Improving Credit

getti

Evening everyone.

Just a question for people who know about credit ratings and scores really.

I will admit i was a bit of a naughty boy many years back and really messed up my credit file. These were getting sorted out and they dropped off my credit file about a month ago.

I did not help myself recently by applying for a sim only deal on O2 twice and taking a 2nd line out with T-Mobile (im getting good money so can afford them no problem and the O2 one was actually cancelled after about 2 months anyway). My score as of 1/1/10 was 702 and when I check now its 595 so has taken a drop, my guess is with the applications I have had for credit.

Within the last month I have cancelled 1 mobile phone contract with T-Mobile and another with Vodafone as they came to an end so i would think within a few months that will help my score as I have less credit in my name.

My main question is about the following 2 items.

I have a Vanquis Card with £450 on it (£500 limit), BEfore now i pay off the small amount every month but I was thinking i might over this month and next pay off £225 each month and just cancel the card all together.

I also have a Empire Stores Catalogue which started with a £500 limit, went to £800, and now it stands at £1,300 but I only have used £300 so have £1000 left over.

If i contact Empire Stores and ask them to lower my credit to say £350 maximum and then in the next few months pay it off in full will that also help my credit score?.

Surely within the next 3 months having 3 mobile contracts cancelled, 1 credit card cancelled and a catalogue credit allowance drop by nearly £1000 surely that will help my score in a big way?.

Many thanks for any info,

Tixy

Hi

I wouldn't get too hung up with the actual number credit score. It means little as all lenders have their own lending criteria and what they look at is your full report not some number generated by the CRAs.

The key thing to improve your rating is to show you can handle credit responsibly. So making sure you never have missed or late payments.

Equally make sure you don't cancel too many accounts as this can leave you with not enough history so lenders cannot see if you can handle credit.

One good thing is to have a credit card (a subprime one like vanquis is okay) and to use it each month but pay it off in full each month. That way you are not hit with the extortionate interest but still have a credit history.

The closed accounts will still stay on your file a while so if you have missed/late payments recently this will still be visible for a while yet.

The other thing - as you may know- is to limit the number of applications you make, so that you do not look desperate for credit.

GeorgeUK

Yes and no i'm afraid.

You probably got your credit score from one of the credit reference agencies. They don't take into account little things like salary etc. All organisations have a different method of calculating your credit score so it's not really worth paying to see this.

If you have too much credit available in comparison to your salary, that could go against you.
If you reduce the amount of credit you have available, that could also go against you:
Example
Vanquis card- 500 limit, 450 used
Empire catalogue - 1300 limit, 300 used
Total available 1800, total used 750 (41.67%)

If you were to do as you say and only leave yourself with 350 available, if you were to spend say 250, that's over 71% of your available credit. Also the fact that you do not have much credit available may be seen as a sign that others have not felt you worthy or a good risk.

So it's a kind of balancing act. The best thing you can do is to not apply for any catalogues (even if you don't buy anything from a catalogue, if you order one you get a credit check);
do not buy any mobile phones - again, even if you were to only buy a PAYG phone you would get a credit check;
do not apply for any creditcards or loans - to avoid getting a credit check.

You can have about 3 credit checks in a 6 month period before your credit score is affected but too many checks close together can also reduce your score.

I would retain the creditcard, pay that off in full each month, but continue to use it. This way you build up your credit file to show that you have a good payment record. Probably worth getting tha amount of credit reduced from 1300 to about 500 or so. Nothing too measly but at the same time not going to break you if you do end up splurging out.

After about 6 months without any credit checks then you may be able to get a credit card from Virgin or a high street bank - if you want.

That's how i'd go about improving my credit score anyway.

Also make sure you are listed on the electoral roll at your address and that the information held by the credit reference agencies are correct - no wrong addresses etc.

jdx

GeorgeUK wrote: »

Yes and no i'm afraid.

You probably got your credit score from one of the credit reference agencies. They don't take into account little things like salary etc. All organisations have a different method of calculating your credit score so it's not really worth paying to see this.

If you have too much credit available in comparison to your salary, that could go against you.
If you reduce the amount of credit you have available, that could also go against you:
Example
Vanquis card- 500 limit, 450 used
Empire catalogue - 1300 limit, 300 used
Total available 1800, total used 750 (41.67%)

If you were to do as you say and only leave yourself with 350 available, if you were to spend say 250, that's over 71% of your available credit. Also the fact that you do not have much credit available may be seen as a sign that others have not felt you worthy or a good risk.

So it's a kind of balancing act. The best thing you can do is to not apply for any catalogues (even if you don't buy anything from a catalogue, if you order one you get a credit check);
do not buy any mobile phones - again, even if you were to only buy a PAYG phone you would get a credit check;
do not apply for any creditcards or loans - to avoid getting a credit check.

You can have about 3 credit checks in a 6 month period before your credit score is affected but too many checks close together can also reduce your score.

I would retain the creditcard, pay that off in full each month, but continue to use it. This way you build up your credit file to show that you have a good payment record. Probably worth getting tha amount of credit reduced from 1300 to about 500 or so. Nothing too measly but at the same time not going to break you if you do end up splurging out.

After about 6 months without any credit checks then you may be able to get a credit card from Virgin or a high street bank - if you want.

That's how i'd go about improving my credit score anyway.

Also make sure you are listed on the electoral roll at your address and that the information held by the credit reference agencies are correct - no wrong addresses etc.

That is some sound advice George.

DarkConvict

I agree with GeorgeUK. Do read the MSE Guide on credit ratings - http://www.moneysavingexpert.com/loans/credit-rating-credit-score

Sharon87

Can a PAYG phone really do a credit search? I don't think it can, you don't sign any agreement or anything, and people under 18 can buy a mobile. So I don't think that's true.

The other advice is good though.