How to improve credit rating?
Discussion
I've just come out of the uni life and am trying to build my credit rating. I've had a credit card before but didn't end up using it much as I didn't understand all the charges. Now my bank has offered me a credit card, with 0% interest-free on purchases for 9mths. The bank also said that I can set up a direct debit for the minimum payment each month and therefore I will not incur any interest charges.
Was she right in saying that? And is there any hidden charges etc that I should be aware of? My aim through this is to only use the credit card if I can afford it, and then to solely use my linked current account to 'hold' the money spent until it is debited from my account/i decide to pay it all off. So effectively it will be like using my debit card in a long-winded way...correct?
And then in 9mths to cancel the card and move onto another special offer. Is this a sound idea?
Was she right in saying that? And is there any hidden charges etc that I should be aware of? My aim through this is to only use the credit card if I can afford it, and then to solely use my linked current account to 'hold' the money spent until it is debited from my account/i decide to pay it all off. So effectively it will be like using my debit card in a long-winded way...correct?
And then in 9mths to cancel the card and move onto another special offer. Is this a sound idea?
if you can keep on top of it and actually pay it all off at the end of the period then you can do ok from it. the only problem is that if you forget it for even a very short time then the costs will be far more than the extra interest gained on the current account.
dont actualy know much about credit ratings though!
plus i may be wrong
dont actualy know much about credit ratings though!
plus i may be wrong
Seany88 said:
I've just come out of the uni life and am trying to build my credit rating. I've had a credit card before but didn't end up using it much as I didn't understand all the charges. Now my bank has offered me a credit card, with 0% interest-free on purchases for 9mths. The bank also said that I can set up a direct debit for the minimum payment each month and therefore I will not incur any interest charges.
Was she right in saying that? And is there any hidden charges etc that I should be aware of? My aim through this is to only use the credit card if I can afford it, and then to solely use my linked current account to 'hold' the money spent until it is debited from my account/i decide to pay it all off. So effectively it will be like using my debit card in a long-winded way...correct?
And then in 9mths to cancel the card and move onto another special offer. Is this a sound idea?
Was she right in saying that? And is there any hidden charges etc that I should be aware of? My aim through this is to only use the credit card if I can afford it, and then to solely use my linked current account to 'hold' the money spent until it is debited from my account/i decide to pay it all off. So effectively it will be like using my debit card in a long-winded way...correct?
And then in 9mths to cancel the card and move onto another special offer. Is this a sound idea?
Banks have a habit of noting the card whores, ie those who jump from one speical offer to another and one day u get bad rating for the jumping
I use one card, it is set up to pay the amount monthly. by using the card sensibly and paying it off u get a good creidt rating, better to set up the direct debit to pay off the full amount each month, unless u like paying lots of interest charges on the balance less the minimum payment - try the maximum payment option
Scraggles said:
Banks have a habit of noting the card whores, ie those who jump from one speical offer to another and one day u get bad rating for the jumping
I use one card, it is set up to pay the amount monthly. by using the card sensibly and paying it off u get a good creidt rating, better to set up the direct debit to pay off the full amount each month, unless u like paying lots of interest charges on the balance less the minimum payment - try the maximum payment option
I use one card, it is set up to pay the amount monthly. by using the card sensibly and paying it off u get a good creidt rating, better to set up the direct debit to pay off the full amount each month, unless u like paying lots of interest charges on the balance less the minimum payment - try the maximum payment option
Not true. You won't get a bad rating for jumping cards. You WILL affect your rating by:
* Applying for too many in a short space of time (having credit checks carried out on you lower your rating)
* Holding too many open cards at once (over-exposed risk)
Getting a card and using it (and paying it off) will improve your credit rating, but not much. Realistically, if you're single, under 30, and don't own property, your credit rating is not going to be great regardless.
If you do use interest free on a card be very careful - the way it's calculated is quite evil at times... you will always pay off the lowest interest first, leaving the highest continually accruing.
From what I remember about credit scoring:
- Credit cards (have some and have used them and paid them off)
- Degree (good to have one, professionals are better for credit)
- Mobile phone contract (easy enough to get, proves you can manage your finaces)
- Property (something they can take off you
)
- Job, regular salary and reasonable time in the position are important
- Credit cards (have some and have used them and paid them off)
- Degree (good to have one, professionals are better for credit)
- Mobile phone contract (easy enough to get, proves you can manage your finaces)
- Property (something they can take off you
) - Job, regular salary and reasonable time in the position are important
The question is why do you want to "improve" your credit rating? If you have a graduate account that you pay your monthly salary into, then that bank will bend over backwards to supply you with things like graduate loans and cheap FTBer mortgage deals.
I saw your other post about multiple student accounts and with all due respect you may well be shooting yourself in the foot if you try to spread your finances too thinly. Get one Graduate account, pay your salary into it every month and stick to it. They will offer you every service you will ever need!
I saw your other post about multiple student accounts and with all due respect you may well be shooting yourself in the foot if you try to spread your finances too thinly. Get one Graduate account, pay your salary into it every month and stick to it. They will offer you every service you will ever need!
Also check what is included in the 9 month offer. Usually this will only include Purchases and balances transferred from other store or credit cards. cash withdrawels (inc currency purchases) and any form of cheqs that come with the card dont usually come under the 0% offer. These also accrue a high rate of interest and this is calculated daily and not monthly. And as a poster has already said at the end of the Promo Period you will pay off the amounts that attract the lowest interest amounts first, allowing the bank to accrue interest on the higher rates linked to cash.
Sorry to be a bit long winded but a lot of people in my experience are caught out by the interest free period so make sure you read the small print
Sorry to be a bit long winded but a lot of people in my experience are caught out by the interest free period so make sure you read the small print
J_S_G said:
Getting a card and using it (and paying it off) will improve your credit rating, but not much. Realistically, if you're single, under 30, and don't own property, your credit rating is not going to be great regardless.
So in your opinion, is it even worth trying to improve this or just leave it to be whatever it is? Does the improvement justify the extra hassle?
slapmatt said:
The question is why do you want to "improve" your credit rating? If you have a graduate account that you pay your monthly salary into, then that bank will bend over backwards to supply you with things like graduate loans and cheap FTBer mortgage deals.
I saw your other post about multiple student accounts and with all due respect you may well be shooting yourself in the foot if you try to spread your finances too thinly. Get one Graduate account, pay your salary into it every month and stick to it. They will offer you every service you will ever need!
I saw your other post about multiple student accounts and with all due respect you may well be shooting yourself in the foot if you try to spread your finances too thinly. Get one Graduate account, pay your salary into it every month and stick to it. They will offer you every service you will ever need!
Matt I understand what your saying, hence why i'm trying to cut down on the accounts i do have! I've decided to stick with international banks i.e. hsbc and barclays - I prefer barclays, but hsbc are offering better graduate options. Another thing, I do have a long-term account (since 5yrs old) with another bank that I do not wish to cut ties with...so its difficult to choose who to stick with!
Also my salary will go into the graduate account, but will not stay there for very long
will they still be so nice?Seany88 said:
J_S_G said:
Getting a card and using it (and paying it off) will improve your credit rating, but not much. Realistically, if you're single, under 30, and don't own property, your credit rating is not going to be great regardless.
So in your opinion, is it even worth trying to improve this or just leave it to be whatever it is? Does the improvement justify the extra hassle?
I wouldn't waste my time with it unless I had a specific need to address (inability to get a mortgage/loan/etc). What I *would* do, though, is make use of financial products where it's sensible to do that. Like having a credit card that's paid off in full each month. It can (sometimes) make life a bit easier when you want something before payday, but more importantly there are plenty of cards out there giving a decent level of cashback (1%, say), that'll make you a couple of hundred quid over the year for nothing other than choosing which bit of plastic to pull out of your pocket when paying for something.
Best of all, set up the DD to pay ALL the balance. If you can't afford it, think twice about spending it. Boring old school stuff but it works.
If you do want to spend the rest of your life ducking and diving from one offer to another and stressing over small print, never use the card for a cash advance and never use any 'credit card cheques' they may send you - as interest is charged from Day 1. I've never paid any interest on credit cards (first was in 1984!) apart from the odd forgotten payment, which is why I now use DD. My current card gives me 1% cash back each year. Win to me
If you do want to spend the rest of your life ducking and diving from one offer to another and stressing over small print, never use the card for a cash advance and never use any 'credit card cheques' they may send you - as interest is charged from Day 1. I've never paid any interest on credit cards (first was in 1984!) apart from the odd forgotten payment, which is why I now use DD. My current card gives me 1% cash back each year. Win to me
Seany88 said:
Fantastic advice, exactly what I was looking for, thanks. What cards are there that give cashback? In fact i'll go look myself.
Egg Money is one of the best... 1% cashback, and other cashback offers (2% over Christmas last year), plus no charge on cash withdrawals (cash advances) (but watch out for the interest period on this!)
(Bearing in mind I worked for Egg until... erm... this week, and I'd still recommend it as a cashback card!) Don't try getting clever with it, though - some nasty gotchas in the latest Ts & Cs... surcharges for usage on gambling sites, etc.
Use for all daily purchases and pay off in full every month, and you should make a couple of hundred a year. If you "load it up" with money before using it at the beginning of each month (i.e. have it in credit), it pays a reasonable rate of interest as a substitute savings account, too, if your current account pays close to zero.
Seany88 said:
Fantastic advice, exactly what I was looking for, thanks. What cards are there that give cashback? In fact i'll go look myself.
Capital One 'Circle'. 1% on all purchases, credited to your account each year. Not a fortune, but better than 0%.
You see, if you can get your finances into the black, you'll end up a lot better off in the long run. On a bigger scale, who spends the most, the guy who goes into a car dealership with a suitcase of money, or the guy who has to sign a finance deal?
Seany88 said:
Well I just applied for a credit card last week and was denied. What can I do? Why would I have bad credit? Is there any middle ground to negotiate?
You can't really negotiate. Who did you apply to? What did you put on the application form? If you put a low income or no job then many will refuse. Sometimes it's best to lie....
cannedheat said:
Seany88 said:
Well I just applied for a credit card last week and was denied. What can I do? Why would I have bad credit? Is there any middle ground to negotiate?
You can't really negotiate. Who did you apply to? What did you put on the application form? If you put a low income or no job then many will refuse. Sometimes it's best to lie....
It was just Halifax, as I was in the bank and they offered it to me. I do have a job.
Could it be from my student days of countless overdrafts and possibly going over my overdraft on a few occasions? One bank even asked for the overdraft to be paid, which I finally did after ~6mths...i'm guessing that wouldn't have helped.
Thing is, what do I do now? I'm going to try and get my phone contract put into my name, but what if they refuse also?
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