is it worth getting a credit card to boost credit rating?
Discussion
My previous borrowing history is almost non-existant. I've had a phone contract with O2 (may 2011 - may 2013) and currently have a £500 student overdraft with Halifax (which is not in use, the account is in positive)
I was thinking about getting a low limit credit card and buying the odd things on it (mainly fuel, shopping) and paying in full every month to avoid interest.
Experian list my credit score as 909 (good) with the only negative being my age (20).
Would there be any benefits to getting a credit card just to improve my credit score, or will a source of credit available have a negative effect?
There is nothing I need the card for, i'm thinking about in a few years time when I come to get a mortgage, a higher score will possibly help. Maybe even get a little cashback in the short term?
I was thinking about getting a low limit credit card and buying the odd things on it (mainly fuel, shopping) and paying in full every month to avoid interest.
Experian list my credit score as 909 (good) with the only negative being my age (20).
Would there be any benefits to getting a credit card just to improve my credit score, or will a source of credit available have a negative effect?
There is nothing I need the card for, i'm thinking about in a few years time when I come to get a mortgage, a higher score will possibly help. Maybe even get a little cashback in the short term?
I don't think its enough to just get a credit card, you need to actually use it for it to positively change your credit rating. I think just getting a CC, will have a negative impact, as each credit check does. Whats important and positively raises your credit rating is paying back money you've borrowed, as this starts to show you as a good risk.
becker-on-ph said:
I don't think its enough to just get a credit card, you need to actually use it for it to positively change your credit rating. I think just getting a CC, will have a negative impact, as each credit check does. Whats important and positively raises your credit rating is paying back money you've borrowed, as this starts to show you as a good risk.
That's what I am planning to do, probably just buy fuel with it and pay it off straight away to avoid interest. Fuel costs are c.£200/month Really depends on what time of finance you're hoping to get in the future really, if you want more credit cards then possibly yes, if you want a mortgage, possibly no.
There are two sides to it, but since the mid 2000s affordability calculators have become more and more important, an unused credit limit with a CC company can be considered potential debt and can hurt affordability calcs.
To be honestly as long as you're on the voters roll and you pay your bills on time you don't need to have a CC, it might make the score look a bit better, but they're largely nonsense in the real world.
There are two sides to it, but since the mid 2000s affordability calculators have become more and more important, an unused credit limit with a CC company can be considered potential debt and can hurt affordability calcs.
To be honestly as long as you're on the voters roll and you pay your bills on time you don't need to have a CC, it might make the score look a bit better, but they're largely nonsense in the real world.
Having a £1k limit and servicing it religiously will be a good idea for prospective mortgage borrowing in a few years time. Placing mortgages for clients with nothing but a bank account and mobile phone is not as easy as you would think.
I have yet to have a mortgage application rejected because of the level of unused credit available. Unsecured finance such as other cards or consolidation loans yes, but not a mortgage.
I don't even a think a £5k limit will cause any mainstream lender a concern.
I have yet to have a mortgage application rejected because of the level of unused credit available. Unsecured finance such as other cards or consolidation loans yes, but not a mortgage.
I don't even a think a £5k limit will cause any mainstream lender a concern.
I don't understand the stigma with credit cards...
Get one with a good cashback/points deal and spend all your usual expenditure on it - food, drinks, socialising, fuel etc.
You have more protection and will get cash back. Just pay it off in full each month.
They're much better than a debit card.
Get one with a good cashback/points deal and spend all your usual expenditure on it - food, drinks, socialising, fuel etc.
You have more protection and will get cash back. Just pay it off in full each month.
They're much better than a debit card.
James2593 said:
My previous borrowing history is almost non-existant. I've had a phone contract with O2 (may 2011 - may 2013) and currently have a £500 student overdraft with Halifax (which is not in use, the account is in positive)
I was thinking about getting a low limit credit card and buying the odd things on it (mainly fuel, shopping) and paying in full every month to avoid interest.
Experian list my credit score as 909 (good) with the only negative being my age (20).
Would there be any benefits to getting a credit card just to improve my credit score, or will a source of credit available have a negative effect?
There is nothing I need the card for, i'm thinking about in a few years time when I come to get a mortgage, a higher score will possibly help. Maybe even get a little cashback in the short term?
I have a credit card for the exact same reason, I don't even have a mobile phone in my name (its under the company), which i'm told is important in these credit checks. I was thinking about getting a low limit credit card and buying the odd things on it (mainly fuel, shopping) and paying in full every month to avoid interest.
Experian list my credit score as 909 (good) with the only negative being my age (20).
Would there be any benefits to getting a credit card just to improve my credit score, or will a source of credit available have a negative effect?
There is nothing I need the card for, i'm thinking about in a few years time when I come to get a mortgage, a higher score will possibly help. Maybe even get a little cashback in the short term?
But its important to use it or there is not point having it, as some one else has said, its about paying it back not having it there.
I got one for that reason, 20yo, no previous history of ever borrowing money, decent income so in 2/3 years time when I want to buy a house I got a credit card which I spend about £500 per month and pay off instantly. I get £5 a month cashback when I spend over £300 aswell. No brainer if you are comfortable and sensible.
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