How can I build a decent credit rating?

[greggy50]

Hello

I just wondered what the best approach for myself would be to building up a credit rating

Quick background of myself

Just graduated from Uni (22 years old)
Have had a contract phone for 4 years always paid off on time
Rented a £600pm flat whilst on placement paid via direct debit and associated bills
Current £1,100 O/D to pay off from University
No other debts
Have never used a credit card
Bank with Natwest

I start work in 3 weeks on a graduate scheme will be on £25k year 1 £27k year 2 then probably mid 30s the year after and as I will be living at home rent free I aim to buy a house in approx 3 years time at the age of 25.

Anyway for a mortgage I know a decent credit rating will be needed so wondered what steps I should take to help build this up I assume a credit card will be the best option but which one?

As I have never had one before I assume my rating is pretty rubbish and this may therefore limit my choice?

Any other tips to help build up a decent rating?

[steve954]

Credit card! Get one with say a £500 limit and use it to buy all you monthly needs like petrol food etc! Then once the bill comes in at the end of the month pay it off in full to avoid paying interest.

[greggy50]

Any tips on what the best one to get is for my needs?

Currently with Natwest but my interest rate is rubbish as a student account and have no real savings just an O/D as running 2 cars without a wage currently and has eaten my funds since I finished in May,

Going to switch to Halifax as qualify for the £100 switch over when I start in 3 weeks and seems to be a better interest rate etc...

Do they do a decent credit card at all?

Edited by greggy50 on Sunday 10th August 19:28

[anonymous-user]

This is what I did to go from a score of 1 up to a 4 in 12 months.

Register with noddle.co.uk (it's free)
Make sure all bills are paid on time with direct debits
Make sure you're on the Electoral Roll
Make sure no gaps in Address Links
Try not to apply for credit too often
If you have a credit card, pay more than the minimum payment each month

And some people reckon credit searches affect your rating so you may wish to avoid registering with comparison
sites.

So many other factors can play a part though like how long you've been at your current address and how much you earn so I wouldn't get too hung up on the scoring.

[davepoth]

greggy50 said:

Any tips on what the best one to get is for my needs?

Makes no difference at all - you pay the whole thing off every month so you don't pay any interest. Use it like your debit card, effectively. Make sure that you get them to set the Direct Debit day a day after payday so there's plenty of cash in there, and don't be tempted to run up any kind of carry-over balance.

[greggy50]

davepoth said:

Makes no difference at all - you pay the whole thing off every month so you don't pay any interest. Use it like your debit card, effectively. Make sure that you get them to set the Direct Debit day a day after payday so there's plenty of cash in there, and don't be tempted to run up any kind of carry-over balance.

Ah okay I thought you had to pay the interest off regardless!

Okay may as well just get the Halifax card when I transfer over

Have checked credit score on noddle 1/5 as expected

Everything seems good and I am on the electoral role

However have a orange account shown as in dispute of a sum of £166 this was over them saying I had no cancelled my contract when I had after 24 months and in the end they dropped me paying it. Is this likely to have a massive effect in the long term?

I have my 3g account on there which I have had for 3/4 years and always paid on time...

[anonymous-user]

If Orange are saying to you the amount is no longer owed I would ask them to get your credit file corrected asap. If they agree it might take some months to show on Noddle. I also wouldn't bother applying for credit from a reputable lender just yet as a good chance of rejection exists which will put you back months still.

Money Saving Expert does a soft credit check on your file (lenders can't see it) to assess your chances of getting a credit card. I would use this as a starting point.

[greggy50]

RaymondVanDerDon said:

If Orange are saying to you the amount is no longer owed I would ask them to get your credit file corrected asap. If they agree it might take some months to show on Noddle. I also wouldn't bother applying for credit from a reputable lender just yet as a good chance of rejection exists which will put you back months still.

Money Saving Expert does a soft credit check on your file (lenders can't see it) to assess your chances of getting a credit card. I would use this as a starting point.

I still have copies of the emails so have raised a complaint via the noddle website an will see where it leads...

I can still get a credit card in the meantime though? As Natwest offered me one before anyway I am not fussed about the interest as because as someone mentioned will be paying it off in full each month anyway

[anonymous-user]

This is the eligibility checker for lenders who are willing to give cards to people with good credit:

https://creditcards.moneysavingexpert.com/?purchas...

Give it a go.

[oddball1973]

Being ultra cynical - pay for everything on the ticket and as long as you keep up payments you'll be fine with a triple A rating 900+ Experian score

Unfortunately the minus side of this is if you miss a payment or two, you'll end up with a score similar to Greece.

[greggy50]

RaymondVanDerDon said:

This is the eligibility checker for lenders who are willing to give cards to people with good credit:

https://creditcards.moneysavingexpert.com/?purchas...

Give it a go.

Not looking good this must all be to do with this Orange thing I was unaware about...

It is weird as Natwest offered me a Credit Card about 12 months ago I just never took them up on the offer yet that website is showing 0% chance

Find it weird how I can be on £25k at home with no real bills or debt and not be able to get a card

[BlackST]

You could look into a Vanquis credit card?
It would be a low limit at first and they are available to people with low credit scores.
Pretty sure that would help you out and improve your rating.

[greggy50]

BlackST said:

You could look into a Vanquis credit card?
It would be a low limit at first and they are available to people with low credit scores.
Pretty sure that would help you out and improve your rating.

That may be my only option!

Think I will pop into Halifax and have a chat as need to transfer my account over and see if they can offer me anything, will also look at getting the Orange phone problem sorted as well.

[mackay45]

I got my first credit card with my bank at that time, Halifax. I'd say you'd be best off getting a credit card from your existing bank, then switching current accounts to Halifax.

If your existing bank say no, change current accounts to Halifax, and then ask Halifax for a credit card - you'll stand a lot more chance once you've been with them a few months, and once you've had a couple of paydays (congrats on the grad scheme job). I don't think I got my credit card until a few months after I started my job, so that might be an even safer way to go.

[ninja-lewis]

Is your grad scheme one where you will be out of the office with expenses often? Your employer may get you to apply for a Corporate AMEX card (or similar) for processing expenses if that's the case. Usually you're joint and several liable with your employer for the full amount but I'm not sure if it'd show up on your credit history though.

[bigandclever]

greggy50 said:

Find it weird how I can be on £25k at home with no real bills or debt and not be able to get a card

Catch 22 isn't it ... you're not proving you have the discipline to manage credit, so you're not given the opportunity to prove you can manage credit

[Hilts]

mackay45 said:

I got my first credit card with my bank at that time, Halifax. I'd say you'd be best off getting a credit card from your existing bank, then switching current accounts to Halifax.

I would agree, go to your bank first. Never mind this credit rating stuff.

[HQ2]

Remember 'age' of accounts (how long you've been with a bank/had credit arrangement) is part of your credit score. Get a card with any rate - it won't matter but you should use it and MUST pay it off in full every month. Also spend approx 1/3 of the limit. The % of your available credit that you've used on billing date is part of the score (doesn't matter if £3000 of £10,000 or £300 of £1000).

[DeanR32]

I checked my rating on that Noddle site, and I was 3/5. How do I get up to a five?

Credit card is the obvious next step. Anything else?

[greggy50]

HQ2 said:

Remember 'age' of accounts (how long you've been with a bank/had credit arrangement) is part of your credit score. Get a card with any rate - it won't matter but you should use it and MUST pay it off in full every month. Also spend approx 1/3 of the limit. The % of your available credit that you've used on billing date is part of the score (doesn't matter if £3000 of £10,000 or £300 of £1000).

Okay thanks a lot will keep this in mind

Going to Natwest tomorrow to see if they can sort me out with a Credit Card for me to start using will probably only need a £500 limit keeping this in mind.