Guaranteed Credit Card

borthers

Lloyds TSB sent me a letter yesterday to say that they had guaranteed me a MasterCard Classic credit card. I've banked with them for years; decent credit score (not perfect yet!), always above £1000 in my account, working full-time with a decent salary coming in. My accountant friend advised me to get it and keep it in a drawer, as this is a line of credit that will help to increase your credit score to strengthen mortgage applications etc. I was silly with my money as a student and have learned some very hard lessons!

Anyone else done this? I've currently got one line of credit, which is my Vodafone contract. I pay this by direct debit every month and have never missed a payment.

lisyloo

It will certainly help you get credit in future if lenders can see you've managed a credit card well.
However I'm not sure I agree with the "put it in a drawer" approach.
Firstly your balance is show so it will show as unused.
Secondly if you re not actually using your card then you may not spot fraud especially if you opt out of paper statements, so this can be dangerous.
I would suggest buying your food and petrol on the card. This will demonstrate to lenders that you can manage credit and also if you are using the account you will not be able to have fraud go unnoticed.
There are some other advantages to credit cards as well like section 75 protection, insurance, warranties, cashback rewards etc. but I would certainly say there are dangers of putting it in a drawer.
Just a few days ago I was reading of someone who had an unauthorised charge on their account 13 months ago but as they had opted out of paper statements they were not aware of it and are now on the back foot as regardless claiming it was unauthorised (always more difficult to prove cases after the passage of time).
If you are worried you might not be disciplined then limit the card to certain items like food & petrol and don't use it for anything else.

borthers

Great response, Lisyloo. Thanks!

I know I can be disciplined with it; I'm 100% better and more disciplined with my money than I was as a student. I'll buy one thing every month and pay it off immediately through internet banking.

Thanks for your reply!

molerat

borthers wrote: »

Great response, Lisyloo. Thanks!

I know I can be disciplined with it; I'm 100% better and more disciplined with my money than I was as a student. I'll buy one thing every month and pay it off immediately through internet banking.

Thanks for your reply!

No, that could cause you problems. Pay it off as soon as you have received the statement.

izools

molerat wrote: »

No, that could cause you problems. Pay it off as soon as you have received the statement.

Yes, pay the bill once it is generated in full. The exact figure shown on the statement. To the penny.

Better yet, set up a direct debit to automatically take the full amount out of your current account each month. Job done!

ChopperST

izools wrote: »

Yes, pay the bill once it is generated in full. The exact figure shown on the statement. To the penny.

Better yet, set up a direct debit to automatically take the full amount out of your current account each month. Job done!

+ 1 on that mate. An excellent way of improving your credit worthiness to lenders for the future.

borthers

Great response, guys. Thanks for your help! I'm going to set up a direct debit and then pay for food shopping once a month.

Love this forum because you get genuinely helpful people.

Paul