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    • thatgeezer
    • By thatgeezer 29th Sep 17, 10:09 PM
    • 2Posts
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    thatgeezer
    Can taking out store finance or a loan boost my credit report
    • #1
    • 29th Sep 17, 10:09 PM
    Can taking out store finance or a loan boost my credit report 29th Sep 17 at 10:09 PM
    Hi,

    I am 23 and looking at applying for a mortgage in 2 years time. I've got a pretty squeaky clean credit score of 999 on Experian. I've had a credit card since I was 18 and an overdraft facility since I was 19 at 0% due to being a student. My first credit card was a capital one card at a "fantastic" rate of 25.9% and a limit of £250 which then increased to £1200 I maxed out once or twice but I paid it all off gradually. I then closed that card and took out a lloyds card at 9% and a limit of £500 which I my everyday card. I use it often but don't clear it off in full each month I know its bad but I'm prioritising saving for a deposit over clearing my card. Anyway my point is that the credit card is the only credit I've ever had.

    My question is that as the credit card is the only credit facility I've ever had, would it be a good idea to take out store finance or a bank loan for the sake of it to prove to lenders that I can make a monthly commitment: effectively buying a good credit report. Like I said, all of my disposable income goes to savings so affordability is not a problem for me but whether the banks see this is another matter.
Page 1
    • Ben8282
    • By Ben8282 30th Sep 17, 12:56 AM
    • 2,046 Posts
    • 895 Thanks
    Ben8282
    • #2
    • 30th Sep 17, 12:56 AM
    • #2
    • 30th Sep 17, 12:56 AM
    If your score is 999 as you say then there is nothing to improve.
    With regard to your finances, closing the Capital One card didn't really help as you have reduced the number of credit accounts and available credit, settled an account after only a short time thereby reducing the average age of your accounts and deprived yourself of your only source of interest free credit.
    You have taken out a new credit card from Lloyds which by the interest rate mentioned is one of the Advance cards which give no interest free period even if the statement is repaid in full. You say you have savings but are continuing to pay credit card interest at a rate higher than you could possibly be earning on your savings.
    My advice would be to take out a new credit card, a normal one which gives an interest free period on purchases if repaid in full every month then actually pay it in full every month using the savings as necessary as the interest on the credit card if not repaid in full will always exceed any interest earned on your savings.
    Don't take out a loan or 'store finance' and pay interest for no reason except to boost a credit score which at 999 hardly needs boosting.
    • zx81
    • By zx81 30th Sep 17, 6:11 AM
    • 13,683 Posts
    • 14,151 Thanks
    zx81
    • #3
    • 30th Sep 17, 6:11 AM
    • #3
    • 30th Sep 17, 6:11 AM
    Two rules -

    1. Never pay interest to improve a credit file.
    2. Always ignore the credit scores you are given.

    Not clearing in full each month makes you look higher risk. Spend what you can and ALWAYS clear in full.

    That will start making you history look more solid.
    • nic_c
    • By nic_c 30th Sep 17, 9:35 AM
    • 1,022 Posts
    • 585 Thanks
    nic_c
    • #4
    • 30th Sep 17, 9:35 AM
    • #4
    • 30th Sep 17, 9:35 AM
    Remember loans and store finance will affect affordability, since part of your income pays those off leaving less income for your mortgage. I don't believe mortgage companies look for people to be able to take on loads of debt and be able to manage, but more that their credit history shows that when they have credit they are able to maintain it and not let it default or continually miss payments.
    • amfan
    • By amfan 2nd Oct 17, 10:19 AM
    • 89 Posts
    • 64 Thanks
    amfan
    • #5
    • 2nd Oct 17, 10:19 AM
    • #5
    • 2nd Oct 17, 10:19 AM
    If your credit limit on the card is only £500 then clearing that balance shouldn't affect your saving for a deposit very much. It is better to have no interest to pay no interest on borrowed money than it is to choose to instead save the money at a much smaller rate of interest. A mortgage lender will ask if you are able to clear any credit card balances when you apply anyway, so you might as well start the process with a clear balance.
    • thatgeezer
    • By thatgeezer 3rd Oct 17, 12:27 AM
    • 2 Posts
    • 0 Thanks
    thatgeezer
    • #6
    • 3rd Oct 17, 12:27 AM
    • #6
    • 3rd Oct 17, 12:27 AM
    Thank you all for your answers. I failed to mention the reason of my desire to improve my report is that whilst experian shows a score of 999, clearscore which uses equifax shows a much lower rating of 465 out of 700. The store finance I was planning on taking would most likely be 0% over a year but I guess my aim is to show I can stick to a financial commitment. Additionally my aim over the next three years is to attain a mortgage in year 2 and in year 3 take out a 12k loan to invest at a return higher than the APR. I've also toyed with the idea of applying for a start up loan to start a business that I can use to generate extra income at the weekend before the end of the year. I am probably being a bit naïve with the !!!!ibilities of gaining all this credit but I want to place myself is the best position ultimately possible.
    • zx81
    • By zx81 3rd Oct 17, 5:35 AM
    • 13,683 Posts
    • 14,151 Thanks
    zx81
    • #7
    • 3rd Oct 17, 5:35 AM
    • #7
    • 3rd Oct 17, 5:35 AM
    Your Equifax rating is as meaningless as your Experian one.
    • amfan
    • By amfan 3rd Oct 17, 9:25 AM
    • 89 Posts
    • 64 Thanks
    amfan
    • #8
    • 3rd Oct 17, 9:25 AM
    • #8
    • 3rd Oct 17, 9:25 AM
    Using and paying off your credit card already shows you can maintain a financial commitment. Piling on more debt isn't the best way to show a future mortgage lender that you are responsible with money.
    • Car1980
    • By Car1980 3rd Oct 17, 11:04 AM
    • 220 Posts
    • 99 Thanks
    Car1980
    • #9
    • 3rd Oct 17, 11:04 AM
    • #9
    • 3rd Oct 17, 11:04 AM
    On the flip side, showing you are able to obtain credit is a plus.
    • chappers
    • By chappers 3rd Oct 17, 7:33 PM
    • 2,735 Posts
    • 1,547 Thanks
    chappers
    in year 3 take out a 12k loan to invest at a return higher than the APR..
    Originally posted by thatgeezer
    good luck with that, not quite sure what you have in mind, especially considering you will have repayments to make along the way before your "investment" pays off.
    Also without any investing track record not sure how a lender will view you gambling with borrowed money.
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