18 in three weeks, what will be my credit rating be like?

BrookesAndrew

DCFC79 wrote: »

And save save save.

My Mum has told me exactly the same thing. I think for the time being I am going to listen to both of you.

Thank you everybody.

Cycrow

BrookesAndrew wrote: »

Thanks for the help. I don't want to get a credit card or anything but I want to buy my own house when I am 21 or 22 (something like that). So I just wanted to maybe build a good credit rating up. I might just stay away from credit cards and everything like that.

Thank you for all your help though.

that wont really help you. You build up a credit history by actually having credit and managing it properly

if you never have any credit then your credit file will never have anything in it. Which is better than having bad credit but lenders wont know what your like to lend to.

Credit cards are a good way to build up credit and can be useful for other things like offering protection and other perks like cash back.
Just as long as you are sensible with them, and never spend more than you have available

DCFC79

BrookesAndrew wrote: »

Thanks for the help. I don't want to get a credit card or anything but I want to buy my own house when I am 21 or 22 (something like that). So I just wanted to maybe build a good credit rating up. I might just stay away from credit cards and everything like that.

Thank you for all your help though.

Nothing wrong with credit cards as long as your able to restrict yourself to a limit and not put so much on the card that you cant pay it back before the end of the month.

JimmyTheWig

BrookesAndrew wrote: »

Thanks for the help. I don't want to get a credit card or anything but I want to buy my own house when I am 21 or 22 (something like that). So I just wanted to maybe build a good credit rating up. I might just stay away from credit cards and everything like that.

Thank you for all your help though.

If you don't get any credit in the next few years, you are unlikely to get a mortgage.

Think about if someone asked to borrow £100 from you.
Would you be more likely to lend it to them if they had...
(a) Borrowed £10 from people a few times in the past and always paid it back when they said they would.
(b) Borrowed £10 from people a few times in the past and not always paid it back when they said they would.
(c) Never borrowed anything from anyone before.

Personally I would trust person (a) the most and person (b) the least. With person (c) being a bit of an unknown.
Buy not having had any credit when it comes to the time you want a mortgage, you are going to be like person (c). You haven't done anything wrong - so you are better placed than person (b) - but equally you've got no history of doing anything right.

There's no rush - make sure you understand what you are doing first, as you don't want to end up like person (b) - but if you want to apply for important credit in the future it makes sense to build a decent credit history.

212

I'd completely agree with others saying to build your history.

Soon after my 18th Birthday I got a card with my own bank, then acquired a Capital One card. Followed that up by getting Barclaycard, Aqua and others. I really have no idea how many I have now. 15 as a minimum, and the same number in current accounts.

When I was about 20, I applied to Nationwide for a current account, and then a credit card soon after. As I'd had 30~ months of paying everything on time etc (even though I was in debt and earning hardly anything as a student back then), I was accepted with a 2k limit on a 0% card.

It was upped to 3k after a year. In April just gone, it was raised to £4,200 (pre-approved so I just clicked through to accept it).

Long story short, but I was in a very very tricky situation, bordering on being homeless, through no fault at all of mine. Only way to prevent it would have been to have 4k+ in savings. Yes I could have saved that over the years, had I predicted the unpredictable! But I hadn't (although I now will build an emergency fund!).

I had nobody (friends/family etc) to borrow that sort of money from. As I've essentially spent 4 years 'massaging'/improving my credit file, I was able to whack the 4k I needed to get a new house on a credit card. Not an ideal situation - but (despite joking that Nationwide were drunk to give me £3k/4k etc) it's hit me that if I had just left it and said 'meh, a £350 student credit card will do', I'd be homeless right now!

Managed properly, a credit card can get you great rewards, and you have to pay no interest if you pay in full & on time (set up a direct debit for at least the minimum). If you know you'll never spend too much, set it up for the full amount and forget about it. It also helps you in emergencies (mine was about as dire as you could get - but think of things like breakdowns/expensive MOTs when you use your car for commuting too so need it fixed ASAP), and ultimately will help you get a mortgage.

I want to work in risk/underwriting etc - that's why I've always been fascinated with improving my score. I know it's not 'normal' to do what I've done, and I wouldn't suggest opening so many accounts etc. But I'd suggest opening a few (incase one card is declined due to errors) and managing it correctly - you never know when it may be needed, I mean when I was 18 and started all this I never dreamed of the past 8-10 weeks ever happening!

Caladan

212,
That situation may have worked out for you, but I'd say in a significant number of people with similar spread out credit agreements and facilities it can cause massive headaches.

When lenders credit score you they can see your available limits. Some banks will not lend if your available credit is above a certain amount, even if you don't utilise it.

If I were you I'd close some of those cards and just keep a couple with reasonable limits in line with your income.