Building credit

thebloms

Dear experts,

My partner has no credit history as he has always lived with his parents (aw, how cute). Could you kindly help me with some advice? His bank has given him a credit card with £400 limit. It's an RBS Mastercard. He has also recently been approved for a Capital One Progress credit card (thanks to the fantastic advice from this site). He will have no difficulty paying all debts off in full and in time every month.

(1) Will his credit scoring speed up if he spends on both credit cards every month or would you advise he now cancel the RBS Mastercard?

(2) Does it make any difference if he spends £20 or £400 every month? Does spending more every month speed things up at all?

I have excellent credit and foolishly opened a joint bank account with him. I am now being refused credit (a real bummer when you can't get a 0% purchase card for Christmas shopping!)

(3) Do you know how long it will take for him to build his credit score up?

(4) I have checked with Experian and my score is still excellent. Should it not show on that report if it is him who is dragging me down? We recently returned from abroad and applied for quite a few things at once (new bank account, credit cards, utilities, et cetera) so I think this may have caused the issue and it may iron itself out in six months. However if he is dragging me down and this doesn't show on my credit report then perhaps I should disassociate from him?

(5) If I disassociate from him will he be able to open his own bank account? He has an RBS account already in his own name. We have a joint Santander account. He would like to have his own Santander account if we disassociate, but I'm afraid they may refuse him and just harm his credit score further.

Thanks in advance for your kind assistance.

MFWannabe

Could you not just ask Santander to change the account into just his name? You will have to both fill out a form i believe to take your name off the account and to put it into his name only. Once this is done that you can ask the reference agencies for a disassociation; unless you have other accounts together?
By the way the credit scores on Experian and Equifax don't mean anything and are not worth paying to get

thebloms

Great FREEZ, thank you. Yes, just putting the account into his name is the way to go. What a dummy - I didn't even think of that.

Can anyone else help with my other queries?

paulmcerlean

Dont close the RBS card - it will have a better rate than the Capital One Card.

thebloms

Hi Paul, thanks. Yes, it does have a better rate but it doesn't matter to us as we can pay both cards off in full every month. Do you know if it speeds up his credit rating to use both cards every month or make no difference?

PNPSUKNET

it makes no difference, time will only be the key to it

paulmcerlean

thebloms wrote: »

Hi Paul, thanks. Yes, it does have a better rate but it doesn't matter to us as we can pay both cards off in full every month. Do you know if it speeds up his credit rating to use both cards every month or make no difference?

No it will make no difference - just keeping the accounts open and active is key.

The only thing that will improve his rating is months and months of green zeros via on time payments.

thebloms

Apologies if I'm slow on the uptake (very likely) but I'm still not sure whether keeping both cards open or not will assist. You say he needs green zeros to improve his credit, so surely green zeros coming from two credit cards is better than only coming from one? Double the amount of green zeros - no?

izools

Not quite.

When a creditor is assessing someone for risk they calculate (amongst many other factors) stability (ability to maintain the status quo) and responsibility (not making frivolous financial decisions).

Having, say, one bank account and one credit card that have been open for five years, proves responsibility, and stability.

Opening another credit card along side this shows that there has been a change to the customers financial situation, and typically having an account under 6~12 months old on your credit file lowers your score

This is because any creditor seeing this, can see a new account, but not enough history on the account to show that the customer can handle the obligation long term.

What creditors don't want is customers who flit from one product to another willy nilly, or customers who accrue new accounts at a rate of knots, or customers who make financial decisions lightly.

Take this example -

My flat mate has held his bank account for 14 years and had a loan with that bank for three years. He has also got an O2 contract open for about a decade.

Three accounts, only one credit account, no credit card, all open for a very long time. He has missed two payments on his loan due to unemployment - it is currently in arrears.

Despite this he has passed the credit check for a full current account and three credit cards.

I, however, despite having not missed a payment in 3+ years, failed the credit check for an Aqua card. I only applied for sheets and giggles when my flatmate got instantly approved for his last week. (Wasted search... telling myself off now )

I can't be sure of the reason for my decline - but I suspect it is to do with the fact I've only just opened a Capital One Progress and a Zopa Loan account.

Creditors are more likely to give me credit once these accounts have been open a year as this shows stability and ability to maintain the status quo.

inkslinger

Some excellent advice there Izools....... not to mention a very good understanding of the system.

paulmcerlean

inkslinger wrote: »

Some excellent advice there Izools....... not to mention a very good understanding of the system.

In her experience, others have had different experiences. The whole thing about the 'system' is that it is hard to predict.

Pay your bills on time, dont over commit and credit can be achieved.