Came into money and want to improve my credit rating, how do I do this?!

sam4sam

I have 2 credit cards, one with a £800 limit with Capital One, one with a £400 limit with Barclaycard.

Also have an overdraft of £1500 with Santander after having HSBC reduce my overdraft from £1500 to zero in 2010.

I have been guilty in the past of going over my overdraft and credit limits and incurring charges on my cards.

So all in all my credit history is awful and no doubt my credit rating is awful too!

But I now have a new job paying me substantially more money than I am used to and my first pay day is coming and I will come into over £5k (3.2k salary, 500 owed to me from old job, 1.3k season ticket loan form new job), so I plan to wipe out all my debt in one go (the 1.2k credit cards and 1.5k overdraft).

But going forward after that I want to build up my credit rating as best as posisble.

What should I do?

I was thinking I should maybe close one of my credit cards and use the remaining one as much as possible for daily spending (instead of my debit card as I have done in the past) and pay the whole credit card balance off every month, would this improve my credit rating??

Or should I leave both cards and use them both now and then only and pay them off every month?

I obviously will never go over my limits but I really want to improve my credit rating so that in the next 5 years or so I can get a mortgage.

How do I best get my rating up to get a mortgage? Considering I have a chequered credit past?

Thanks

Sam

CLAPTON

keep, but don't use your overdraft facility

keep both CCs; use them regularly for things you buy anyway; always pay in full each month (maybe set up DD for full amount )

glowgirl_2

OP ignore post 3 and press :spam:

sam4sam

glowgirl wrote: »

OP ignore post 3 and press :spam:

What does that mean?! I am confused?

CLAPTON

sam4sam wrote: »

What does that mean?! I am confused?

an idiot made a post that has now been deleted (was post #3 but now gone

izools

OP, pay off your debts yes but then call your credit card companies and ask them to set up direct debits to take the full statement balance each month from your bank account.

I suggest you also cancel your overdrafts, too, or reduce them to very small amounts, say £250.

The less available credit the better and those overdrafts are unusually large.

pjread

izools wrote: »

OP, pay off your debts yes but then call your credit card companies and ask them to set up direct debits to take the full statement balance each month from your bank account.

I suggest you also cancel your overdrafts, too, or reduce them to very small amounts, say £250.

The less available credit the better and those overdrafts are unusually large.

£1500 seems pretty standard to me?

Agree on the DD though!

askabigail

If possible:-

1. Get new bank account that gives cash welcome and good interest on current account
2. Pay off CC's in full every month
3. Gradually pay off o/d (maybe £500 pm)
4. Enjoy Christmas!!!!

izools

pjread wrote: »

£1500 seems pretty standard to me?

Agree on the DD though!

I suppose it depends on the income.

Reason I mention the OD is underwriters don't like to see applicants too overdrawn at time of application so the smaller the OD limit the less likely the OP is to actually be overdrawn when applying for credit elsewhere

sam4sam

Cheers, I guess I will pay off my credit cards and DD them every month for any full balance and use it for daily spending.

Overdraft I will look to lower then, I was not aware that having a 1,500 overdraft looks bad, it is a good safety net so am reluctant to let it go, but as long as I save monthly then I guess I negate the need for an overdraft.

I am counting down the hours till Friday morning when I get htis money through and can finally be debt free for the first time since age 18 when HSBC gave me a student account and overdraft!

CLAPTON

overdraft is an ambiguous term

to my mind there is such a thing as an 'overdraft arrangement with an approved limit' i.e. you have the bank's permission to borrow when you want without asking.

and then there is an 'overdraft' meaning that you actually owe money to the bank

in my view having an overdraft limit of 1,500 is fine

actually using your OD (except very rarely) shows poor money management