Student wanting Credit Rating

LouisCross

Firstly I apologise if something along these lines has been posted before; there's an abundance of threads and it was simply impossible to look at them all.

Right, I was hoping people could help me!

I'm a student but with a normal Current Account, not a Student account. Im planning on changing banks because next year I need to go abroad for studies and Nationwide are the olnly bank that dont charge to withdraw.

Whilst looking through all these applications I came across Credit Cards. I know they help your credit rating, but I'm rather unsure as to what to do. You see neither of my parents own debit or credit cards; so can't help me.

I want some clarification on things about them.

IF I'm deemed acceptable to receive one; how do they work? Nationwide do 0% interest on purchases for the first 3months of the account opening and then 17.9%p.a. Does it work that if I opened my account TODAY and then between Jan 24th and Feb 24th I spent £100 on the card; as long as I pay back in 3months I only pay back the £100 - and after the 3months I pay a monthly equivilent to the 17.9%p.a?

Does just OWNING a credit card boost my rating even if I dont use it? Or, seeing as though I never spend what I don't have, would it be beneficial to buy something each month and pay it off that some month - even after 3months as long as I pay it in the same month; do I pay no interest, and does it keep rising my rating? Or does it only rise once per card type thing?

Im really confused; also thinking about overdrafts (as I don't have one ) - as to whether I should get one of those and dip into it now and then to increase credit rating.

Anyone able to help?

TheEffect

You can get a credit card with a GOOD or POOR credit rating. The only difference is the Amount Of Credit you are given and the APR. If you have a good credit rating, you can get a 0% APR (Fixed for 12/16 months) and £500+ credit limit. If you have a poor credit rating, you should be able to get a low limit/high APR credit card e.g 35% APR and £250 credit limit! APR shouldn't matter if you are planning on paying off the card in full each month when the bill is due, as interest is not applied unless take the ballance over to the next month.

Simply owning a credit card and not using it will not improve you credit rating. Getting a credit card and paying for very small things such as the odd £3 Starbucks payment or odd lunch WILL improve your credit rating, as long as you pay the ballance off in full and pay on time.

Within 6/12 months of using a credit card correctly, your credit rating would have improved considerably. Your credit rating will continue to rise as long as you use the card correctly.

LouisCross

Ooh that's good to know. Based on my student situation though; with no regular income, am I likely to be declined from receiving a credit card? In which case should I go for one of the CASHBACK Credit Cards that Martin has spoken about? Or will they think "He's a student; no income...we can make more interest from him!".

Lokolo

^^ yes.

You really want to get a student account because these are specially designed for students so the banks no you are not going to have very much income. Whereas usually, the bank give you an overdraft or CC and see you've got no income, they will withdraw it.

You can still open student accounts but obviously don't get the incentives.

Good luck.

LouisCross

I think the thing with a lot of student accounts is that they're not very hospitable when it comes to being abroad. And because I NEED to have free withdrawal abroad for next years studies...it really has to be Nationwide. But they dont do a student account...

CLAPTON

Try your bank for a credit card .. they know you have been managing your a/c well

use the card regularly and pay in full each month (set up a DD)

Nationwide may or may not give you an account

olly300

LouisCross wrote: »

I think the thing with a lot of student accounts is that they're not very hospitable when it comes to being abroad. And because I NEED to have free withdrawal abroad for next years studies...it really has to be Nationwide. But they dont do a student account...

I don't know if it's still the case but if you are registered on the electoral roll at your parents address as well which is entirely legal if you are a student, it may be worth applying for any credit cards or normal current accounts from this address as you would have lived there longer.

In addition there is nothing stopping you from having a normal current account with one bank/bs and a student account with another bank/bs. The trick is to do all direct debit transfers yourself, use both accounts frequently and not being stupid with overdrafts.

anotherpaul_2

LouisCross wrote: »

I want some clarification on things about them.

IF I'm deemed acceptable to receive one; how do they work? Nationwide do 0% interest on purchases for the first 3months of the account opening and then 17.9%p.a. Does it work that if I opened my account TODAY and then between Jan 24th and Feb 24th I spent £100 on the card; as long as I pay back in 3months I only pay back the £100 - and after the 3months I pay a monthly equivilent to the 17.9%p.a?

Reading this, there's an important point that you may or may not understand - and I don't think anyone else has mentioned, so just in case...

You are correct in what you say, BUT, you do know that you have to pay at least the minimum during the 0% period, don't you? So on the first statement you have to pay 3%-ish of the £100, and again on the second statement, then the balance by the end of the free period.

Personally, I check my account online and know what the payment is before I recieve the statement. There are regularly people on here who've missed a payment because their statement got lost in the post and the CC companies don't tend to accept this as an excuss.

Sorry if that was obvious.

LouisCross

Does the above apply even if I set up a direct debit to make FULL PAYMENT each month? As long as I pay off the full amount each month, then I don't pay any interest do I?

Also re: credit rating, I know now that I need to SPENT to get higher credit rating, but is it frequency or quantity that counts?

If I spend £50 each month (and pay it off in full each month) will that get me the same credit rating than if I spend £500 each month (and pay it off?) or is it a case of SPEND MORE (and pay it off in full each month) and get HIGHER credit rating?

anotherpaul_2

LouisCross wrote: »

Does the above apply even if I set up a direct debit to make FULL PAYMENT each month? As long as I pay off the full amount each month, then I don't pay any interest do I?

Yes, that is correct, expect for a few cards that charge interest from the day of the statement whether you make the full payment in time or not. Check the T+Cs.

LouisCross wrote: »

Also re: credit rating, I know now that I need to SPENT to get higher credit rating, but is it frequency or quantity that counts?

Making at least one transaction on each statement and pay it off in full is sufficient, I think the size is almost irrelevant. And some cards count having a card with no balance as making the minimum payment.

LouisCross wrote: »

If I spend £50 each month (and pay it off in full each month) will that get me the same credit rating than if I spend £500 each month (and pay it off?) or is it a case of SPEND MORE (and pay it off in full each month) and get HIGHER credit rating?

The only difference that spending more might have is that they may increase your limit more quickly or in larger steps. A larger limit can look good, but this is the only benefit (ignoring a small gain in interest from having the cash in your bank account for longer...).

LouisCross

Can someone decipher this for me please?

http://www.abbey.com/csgs/Satellite?c=GSDetalleProducto&cid=1210619167284&idParent=1210619162360&pagename=Abbey%2FGSDetalleProducto%2FGS_DetProducto

It makes it seem like even if I pay the full amount on time, I still get charged interest? From the moment I make the purchase?

So if I buy it on the 2nd feb...and statement doesn't come till Feb 28th and I pay it ALL OFF on the 28th (even via direct debit) I'll have paid interest from 1st-28th feb? Is that what its saying? I dont really want to be charged when Im paying on time and in full!