Taking out personal loans for credit rating building

UsetheFORCE

MJ41 wrote: »

If your credit rating is decent enough for you to be accepted for a £3k loan, why do you feel it needs boosting? I wouldn't ever advise anyone to take out credit for no reason!

The OP has NO credit history as such so HIGHLY UNLIKELY at 18 to be getting this £3,000 loan.

stephane_2

Stop dreaming.....with no credit history you'll never get a loan

dealer_wins

What looks better to a company considering you for a mortgage.

A customer who has lived perfectly OK without any credit for the last 5-10 years and has a healthy deposit that he has saved up OR

A customer that has had many loans, cards and overdrafts.

Naf

dealer_wins wrote: »

What looks better to a company considering you for a mortgage.

A customer who has lived perfectly OK without any credit for the last 5-10 years and has a healthy deposit that he has saved up OR

A customer that has had many loans, cards and overdrafts.

Your first customer would likely be accepted, but at the worst rate they have: big risk.
Your other option would, I suspect, be borderline; if all of said accounts were in order they would probably be accepted, on a slightly better rate; if even a single late payment then very possibly a decline.

Better is someone in between; with a card, or perhaps two; a loan taken and paid in full (but this shouldn't be done willy-nilly as the OPs suggestion, only if needed); an overdraft facility available but never/rarely used. An individual like that will be offered a much better rate (still probably not the best - no mortgage history). And sensible use of the above accounts would still enable them to build a deposit much the same as your first example.

pheonixrising21

I would suggest a credit card, Aqua being a good example mentioned. Its sub-prime so should be available to someone with no credit history.

As its a cash back card, make all the purchases you normally do during the month for cash/on debit card (to earn the cash back), keep the cash in your current account and pay the bill in FULL when you get the statement. No interest to pay, 3% cash back earnt on all spend up to £100 per year.

Also, maybe a mobile phone contract? If you want something "nice", a Galaxy S3 mini is available on contract for around £26 per month, so that could be a way to build your credit history too.

As others have said, you probably won't get a loan at this time, so a credit card and mobile will be the best way to build your credit profile.

pheonixrising21

What looks better to a company considering you for a mortgage.

A customer who has lived perfectly OK without any credit for the last 5-10 years and has a healthy deposit that he has saved up OR

A customer that has had many loans, cards and overdrafts.

As someone else has said, surely its somewhere in the middle? Would you lend £2k to a random guy in the pub just because he told you he already had £1k saved up? You don't know him, know one else knows him, but he invites you round to his house so you know where he lives. Thats all the info you get, do you lend him £2k?

shocky_2

When I was 21 according to Experian my credit rating was "very good" - the only reason it wasn't "excellent" was because I wasn't a homeowner. All I did was get myself on the electoral roll, take out a credit card with my bank and take out a specialist credit card for spending abroad.

I don't think taking out personal loans is necessary and its also very expensive. Don't take a £3,000 loan: the graduate recruitment market is very tough right now, there are a lot of recent graduates who can't get jobs.