New borrowing -- do I need to build a history?

lunaris

Hi all,

With Christmas approaching and some other big purchases around the corner, I'd like to take advantage of credit to spread the cost or at least get some cashback/rewards. However, I'm incredibly nervous about applying for a card due to the following:

1. I've only recently (< 6 months) entered full-time employment. My salary is good (> £30,000) but I'm living with my parents while I save for a mortgage.

2. While my credit score is supposedly excellent (988 according to Experian), I've no history of card lending -- only a few overdrafts on current accounts and a mobile phone contract (24 months).

3. I was rejected for an Amazon MBNA Mastercard 4 months ago.

Are my worries justified? My credit score seems to suggest that I can apply for most cards, but my lack of history makes me think I might need one of the "bad credit/build credit" cards. Is this the case? Does everyone start on one of these cards before progressing to the more preferential cards?

Thanks for any advice,
lunaris

[Deleted User]

You might want to have one shot at getting 0% purchases card. But I think you're correct, in that you may need to start lower down the ladder.

While this may not be what you want, the sooner you start, the sooner you can move on to something better.

Your Experian score, as you suspect, is not a particularly accurate guide as to whether a lender wants to throw some of their cash your way.

R_P_W

Do you want the card to spread the cost of credit, build a history or get cash back/rewards?

Because if your spreading the cost the interest payments will kill any points/rewards you get.

If you want to build a history get any credit card and only spend on it what you can afford to pay off at the end of each month.

CLAPTON

ask your bank for a card (any card)
use it regularly for things you buy anyway and pay in full each month.
after 6 months or more then maybe try for a cashback card

forgotmyname

Personally i would wait until its at least 6 months after the previous card was declined.

Then go for one of the cards with a higher rate, But only spend what you can pay back easily that month. Dont use it for xmas spending.

Getting a card now to spend for xmas is a risk of getting onto that slippery slope. Been there and i wonder how many others did the same?

lunaris

Hi all,

I just wanted to thank you all for the informative replies. I think I'll ask my bank for a card (first direct). If they reject me then I'll see about getting a high rate card.

Regards,
lunaris

Maestro.

The phone contract and overdrafts will certainly have helped.

Not all banks will be any more lenient about lending their customers a card just because they have a current account - my bank in effect told me to bog off when I asked them for a credit card because "they couldn't credit score me".

Try the following to get an idea of what you might be able to get:

Fluid card website - http://card.fluid.co.uk/home.aspx - the application process first does a "soft search", which does not adversely affect your credit card, and shows you whether you are likely to be accepted for Fluid. If not, it suggests other products you're more likely to be accepted for. (at the time of posting the Fluid website is down, but I know it works because I used it not long ago)

Barclay card pre eligibility checker - https://letmechoose.barclaycard.co.uk/?source=cchubrhnavhd2 - Same idea, you fill out the form and the website tells you what products you're likely to get. You can then go on and do the full application if you want to.

Nationwide - http://www.nationwide.co.uk/creditcard/default.htm - same deal again, go through the application process and it will quote you first what you're likely to get. You can then decide to proceed and do a proper credit search or back out if you only get 19.9% APR and a £500 credit limit, for instance.

Good luck.

jpb77

lunaris wrote: »

Hi all,

With Christmas approaching and some other big purchases around the corner, I'd like to take advantage of credit to spread the cost or at least get some cashback/rewards. However, I'm incredibly nervous about applying for a card due to the following:

1. I've only recently (< 6 months) entered full-time employment. My salary is good (> £30,000) but I'm living with my parents while I save for a mortgage.

2. While my credit score is supposedly excellent (988 according to Experian), I've no history of card lending -- only a few overdrafts on current accounts and a mobile phone contract (24 months).

3. I was rejected for an Amazon MBNA Mastercard 4 months ago.

Are my worries justified? My credit score seems to suggest that I can apply for most cards, but my lack of history makes me think I might need one of the "bad credit/build credit" cards. Is this the case? Does everyone start on one of these cards before progressing to the more preferential cards?

Thanks for any advice,
lunaris

Try Nationwide - this will give you a quote without leaving a footprint for other lenders to see. It is like making an application but it will provide you with a quote before proceeding so this will give you an idea if your eligible!

JimmyTheWig

lunaris wrote: »

I'm living with my parents

Are you on the electoral role at that address? If not, get on it and don't bother applying for credit until you are on it.

I've no history of card lending -- only a few overdrafts on current accounts and a mobile phone contract (24 months).

3. I was rejected for an Amazon MBNA Mastercard 4 months ago.
...
I might need one of the "bad credit/build credit" cards. Is this the case?

I don't think you need a "build credit" card, in terms of one of those cards where you end up paying fees in order to get some history. But I do think starting with a basic card would be sensible rather than going for a market leader in terms of a 0% deal / cashback card.

Remember that if you don't pay the balance off in full each month (and it's not a 0% for spending card) then you will be charged interest at a high rate.
By having a regular credit card and paying off the balance in full each month you will build up a credit history and won't pay for it.
Maybe then next Christmas you can get a cashback card and start getting rewards for your spending.

lunaris

Hi all,

Well, it's bad news I'm afraid.

In trying to make as informed a decision as possible, I used some of the online pre-check tools and spoke to some "advisors". I was planning to apply for a Barclaycard Initial, but on speaking to an advisor was informed that application might not be sensible since I'm new to borrowing. Note that the online pre-check said I had a 80%/90% chance of success for the platinum/gold cards and 90%+ for the initial. On querying this with the advisor they said that I should go ahead with the application.

This was somewhat unnerving, so I looked at Virgin Money, with whom I'd spoken with an advisor on the phone. My chances were rated as good and so I applied online. I was rejected in seconds.

Upon checking my credit report, I've noticed that Experian have recently doubled the amount of credit I'm perceived as holding. In actual fact my current accounts (and associated overdrafts) are being listed twice. I've contacted them asking to correct this but they've not yet got back to me.

I'm absolutely gutted and even a little angry -- perhaps I should have just applied for the Barclaycard. I'm guessing the sensible thing now is to wait several months before even thinking about applying for credit again? In terms of the search that Virgin will have made, my credit report hasn't been updated yet but I don't think I've got a leg to stand on in terms of appealing the decision.

Thoughts? Thanks again for all the help,
lunaris

BugsyBrowne

Never speak to a bank or a lenders advisor like you did with virgin money as they haven't got the foggiest Idea on how credit scoring works.

You should of tried the likes of Vanquis or capital one classic and I am surprised other posters didn't point you in this direction rather then send you on a mission filling out stupid pre-approval soft search applications.

Blame the above posters!!