A way of upping your credit rating?

Brassic

Can anyone tell me if this is true?

A former boss of mine, who is apparently a self made millionaire, (I used to drive his limos) told me the following way of getting a better credit limit.

1) Take out a loan of minimum amoutn, say 250 quid or so. Sign all the forms. Cash in the cheque, then pay it off (cancel it) within the guaranteed cancellation time frame. It will show up on your rating as having been taken out and settled in full.

2) Take out a different loan of more, say 1000, do the same.

3) Repeat with increasing amounts, it will cost nothing, show as being settled and improve your credit, so long as you're careful not to spend it or let it get swallowed up.

I meant to try it, but never got round to it, and the post by the person just now with a terrible credit limit reminded me. Is this kosher?

Gemmzie

I'd go with no, as opening and closing several accounts in quick sucession is more likely to be investigates as money laundering :eek: as it looks suspicious.

You're better off getting the crummiest credit card you can, spending a small amount on it per month and paying it off in full each month.

rog2

It might help, as potential lenders will see that you have paid these loans, but it is not going to do any good if you already have CCJs or defaults on your file.

LittleL_4

Sounds like a great idea! Wish I knew this before I trashed mine. Don't think anyone will lend me £1.00 at present..

Little L
x

Brassic

Gemmzie wrote:

I'd go with no, as opening and closing several accounts in quick sucession is more likely to be investigates as money laundering :eek: as it looks suspicious.

You're better off getting the crummiest credit card you can, spending a small amount on it per month and paying it off in full each month.

I hadn't thought of the money laundering angle It's not something I plan on doing as DH and I don't want any more credit (well, not until our 3 year fixed rate mortgage runs out and we're hoping to have got rid of the majority of our debt by then anyway). We do the credit card thing though in the hope that it might help.

Graham_Devon

Remember that new credit applications will knock your credit rating down for every search.

Whether the settled bit outweighs it I don't know. But you will start looking desperate for money, or look like your laundering if you do too many.