What should I do to improve my credit rating?
Discussion
As per title really.
I'm 22, in full time employment earning a decent salary for my age in my area etc etc...
Looking at my Noddle credit report, it seems to be pretty good for my age but I'm wondering what I can do to improve it.
Currently I have:
Main bank account with a small overdraft. I very rarely use the overdraft and when I do dip into it I swiftly transfer money from another account to clear the debt.
Savings account (specifically for a new car, currently 4 figures).
Savings account which I can only withdraw from once a year, currently only 3 figures in it (not had it long).
In terms of money that goes out:
Rent money via a standing order
Phone bill
Other small things (Netflix, Xbox Live etc)
Oh, and I'm on the electoral role.
I tend to have an empty (or near empty) account by then end of each month - but the savings accounts do show that I'm capable of saving and managing money, I think that's how it works, right?
Last year I also took out a small loan, purely to boost my credit rating. This has now been paid off and I'm able to borrow a lot more than previously.
What else can I do? I've looked at getting a credit card (I'm good with money and wouldn't buy what I can't afford) and also looked at getting a much bigger loan but don't really want to pay a f
k load of interest for no reason whatsoever and aside from that don't really know what I can do.
I'm 22, in full time employment earning a decent salary for my age in my area etc etc...
Looking at my Noddle credit report, it seems to be pretty good for my age but I'm wondering what I can do to improve it.
Currently I have:
Main bank account with a small overdraft. I very rarely use the overdraft and when I do dip into it I swiftly transfer money from another account to clear the debt.
Savings account (specifically for a new car, currently 4 figures).
Savings account which I can only withdraw from once a year, currently only 3 figures in it (not had it long).
In terms of money that goes out:
Rent money via a standing order
Phone bill
Other small things (Netflix, Xbox Live etc)
Oh, and I'm on the electoral role.
I tend to have an empty (or near empty) account by then end of each month - but the savings accounts do show that I'm capable of saving and managing money, I think that's how it works, right?
Last year I also took out a small loan, purely to boost my credit rating. This has now been paid off and I'm able to borrow a lot more than previously.
What else can I do? I've looked at getting a credit card (I'm good with money and wouldn't buy what I can't afford) and also looked at getting a much bigger loan but don't really want to pay a f
k load of interest for no reason whatsoever and aside from that don't really know what I can do.
TREMAiNE said:
Looks like I'm getting a credit card then!
Is a credit card from my own bank a better choice than one from another company?
And what sort of things do I need to know what credit cards are better than others?
Longest interest-free period possible and whatever rewards work for you (look for cash back rather than points) since you'll be paying it off in full every month. Don't apply for too many though as an excess of checks will actually hurt your credit score.Is a credit card from my own bank a better choice than one from another company?
And what sort of things do I need to know what credit cards are better than others?
TREMAiNE said:
Looks like I'm getting a credit card then!
Is a credit card from my own bank a better choice than one from another company?
And what sort of things do I need to know what credit cards are better than others?
Anything with rewards will suit your reasons for using a credit card. Is a credit card from my own bank a better choice than one from another company?
And what sort of things do I need to know what credit cards are better than others?
My wife had one with Amazon, got £10 for every £1000 you spent. If you are as sensible as you say, put everything you can on it, pay it off each month, and you will get a bit back to spend on a game, film, CD etc or save the vouchers for something bigger.
Probably not the most rewarding card, but something along those lines is probably what you want.
marshalla said:
Longest interest-free period possible and whatever rewards work for you (look for cash back rather than points) since you'll be paying it off in full every month.
If he pays it off every month (the smart choice) then the interest-free bit is irrelevant.Also, set up a DD to pay it automatically from your current account.
You're doing well; try to avoid borrowing money because (unless you count a CC as a loan) all it does is cost you more. The only exception IMHO is a mortgage.
Simpo Two said:
If he pays it off every month (the smart choice) then the interest-free bit is irrelevant.
Also, set up a DD to pay it automatically from your current account.
You're doing well; try to avoid borrowing money because (unless you count a CC as a loan) all it does is cost you more. The only exception IMHO is a mortgage.
Depends what he does with the "surplus" cash that will be sitting in his account. It might be possible to get enough of a balance to earn a little bit of interest, and a few extra days on the card payment date could be useful to make sure the credit balance never falls below a threshold. Longer interest-free periods also reduce the chances of the card payment date falling at an "awkward" point between salary/wage payments.Also, set up a DD to pay it automatically from your current account.
You're doing well; try to avoid borrowing money because (unless you count a CC as a loan) all it does is cost you more. The only exception IMHO is a mortgage.
Thanks both.
I tend to overview my finances daily, so there is little chance I'd go into my overdraft - if I did it would be for a few hours max before I cleared it with money from a different account.
Looks like tomorrow I'll be looking at CC's!
I'm actually a little excited about improving my credit rating... Wow my life is sad!
I tend to overview my finances daily, so there is little chance I'd go into my overdraft - if I did it would be for a few hours max before I cleared it with money from a different account.
Looks like tomorrow I'll be looking at CC's!
I'm actually a little excited about improving my credit rating... Wow my life is sad!
Definitely set it up to pay off the full balance by DD every month, then there is no temptation to let a balance roll over, or spend more than you can afford.
Also, a friend who works in scoring for a large company said that in his algorithms the score is quite heavily affected by the ages of the oldest lines of credit, ie. once you get this card never close that account.
Also, a friend who works in scoring for a large company said that in his algorithms the score is quite heavily affected by the ages of the oldest lines of credit, ie. once you get this card never close that account.
Edited by Gareth79 on Friday 6th February 01:38
Savings accounts, netflix payments etc won't affect your credit rating, as they are not credit accounts.
However a mobile phone contract will, as it is essentially a loan. A good indicator of credit is if someone can pay their phone bill on time, if they can't keep up with such a small payment, you questions their ability on larger payments.
Also, don't have too many large available limits, even if you're not using them. If you have £15k of available credit between cards and overdrafts, even if you're not using it, a lender may not want to add to that, as if you lost your job and suddenly maxed them all out, you're going to struggle to pay it all back.
As others have said, take out a credit card and pay it back in full each month. That will help.
Be on the electoral roll.
Have a mortgage. This ups your score significantly.
Don't move house often.
However a mobile phone contract will, as it is essentially a loan. A good indicator of credit is if someone can pay their phone bill on time, if they can't keep up with such a small payment, you questions their ability on larger payments.
Also, don't have too many large available limits, even if you're not using them. If you have £15k of available credit between cards and overdrafts, even if you're not using it, a lender may not want to add to that, as if you lost your job and suddenly maxed them all out, you're going to struggle to pay it all back.
As others have said, take out a credit card and pay it back in full each month. That will help.
Be on the electoral roll.
Have a mortgage. This ups your score significantly.
Don't move house often.
Greshamst said:
Also, don't have too many large available limits, even if you're not using them.
That comment surprised me a bit. I run with very large available limits on credit cards and have always imagined it would be seen as a "good thing" to have big limits and not get into difficulties. I guess your point may be that these are already, effectively, available loan facilities.I am led to believe that suppressing the number of credit enquiries made in your name can be beneficial.
I'm 22 as well. I got a American Express Platinum everyday cash back card which had 5% cash back for the first 3 months and 1.25% after that. I put all my every day spending where I can onto it and get money back. Pay it off every month. So far I've for £85 cash back since November ( put all my christmas spend on it )
I think as long as You always have at least the same amount cash saved as you have as a credit limit you can't go wrong even if you had a bit of a splurge.
My credit rating is excellent on experian.
I think as long as You always have at least the same amount cash saved as you have as a credit limit you can't go wrong even if you had a bit of a splurge.
My credit rating is excellent on experian.
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