I was brought up to believe that credit = bad and saving up and paying in cash = good. This meant that I ended up without having hardly any credit history at all because I put everything on my debit card and never ran up an overdraft.
It was only when I went mortgage shopping that the mortgage advisor told me my credit file was "too thin" for someone my age. At that time all it had on it was my mobile phone account (for some reason my bank account wasn't reporting to the CRAs). She told me that I need to start building a strong credit history.
I am not precisely sure how to do that. I managed to get approved for my first credit card last week, through HSBC. They also approved me for a 2000 personal loan. So hopefulyl those two products will be reporting to my CRA files soon. My mobile phone is on there too and so is my bank account now.
Does this sound like enough for the time being? Is it enough to leave it at that and just sit back and watch the green 0s accumulate? Or should I be trying to get additional card like Capital One or Vanquis? Or a mail order catalogue?
I don't want to overdo it and have too much credit but I do want to start building a really strong credit history.
Hi,
If you already have a cc with a decent limit and loan, then I would suggest getting a catalogue. Try Littlewoods or Next, and they report to all 3 CRAS every month which will help your file. For what it's worth, I have had a Littlewoods catalogue since August and have never bought a thing, yet they're still reporting nice green zeros. Once you've got a good 6-12 month history, then it should be easier to get a decent mortgage
HTH
Just use the CC regularly for things you buy anyway (maybe petrol or something like that), set up a DD for the full amount and so pay no interest and you never forget to pay.
I dont understand about the loan...do you mean you have taken one out (bad move) or merely been 'approved' for one?
maybe apply for another CC in 3-6 months time .. maybe a cash back card and that should be sufficient
Just use the CC regularly for things you buy anyway (maybe petrol or something like that), set up a DD for the full amount and so pay no interest and you never forget to pay.
I dont understand about the loan...do you mean you have taken one out (bad move) or merely been 'approved' for one?
Hi. I actually took a loan out for 2000. Why is it a really bad move? I'm within the time period where I can cancel the agreement and give the money back if for some reason it is a really bad move?
Hi,
If you already have a cc with a decent limit and loan, then I would suggest getting a catalogue. Try Littlewoods or Next, and they report to all 3 CRAS every month which will help your file. For what it's worth, I have had a Littlewoods catalogue since August and have never bought a thing, yet they're still reporting nice green zeros. Once you've got a good 6-12 month history, then it should be easier to get a decent mortgage
HTH
hi Sammy, I've been considering the NExt Directory. Not sure how stringent they are in credit scoring but I may well apply. Thanks for your suggestions :)
Hi. I actually took a loan out for 2000. Why is it a really bad move? I'm within the time period where I can cancel the agreement and give the money back if for some reason it is a really bad move?
Is there anything you want to do with the loan? It's a very expensive way to build credit history....
no needto do more than the c/card (is ussed and paid in full), and loan- i hpe you have spent the money wisely, or shuffled it into a Bank of Gordon (er,, I mean England) approved account..?
Hi. I actually took a loan out for 2000. Why is it a really bad move? I'm within the time period where I can cancel the agreement and give the money back if for some reason it is a really bad move?
slow down a bit
what sort of mortgage advisor did you see
no proper advisor (working in your interest) would suggest taking out a loan (and paying interest) just to build credit history
credit history with a CC or two (used as already described) , a bank a/c or two, maybe a contract mobile phone is more than adaquate to get the best rates on a mortgage.
actual debts i.e. loans will make it more difficult to get a good mortgage
no needto do more than the c/card (is ussed and paid in full), and loan- i hpe you have spent the money wisely, or shuffled it into a Bank of Gordon (er,, I mean England) approved account..?
The loan's sitting in a savings account.
slow down a bit
what sort of mortgage advisor did you see
no proper advisor (working in your interest) would suggest taking out a loan (and paying interest) just to build credit history
credit history with a CC or two (used as already described) , a bank a/c or two, maybe a contract mobile phone is more than adaquate to get the best rates on a mortgage.
actual debts i.e. loans will make it more difficult to get a good mortgage
the loan's paid off by the time i start applying for mortgages so it shows as a paid loan which I'd have thought is good.
the loan's paid off by the time i start applying for mortgages so it shows as a paid loan which I'd have thought is good.
Yeah but what is the APR, like 15%? It's sitting in a savings account at 4% and you are losing a LOT of money.
Yeah but what is the APR, like 15%? It's sitting in a savings account at 4% and you are losing a LOT of money.
I'm losing a total of about 100 over the duration of the loan. That's not that much money to me and it is worth it to me to build a strong credit profile.
I'm losing a total of about 100 over the duration of the loan. That's not that much money to me and it is worth it to me to build a strong credit profile.Oooooookay!
Just to let you know I never had loans before I got my mortgage. Only 2 credit cards which I pay off in full each month. And I was only 20 so had only had them 1.5 yrs at the time....
I'm losing a total of about 100 over the duration of the loan. That's not that much money to me and it is worth it to me to build a strong credit profile.Madness...utter and complete madness (IMHO)!!
And the very fact you *have* a loan will, if indeed HSBC decide to report it (and they might not), probably even LOWER your credit rating in the interim period.
Madness...utter and complete madness (IMHO)!!
And the very fact you *have* a loan will, if indeed HSBC decide to report it (and they might not), probably even LOWER your credit rating in the interim period.
Your response is a tad melodramatic I think.
The (independent) mortgage advisor suggested that a good mix to have on my credit report is:
1 or 2 credit cards
an unsecured loan of some kind
mobile phone contract and/or catalogue
To be honest I think that the fully paid loan I'll have on there a year from now is a good look and not a bad one. Especially since there is no other outstanding debt on the report and I've no need to apply for anything else before the loan's paid off.
Oooooookay!
Just to let you know I never had loans before I got my mortgage. Only 2 credit cards which I pay off in full each month. And I was only 20 so had only had them 1.5 yrs at the time....
I bet that mortgage approval wasn't in today's climate!
Your response is a tad melodramatic I think.Of course you're entitled to your opinion. However, I stand by my opinion, which is based on considerable knowledge of credit scoring/rating issues...with a large dose of common sense thrown in - you don't need to *buy* a credit rating. What's you opinion based on?...Oh, I see it's based on... The (independent) mortgage advisor suggested that a good mix to have on my credit report is:
1 or 2 credit cards
an unsecured loan of some kind
mobile phone contract and/or catalogue
To be honest I think that the fully paid loan I'll have on there a year from now is a good look and not a bad one. Lets hope what you think will happen actually does happen then.
Good luck.
personally i'd get rid of the loan - it may do you some favours, but nothing that say a next/littlewoods account wont do for you
credit ratings wont look at what types of acccounts you have had as such, they are looking for the ability to pay on time (plus the next directory account comes in handy at sale times ;)
also by getting rid of the loan you lessen the risk of actually using some of the money for other purposes - at the moment im assuming you would make the loan repayments from the loan itself plus coughing up the interest
personally i'd get rid of the loan - it may do you some favours, but nothing that say a next/littlewoods account wont do for you
credit ratings wont look at what types of acccounts you have had as such, they are looking for the ability to pay on time (plus the next directory account comes in handy at sale times ;)
also by getting rid of the loan you lessen the risk of actually using some of the money for other purposes - at the moment im assuming you would make the loan repayments from the loan itself plus coughing up the interest
Thanks for the advice. However, the loan's for 2k and my monthly take-home's just over 4k. I've also got 12 months' living expenses in a savings account. With that lot in place, if I felt the need to start dipping into the 2k loan it would mean that I'd developed the mother of all crack addictions or something.. The loan money's sitting in an account soaking up 8 or 10% interest - I'm gonna be just fine. Now if it was a 20,000 loan, it might be a problem
You have an account paying10%?! I want this account
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