sure that it is paid off every month.
My son got an aqua credit card as a student for this purpose. As others have said, it was a low limit initially, a few hundred pounds I think. The interest rate will be high, but not an issue so long as the discipline is there to pay off the full balance every month. It definitely helped his credit score.
You don't improve your score by having a credit card unless you use it.
So, use it once, then OVERpay the balance by £5 using a debit card (so there's no linked DD). So, they owe you money, but critically the balance is not zero, and they will not close the account either, then put the card in a drawer and forget about it. It will show on credit reports as being used every month, and you don't need to do anything. I discovered this purely by mistake, but it works, and you don't need to make a transaction each month.
So, use it once, then OVERpay the balance by £5 using a debit card (so there's no linked DD). So, they owe you money, but critically the balance is not zero, and they will not close the account either, then put the card in a drawer and forget about it. It will show on credit reports as being used every month, and you don't need to do anything. I discovered this purely by mistake, but it works, and you don't need to make a transaction each month.
Free credit score providers usually have a checker for 'pre-approved' and 'credit score builder' credit cards.
Double-check those and ensure there are guaranteed credit cards with '0% for X months' (after which it is usually a gazillion per cent APR). Pay the spend balance off every month in full, stop using it once the 0% period is over and try and find another.
Other things like electoral register, having a contract/utility bill under someone's name can also contribute to a credit score.
If there's nothing online, check in branch at the bank or consider opening an account with a smaller bank or building society where you're likely to be able to deal with someone in person and not fobbed off to consult online or telephone banking. The smaller banks / building societies could be a bit more flexible, lenient and willing to engage the manager or find a suitable product.
Salary helps, of course. Several years ago I took out my first credit card as an M&S Bank customer. I was in full-time employment and I was approved for it with a credit limit of £4,000 and 0% for 24 months, which of course I maxed out and paid off over a seemingly generous 0% grace period.
Double-check those and ensure there are guaranteed credit cards with '0% for X months' (after which it is usually a gazillion per cent APR). Pay the spend balance off every month in full, stop using it once the 0% period is over and try and find another.
Other things like electoral register, having a contract/utility bill under someone's name can also contribute to a credit score.
If there's nothing online, check in branch at the bank or consider opening an account with a smaller bank or building society where you're likely to be able to deal with someone in person and not fobbed off to consult online or telephone banking. The smaller banks / building societies could be a bit more flexible, lenient and willing to engage the manager or find a suitable product.
Salary helps, of course. Several years ago I took out my first credit card as an M&S Bank customer. I was in full-time employment and I was approved for it with a credit limit of £4,000 and 0% for 24 months, which of course I maxed out and paid off over a seemingly generous 0% grace period.
A bit lazy posting an ML but it's a good summary of how credit scores work and how you can improve them.
https://www.moneysavingexpert.com/loans/credit-rat...
https://www.moneysavingexpert.com/loans/credit-rat...
FriedMarsBar said:
A bit lazy posting an ML but it's a good summary of how credit scores work and how you can improve them.
Lazy_banal_article said:
Companies use any data on previous dealings they've had with you to feed into the credit score. This means those with limited credit history may find their own bank more likely to lend to them than others
Er -My daughter also got turned down recently for the Apple iPhone interest-free deal. Except it's not Apple doing the Finance, it's Barclays. And she has tens of thousands in her Barclays accounts. And is a homeowner. But their application form doesn't ask who you bank with. Or whether you're a homeowner
There is something Kafka-esque about the way this now works and how financial status is assessed
And yes, she did buy the phone from her savings, but genuine no-catch interest-free payment is always good
Jermy Claxon said:
You don't improve your score by having a credit card unless you use it.
So, use it once, then OVERpay the balance by £5 using a debit card (so there's no linked DD). So, they owe you money, but critically the balance is not zero, and they will not close the account either, then put the card in a drawer and forget about it. It will show on credit reports as being used every month, and you don't need to do anything. I discovered this purely by mistake, but it works, and you don't need to make a transaction each month.
That's a great idea if it works, thanksSo, use it once, then OVERpay the balance by £5 using a debit card (so there's no linked DD). So, they owe you money, but critically the balance is not zero, and they will not close the account either, then put the card in a drawer and forget about it. It will show on credit reports as being used every month, and you don't need to do anything. I discovered this purely by mistake, but it works, and you don't need to make a transaction each month.
Edited by The Gauge on Thursday 3rd July 19:16
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