Arranged Overdrafts - Do I need one?

codeX

Hi,

I do have multiple current accounts but never requested for an arranged overdraft. It's just that I never needed one.

Is having an arranged overdraft generally a good thing?

How about keeping it used/unused?

Will it be reported as another entry in my credit files?

Basically, if I don't need it; should I even bother applying for one?

I've been searching the forums for some clarification on this & got some ideas. But would really appreciate your inputs.:beer:

matttye

You don't have a credit rating.

It's unlikely to make much of a difference. Borrowing and repaying regularly is good for your credit worthiness but going into your overdraft every month can be seen as a sign of financial hardship (much like payday loans), so I would recommend you obtain a credit card and pay it off in full every month instead.

The_Boss

There's a sticky at the top of the main page of this board about scores/ratings not existing - have a read of that.

codeX

Okay! Edited the title to remove the reference to the 'Credit Rating'. But my questions still stand.

@matttye: Thanks for the reply. I already have multiple prime credit cards and paying the full balance on all of them.

The_Boss

It's best not to use an overdraft to be honest unless it's a super low interest deal - the amount in debt will be reported to the CRAs. If not using it, the balance will show as £0.