How does he better his credit rating?

cavity123

thanks madprof - just to let you know he's taken the advise and has reduced the overdraft facility from £4000 to £1000.

Lets hope someone can advise on benefits and credit cards.

B_G_B

cavity123 wrote: »

Lets hope someone can advise on benefits and credit cards.

I have successfully applied for Barcaycard initial and Nationwide select credit card whilst only* income is DLA & ESA.

The Barclaycard was my first card. Small spend and paid off fully each month. 6 months later they upped the limit.

Nationwide I have had savings accounts for years. Offer to apply appeared online and I went for it. Didn’t expect to get it but was accepted immediately.

I have also been refused once from another provider.

My credit reports are “clean” though.

*NOTE… I am grateful for the help that I receive with ESA & DLA and use the word “only” in the context of this thread.

cavity123

Thanks B_G_B.

I've just spent a bit of time helping him. He used Noddle to check what credit cards he can most likely have the chances of applying with. Although he couldn't go for barclaycard they want a person in employment, the good news is that he has managed to get 2 credit cards!

First one is a capital one classic and 2nd one is a halifax all-in-one.

As silly as it sounds, we're still confused as to what it would cost him for using any of these cards.

MadProf

It could cost him nothing at all.

Both those cards carry no annual card fee (a payment to the lender for administration in managing your card) so if you set up a DD to pay the balance in full you'll never pay a penny in interest or fees.

It's basically like using a souped-up debit card (which now gives you amongst the credit-building benefit, S75 protection). Just make sure that you track what you spend on it and keep the money that you would have spent on your debit card aside to pay the balance when your statement arrives.

Another piece of advice I could give is to not spend more than ~30% of the credit limit you're given. This could be problematic as subprime cards could start off with limits as low as £200. The CC lender will record the credit utilisation (what you spend on it versus what you've been given) to the CRAs and when it comes to mortgage time the last thing you want is that lender observing an applicant that has maxed the credit he has been entrusted with.

Most cards have a 56-day interest free period so if you spend say, £75 on the card in the month, you pay the full £75 when you receive your statement for that month. No interest is then charged. If, however, you do NOT pay the full balance, you'll pay the advertised interest rate (>30% for subprime cards) on the remainder of the balance you carry. Do -not- do this with a subprime card - you'll end up in a debt spiral very quickly.