Should I take an overdraft I don't plan to use?

The_Laisy_Daisy

Please indulge me while I share a little back story...

I have an appalling credit history (or whatever the correct term is). I have been absolutely unable to get any sort of credit, including an overdraft, for the last 10 years. This doesn't bother me. It has taught me to always live within my means.

Today I had a call from my bank saying that they would like to offer me an overdraft and /or a loan and would I like to make an appointment for next week to discuss how they could 'help' me? To be honest, I don't want to borrow money. I neither need nor want it (don't get me wrong, I'm not financially wealthy by any stretch of the imagination - I'd just rather save than borrow). One day in the future though, I would like to buy a house and I'm guessing I'm still going to need to fund some of that with a mortgage. So my question is this:

Will taking an overdraft / loan continue to improve my credit rating so that one day I may be accepted for a mortgage or should I leave things as they are?

Thanks in advance for your help! :-)

colsten

Keeping one or more current accounts in good standing (no unauthorised overdrafts, no bounced cheques, no refused payments etc) will look good on your credit file.

Paying all your phone and utility bills in full and on time will look good on your credit fie.

A credit card that you pay off in full each month will look good on your credit file.

Being on the electoral role at your current address will help. Not being financially associated with anyone with a bad credit history will help.

Paying overdraft charges or interest on loans that you don't need seems the wrong way to go.

When did you last check your credit files? What do they say?

grumbler

The_Laisy_Daisy wrote: »

So my question is this:

Will taking an overdraft / loan continue to improve my credit rating

Yes, but I don't think it's worth paying for this by taking a loan. Take the overdraft (don't use it) and ask for a credit card instead (use it for spending and pay the balance in full every month by a DD).

The_Laisy_Daisy

Thanks for replying. I last checked my credit files in about 2009 and noticed that most 'black marks' expired in 2012. I had another later that year so that should have expired this year.

I don't pay the household bills, they are under my partner's name but I have just added myself to the electoral register and my current account has been excellent since I opened it (probably about 2008?).

I understand that taking credit with interest doesn't make sense, I just wondered if I would get more 'good credit' by having the overdraft on my account as opposed to not - even if I don't use it? Or perhaps they will offer me a credit card - if I saved my grocery money (for example) and paid it off in full each month, will this work in my favour?

colsten

I don't think there is a difference, in terms of credit history, between a current account with an overdraft facility and one without it. The important thing is that you don't use any unarranged overdraft, and have no bounced payments.

If I didn't need an overdraft, I wouldn't have one on any of my accounts. The temptation to use it could be too big.

The_Laisy_Daisy

Ah Grumbler, I see we crossed posts - thank you too for taking the time to answer, I shall see what they have to say next week then!

colsten

Your credit history might be in much better shape than you think. Go to https://www.noddle.co.uk/ for an instant, free, peek at one of your files. Don't buy anything they try to sell you - you don't need it, however much they tell you that you do.

The_Laisy_Daisy wrote: »

if I saved my grocery money (for example) and paid it off in full each month, will this work in my favour?

Get a cashback credit card that you pay off in full each month? Check here what you might be able to get http://www.moneysavingexpert.com/credit-cards/best-0-credit-cards#preapply

colsten

The_Laisy_Daisy wrote: »

I shall see what they have to say next week then!

Can you resist a trained banker selling you something that you don't need? The only reason why they have called you is because they want to sell you something. They don't care about you, they just want to make more money of you.

Would you go into a department store if you didn't need to buy anything but they called you to say come into the store, we have things to sell? No? Then why go into a bank if you need nothing from them just because they called you to say they can sell you an overdraft or a loan, or, Lord forbid, both.......and all sorts of insurance policies, too, plus packaged accounts etc etc

Having an overdraft facility doesn't improve your credit files, and it doesn't make you a better person.

The_Laisy_Daisy

I absolutely can! She has her work cut out lol! Hence my question on here, I'll be going for my benefit, not theirs! ;-)