Borrowing Money to IMrpove credit rating

UltraSoul

I have always followed the rule if i cant afford something in cash i dont get it. So i have never really got anything on finance. I have read my credit report and its pretty plane with nothing on it. I have been out of work for a while but i have now started a new job. And i have started thinking about my future. Eventually i want to own my own home, i am currently renting a place. But because i have a nearly none existent credit history im thinking that when the time comes i may not be able to get a mortgage.

I have recently looked on this site for a credit card deals. and i applied for one for Low/Bad credit. I was declined in my application. So i am trying to find a way to improve my credit without a credit card. Where i live there is this group called provident. they come to your door and offer you cash money and you pay it back in weekly installments. I am thinking along the lines of borrowing say £300 not spend a single penny of it then in 2 weeks time i will pay them back the £300. because i will pay it all back straight away there is no interested added. Where if i pay it back weekly over the year i would have to pay interest on it.

If i do this once a month with them i am wondering if it will improve my credit rating. similar to how a credit car would. Then after 6 months or so i will re-apply for a credit card, if accepted i will then use the credit card to improve my credit score not spending more then £100 a month on the credit card, and paying it in full each month.

Im very disciplined with money so i know i wont run into trouble with it. Especially because i am aiming for a goal. Im 25 years old and in 5 years i hope to own my own home and stop private renting. Is this a good idea or is there a better way? any help would be greatly appreciated.

matttye

Do you have a mobile phone contract? If not, this will help improve your creditworthiness and build a history.

Also, I would suggest you fill out a Barclaycard Pre-application Check, as this will tell you if you're likely to get any of the Barclaycards without actually doing a credit check. Barclaycard Initial accepts people with limited histories.

The fact you've been declined for one card doesn't mean you won't get one with another company.

A credit card would be better than the Provident idea because, presumably, each Provident loan will show up as a new loan on your credit file and you'll be credit checked each time you apply.

ChopperST

DO NOT USE A DOOR STEP LENDER

You clearly have a good attitude to finances and live within your means and you do right by getting some form of credit now to show your credit worthiness in the future for mortgage applications etc.

I would imagine the reason for decline is your short employment history. Also check your are on the electoral roll at your home address.

Leave it 6 months and apply for something like the Aqua card or Capital one or approach your own bank.

Using a door step or pay day lender will be a black mark on your credit file as it will show you are struggling to manage your finances.

Check your credit report for free with noddle (call credit) or pay £2 to get a copy from each agency.

Cycrow

Credit cards are generally the best for this sort of thing, and as long as you are paying off in full every months, they wont even cost you anything.

Make sure you are on the Electoral Roll and that its showing on your credit report.

you could try applying for another card, like the Barclaycard Initial or Capitol One classic.

when you have some history you might then want to upgrade to something with some additional benefits, like a cashback card

Thrugelmir

UltraSoul wrote: »

Is this a good idea or is there a better way? any help would be greatly appreciated.

Save with a lender such as a local building society. This in itself will accrue you brownie points over time. As it demonstrates an ability to manage your personal finances.