Repairing a Credit Rating Post DMP

AJR6115

I am about to be totally Debt-Free (from 40k in Dec 2009) and I am looking to rebuild a credit score.. Mine is quite bad at 560.

What are the best methods to doing this? I know I could get a high APR credit card and know MSE's (IN FULL) rule. To that end is it acceptable to assume if you follow that rule the APR is actually irrelevant as you wont pay interest?

Secondly, I am looking to save c£500 pcm towards a mortgage down payment.. (6 year plan) what is the best way to do this?

TIA

Aaron

Palookaville

What I did was make sure I was on the electoral role and paid my gas by direct debit. Simple things I know.
I didn't bother with one of those credit builder card type things because I didn't know they existed.
I also kept my bank account in very good order. I only had a basic account at first but the bank obviously saw I was behaving responsibly and offered me an overdraft and after a while I applied for a credit card and was successful. I even had a loan which I managed to repay earlier but I never go in the overdraft and the balance on the credit card is kept to a minimum.

I now have a big overdraft that I never use and a big limit on my credit card.
Weirdly enough I got my credit file 2 weeks ago and found incorrect information with regards to a default and incorrect payment markers.
I didn't know this before then but I was still able to get credit. That does go to show you that credit scoring from Experian/Equifax is not the be all and end all.

AJR6115

Thankyou.. Due to my job I never used to go on the electoral roll (seemed to much hassle) but now I do.. As of September I will have no loands, cards, overdrafts.. I do however pay all my utilities by DD Only my mobile contract shows on my credit file though.. Maybe that will change soon....

matttye

Take the credit scores with a pinch of salt, they don't mean a great deal because 1) credit reference agencies like Experian/Equifax don't actually lend money and 2) they don't take things like income into account, whereas a lender will.

Yes a high APR credit card is a good way to rebuild a score and you won't pay any interest if you always repay in full and on time.

At the moment the best way to save is to use a high interest current account IMO. The Nationwide FlexDirect account offers 5% gross interest (4% net). Lloyds/Bank of Scotland Vantage accounts offer 3% gross (2.4% net). Santander 123 account offers 3% gross (2.4% net) but also offers cashback on bills if you pay your direct debits from it.

Look at this page and decide which is best for your needs:

http://www.moneysavingexpert.com/savings/savings-accounts-best-interest

Just prepare yourself for rejections. I've been debt free for four years (two defaults) and I've found getting a current account with another bank difficult.