I REALLY dont understand Credit Scores and Credit cards, please help.

Cazc

Would really appreciate any help -

A friend of mine is applying for a mortgage at the moment and got me thinking about credit scores and credit cards.

At the moment I have no loans (well except student loan), no credit cards. Just an overdraft (which I am constantly in) and a mobile phone contract.

I have moved house 2 times in the last year (renting), although my bank is still registered with my parents address (where my father has a CCJ againts him) and I am due to move again at the end of this year.

I have 2 jobs, 1 full time with an income of £24K and 1 part time at around 4K a year.

So the dilemma is, what should I do about improving my credit score for the future when I start applying for mortgages?

I have been told that just having a credit card will help, but also that if you apply for a credit card and get rejected then that will negatively impact your credit score. And with my bank being registered at my parants with a CCj against my Dad I am worried I will be rejected.

Should I use my own bank (Halifax) and apply there for a card if that is the best option, and if so which one? They are currenlty offering about 10.

What does balance transfer and representative APR mean, and purchase rate mean?

If there is another way of improving credit score I would welcome any suggestions too.

Thanks in advance everyone!

JohalaReewi

See Martin's article...
http://www.moneysavingexpert.com/loans/credit-rating-credit-score

Cazc

Thanks, I have looked at the link before but given that 'what my bank knows about me' is that I live in a house with a CCJ on a member of the household, I am still concerned about applying for credit. Would my Fathers CCJ affect my credit? Should I change it to my current address which will change again in 8 months? From the link you sent, moving house alot will negatively effect credit score so should I just leave it at my parents? Whats my best option?

Also, still no idea about which credit card and what it all means.

JimDuff

Is simply having a card good for credit scoring? I really would like the safety of one as we're travelling a lot this year and stuff does cross up. I'm considering applying.

blueberrypie

Cazc wrote: »

Thanks, I have looked at the link before but given that 'what my bank knows about me' is that I live in a house with a CCJ on a member of the household, I am still concerned about applying for credit. Would my Fathers CCJ affect my credit?

No. Your credit record is personal to you. The credit records of others at the same address only matters if they also have are financially linked on your credit records - e.g. if you held a joint current account or joint loan/mortgage.

Should I use my own bank (Halifax) and apply there for a card if that is the best option

Not necessarily. Some credit card providers are fussier than others about who they accept, and with not much of a credit record, it might be better for you to apply for one of the more laid-back providers first. Have a read through some of the posts on this forum and you'll see suggestions.

What does balance transfer and representative APR mean, and purchase rate mean?

Balance transfer: when you transfer the balance from one credit-card to another. Usually this will be to take advantage of a lower interest rate.

Representative APR: the APR is the interest rate you'd pay on what you borrowed over the course of a year. For example, if you had a running balance of £1000 on a credit-card, with an APR of 20%, you'd pay £200 in interest over a year. The representative APR is the "typical" rate the cc provider offers to new customers - at least 51% of accepted applicants will get this rate.

Purchase rate: this is the interest rate applied to purchases you make using the credit-card. Cash withdrawals and certain other transactions will have different rates applied.

If there is another way of improving credit score I would welcome any suggestions too.

Get out of your overdraft and keep up-to-date on all your credit commitments.

Cazc

Thank you so much that has really helped.

One more question - Would you suggest getting a credit card at 0% for 12 months, paying off my overdraft then paying off my card over the 12 months?

blueberrypie

Without much of a credit history, you're unlikely to get offered a 0% credit card.

fracturedsun

Even if you did get a 0% credit card a lot of them count transfers to bank accounts as cash advances which are usually very expensive, only a few cards let you BT to bank accounts.

Cazc

Thanks.

Just to confirm too, (sorry for all the questions) would having a credit card and not spending on it improve my credit score?

This would be the only reason I would get one if I couldn't get a 0% one and pay off my overdraft.

fracturedsun

You'd need to spend on it too. Buy a few small items every month. If you pay it off in full every month you don't get charged any interest but you prove you can handle credit and so your credit history improves;)