Experian Credit Score

[simon] · 12 May 2014 at 10:59AM

Hello, I have checked my credit rating on experian, just out of curiosity. I am 26 years old in July and i just wanted to see where my credit score was at so that i can plan ahead to make any improvements to it to make it better for when it comes to getting a mortgage in a few years time.

My credit rating is 'fair' and experian told me on the phone when i rang them to cancel my 30 days free trial that I was 50 points away for been rated as 'good'

All my debts are paid off. The only two that are on going are my mobile phone contract and my EE contract for my Ipad's 3G. The EE contract for the Ipad is over, so it is just a rolling contract which can be canceled anytime but i don't wish to cancel it at the moment.

Experian recommended i get a credit card / store card which will help me get in to the 'good' category and beyond.

I have never, ever had a credit or store card before. I know you can get in to lots of debt with them though, very fast. So i would only use it to pay for a bill or something and then transfer the money from my current account to pay the money back on the credit card pretty much straight away.

I will never spend on the credit card if i do not have that amount spare in my current account.

Is this a good idea ? and what do i look out for when applying for a credit card ?

Thank you.

Tixy · 12 May 2014 at 11:42AM

Showing responsible use of a credit account helps to build up a credit history and makes it easier for other potential lenders (including mortgage lenders) to assess the risk in lending to you.

Whilst showing payments of service contracts is good, it is not usually viewed as the same as a proper credit account.

Using a credit card sensibly can be a good way to show a good credit history without it costing you any money.

So i would only use it to pay for a bill or something and then transfer the money from my current account to pay the money back on the credit card pretty much straight away.

This wouldn't work. You need to wait for the statement to be generated each month, and then make your payment (preferably paying in full each month) - otherwise your credit file could look as though you are not actually using the card.

what do i look out for when applying for a credit card ?

If you are going to pay in full each month then the interest rate isn't important and ideally you may want to look at cashback/reward credit cards. However for a first card you may be best either applying to your own bank as you are more likely to be accepted by them, or if not then conisder one of the subprime credit cards to start.

thebritishbloke · 12 May 2014 at 11:43AM

Firstly, ignore your 'score'. It's an arbitrary number made up to make the CRA's money.

Your 'score' is not very good because you've never had any (what I would consider) risky credit, such as credit cards, loans, mortgage etc. If you get a credit card, pay it off in full every month (Have a direct debit set up to do this so that you don't miss a payment!).

You can use the MoneySavingExpert Eligiblity checker, this does a soft check on your credit report to tell you which cards you may be eligible for. You may be able to get an average card because you've had phone contracts to pay, but I wouldn't hold your hopes up.

You're most likely looking at a sub-prime card, these are cards with high APR's (But this won't matter to you, since you're paying it in full every month) and they don't come with any sort of cashback/rewards generally. You could try for the BarclayCard Initial, who do you bank with? My SO only had mobile phone contracts and got approved for Halifax's best card, since she'd banked with them for a long time.

[simon] · 12 May 2014 at 11:48AM

Thank you very much for the Information.

Is interest only applied if the full amount is not paid with in the month ?

Also, a positive on my score is the fact that i have not applied for any credit within 6 months, so will applying for a credit card make my score drop ?

Also i have had a loan in the passed for a new car, which i have paid off this year 2 months earlier than agreed.

What makes my score lower than it could have been is the fact that i struggled to pay the water bill when i had my own rented places 2 years ago. it was finally paid off but it was very little amounts per month which put me in the red zone for their payments.

Tixy · 12 May 2014 at 11:54AM

It may make the score the credit reference agency will sell to you drop for a short while - but nobody sees that number except for you.

Lots of applications in a short period of time can make potential lenders wary, but if you are not intending to apply for any other credit for a few months then making an application for a card will have a negligible impact on how a potential lender will view you.

Providing you only use the cards for normal purchases (not gambling transactions/cash withdrawals/purchase of foreigh currency) and providing you pay the whole balance from the statement in full before the due date (typically 2 weeks after the statement date) then you would pay no interest.

thebritishbloke · 12 May 2014 at 11:56AM

[simon] wrote: »

Thank you very much for the Information.

Is interest only applied if the full amount is not paid with in the month ?

Also, a positive on my score is the fact that i have not applied for any credit within 6 months, so will applying for a credit card make my score drop ?

Also i have had a loan in the passed for a new car, which i have paid off this year 2 months earlier than agreed.

What makes my score lower than it could have been is the fact that i struggled to pay the water bill when i had my own rented places 2 years ago. it was finally paid off but it was very little amounts per month which put me in the red.

Ignore the idea of your "score". It means nothing.

Having multiple recent searches on your account is not good for getting approved for credit. They are taken off your credit report after 12 months though, so I wouldn't worry about them too much so long as you're not expecting to make any big applications any time soon.

You say your water bill "put you in the red", what exactly do you mean? Does your credit report have a late payment marker? A default marker?

[simon] · 12 May 2014 at 12:05PM

Its not defaulted no, My water bill is now "settled". i moved out of my rented accommodation back home with parents, Yorkshire water sent me a bill of about £100 +, i don't remember why, i think it might have been because my water usage estimate was wrong and i was paying very little per month for water when i was in the rented accommodation. but the main point is i had £100+ to pay to them and i also had my car loan to pay, (i had been dropped from full time work to part time at this time) and so i focused on the car loan as it was most important and biggest debt. so the monthly payments to Yorkshire water were all over the place, some where late payments, some where less money than agreed. It was just a struggle to pay it, i just paid what i could. I always kept in contact with them and it went on for about 9 months until it was paid off

thebritishbloke · 12 May 2014 at 12:10PM

What does this look like on your credit report? I'm really struggling to understand what went on here...

[simon] · 12 May 2014 at 12:14PM

Green, settled,

But the payments where not as agreed so the payments per month are in red. So it had taken a knock on my credit score, a little bit. If that wasn't their i guess my credit score would be rated as "good". I When i rang experian to cancel my trial with them they mentioned to me about the water, They said it had not defaulted, and it wasn't a big problem, its been settled and my over all score is fine. Just told me to use a credit card or store card if i want to improve it further. The water payments are the only payments i have struggled with. All the rest of my loans and bills have all been paid on time and settled.

thebritishbloke · 12 May 2014 at 12:17PM

Ok, I'd look at a credit card offered by your bank. Don't be too ambitious by applying for the best card you can find, because you won't get it. Use the MSE eligibility checker, Money Supermarket and Confused.com also do eligibility checks.

The_Boss · 12 May 2014 at 12:22PM

I've now edited my signature so I can just direct people to that. The number of "credit score" threads was already at ridiculous level and has elevated above that now.