Get a loan to improve credit rating?

Janexoxo

Hello everyone

I have been offered a loan of £10,000 at 16% APR by Santander, I could use the money but don't really need it, however I would like to improve my credit rating so my question is:

Does having a loan improve my credit rating?

I have the option of early repayment so I could borrow and pay it off after 6 months to reduce the amount of interest I''l have to pay.

Any advice would be much appreciated.
Thanks

HappyMJ

Well...yes it does improve your credit rating...but at what cost. £1,600 per year is far too much.

A credit card that you use and pay in full each month to avoid interest being charged will achieve the same objective.

Fruit_and_Nut_Case

I think the fact that the nice folks at Santander have offered you a loan seems to indicate that in their eyes your credit rating is fine already.

Janexoxo

HappyMJ wrote: »

Well...yes it does improve your credit rating...but at what cost. £1,600 per year is far too much.

A credit card that you use and pay in full each month to avoid interest being charged will achieve the same objective.

That's what I thought as well, there's no way I could make £1600 from the loan to pay that much.

I have 6 credit cards, 4 of which I use regularly, I pay for them by direct debit so I never miss any payments.

Janexoxo

Fruit_and_Nut_Case wrote: »

I think the fact that the nice folks at Santander have offered you a loan seems to indicate that in their eyes your credit rating is fine already.

I initially applied for the loan as I was attracted by the advertised 4.1% APR but was offered 16% APR instead due to credit score, the only reason I might consider taking the offered rate is to improve my rating to become able to take loans at cheaper rates which I could actually benefit from.

redcard

A £10K loan at 16% that you don't really need, to improve your credit rating so you pay a lower rate next time?

Why not just be honest with yourself and admit you quite fancy a new car / holiday / laptop ?

There's no guarantee that you'll get offered the lower rates next time anyway.

HappyMJ

Janexoxo wrote: »

That's what I thought as well, there's no way I could make £1600 from the loan to pay that much.

I have 6 credit cards, 4 of which I use regularly, I pay for them by direct debit so I never miss any payments.

That will damage your credit rating as you may have too much credit available. Try closing half of them and reapply for the loan in 6 months.

Janexoxo

HappyMJ wrote: »

That will damage your credit rating as you may have too much credit available. Try closing half of them and reapply for the loan in 6 months.

Good idea, will close my Braclayard and Halifax Clarity as they offer pretty much no advantages at all.

Joe_Bloggs

@Janexoxo

The Halifax Clarity card is a winner if you can make the most of it.

Spend over £300 on the card, Transfer over £1000 through a Halifax reward current account from an external source (stay in credit or else). Pay the card off /use a direct debit. Collect £5 cash rebate from the Clarity card and £5 Halifax reward current account cash rebate.

That's £5 + £5 every month of advantages. It is free money if you are organized enough to jump through the hoops
J_B.

thebritishbloke

Joe_Bloggs wrote: »

@Janexoxo

The Halifax Clarity card is a winner if you can make the most of it.

Spend over £300 on the card, Transfer over £1000 through a Halifax reward current account from an external source (stay in credit or else). Pay the card off /use a direct debit. Collect £5 cash rebate from the Clarity card and £5 Halifax reward current account cash rebate.

That's £5 + £5 every month of advantages. It is free money if you are organized enough to jump through the hoops
J_B.

Does this apply to every Halifax Clarity holder? I thought it was just people who held the Halifax Clarity Reward card?

Joe_Bloggs

Does this apply to every Halifax Clarity holder? I thought it was just people who held the Halifax Clarity Reward card?

The terms of the Halifax Clarity card outline what it takes to get a reward.

11.2 To be eligible for the reward set out in condition 11.1, you must, at the time you enter into this agreement:-
(a) hold a Halifax current account and pay in £1,000 or more each month;
(b) use our switching service to move your current account to a Halifax Current Account and agree to pay in £1,000 or more each month;
(c) open or hold a Halifax Ultimate Reward Current Account.

J_B.