Do Direct Debits affect Credit Scores?

GrimJam

Hi,

After reading the MSE guide on credit ratings, I'm still not sure on this. If I've got credit cards, store cards etc, these will be on my credit rating along with info on my payment-making.

What about direct debits I have - council tax, phone bill, gym etc - will making regular payments like these be a good thing for my credit file? Or are they only good if they're Direct Debits for paying off credit (eg, a direct debit to pay the balance monthly for a credit card)

Thanks!

The_Boss

Yes they do affect credit file data (scores dont really exist and you certainly dont have a 'credit rating' that data is recorded on).

Assuming you have cleared funds in your account, the dd ensures you do not pay late thus totally minimising any risk of late payments being recorded on your file. Of course, you need to keep paying manually until there is confirmation on the statement. Therefore dds have a very positive effect on how lenders score applications you make.

GrimJam

The_Boss wrote: »

The dd ensures you do not pay late thus totally minimising any risk of late payments being recorded on your file.

So it's not a *positive* thing in itself, it just prevents a missed payment and therefore negative marks?

IE, If I make the payment manually, regularly, and without fail, it's just as good?

I'm asking, by the way, as my girlfriend has literally no credit info, cannot register to vote, and we're trying to build her credit up. (yes, she is over 18)

Tixy

DDs don't affect your credit file as such. That is unless you have DDs bounced in which case within your current account entry on your file this could be recorded as a negative marker.

DDs/payments for council tax will have no impact on your credit file.

In terms of your credit file DDs for things like store cards/credit card etc are no different to paying for those items by a manual payment. If you make the required payment on time to the credit agreement then that is what is required and recorded.

Similarly with the gym/phone contracts, if those agreements are reported on your credit file then it makes no difference if you pay by DD or manually each month.

Tixy

Why can she not register to vote?

Has she tried to get any credit and been turned down?

Does she have a current account?

The_Boss

GrimJam wrote: »

So it's not a *positive* thing in itself, it just prevents a missed payment and therefore negative marks?

IE, If I make the payment manually, regularly, and without fail, it's just as good?

I'm asking, by the way, as my girlfriend has literally no credit info, cannot register to vote, and we're trying to build her credit up. (yes, she is over 18)

They are a positive thing from preventing missed payments due to forgetfulness. Manual payments are the same...but what if someone forgets to pay?

GrimJam

Tixy wrote: »

DDs don't affect your credit file as such. That is unless you have DDs bounced in which case within your current account entry on your file this could be recorded as a negative marker.
DDs/payments for council tax will have no impact on your credit file.

In terms of your credit file DDs for things like store cards/credit card etc are no different to paying for those items by a manual payment.

Brilliant, this is exactly what I was looking for - and confirmed what I thought was the case.

Thanks :T