Improve with ANY Direct Debit?

juniorbuddy

Hi there,

I'm currently trying to improve my credit file. I hear a lot about setting up Direct Debits to improve your rating.

Could it be for any Direct Debit, i.e if I join the National Trust and pay monthly? Or a charity, or Netflix etc? in other words a fixed amount, not a bill per se.

It would be good to know how much detail they look into, or if they just see a DD on the file and like it, not minding what it's for.

Cheers

TakeItAsRed

I could be wrong here, but i don't think so.

Only 'CREDIT' accounts will appear on your CREDIT file.

For example, my Netflix, annual Beano comic subscription, or direct debit to pay for my over 18 channels on Virgin TV, don't appear on my CREDIT file.

I could be wrong here, i don't think i am, but someone with way way more knowledge than me will come along!

juniorbuddy

Thanks @TakeItAsRed. So you think it only shows DD's where there was an original credit application, i.e Utility Bill, Mobile Phone etc.

I wonder if my bank will take into consideration ANY DD if I apply through them.

Cheers

TakeItAsRed

A direct debit doesn't need to be applied for. If you take out any service from anyone, even the window cleaner, you can pay by direct debit.

A direct debit is of course the most trusted way of paying your bills each month, as long as the funds are in the account, the bill will be paid, you don't have to worry about them.

What a direct debit will do, is show your bank, than your are managing your finances correctly, paying your dues, when they are due etc. They will not though be a influencing factor in being accepted for credit.

Nebulous2

I'm not clear how a direct debit would help your credit account.
Credit accounts improve by using credit and paying it back on time (or before)

The recommendation for a direct debit is because so many people, either regularly or occasionally, miss payments such as credit card payments. A direct debit should make sure you always repay on time, as long as you have funds to cover it.

Credit accounts are the ones submitted to credit reference agencies and not all of them. So mobile phone bills, monthly credit arrangements to pay an annual insurance bill, some utility bills and probably most of all credit card payments are some examples.

Above all if you have any of these try not to miss any payments or fall into arrears.

Nebulous2

juniorbuddy wrote: »

Thanks @TakeItAsRed. So you think it only shows DD's where there was an original credit application, i.e Utility Bill, Mobile Phone etc.

I wonder if my bank will take into consideration ANY DD if I apply through them.

Cheers

I missed this as it overlapped my post. I'm not convinced it would make much difference. Are you looking for a loan?

If you had a lot of DDs your bank might worry you were already overstretched with regular payments and wouldn't be able to afford it.

TartanSaver

None of the things you list will appear on your credit file, because none of them are credit. Netflix uses continuous payment authority (your credit or debit card) in advance and has no long term contracts.

The only prospective lender which can see your direct debits is your own bank - others can only see credit. For example, any bank accounts with overdrafts or credit cards, or utilities with contracts not payg ones. It does not matter how you pay your obligations, it matters that you do pay.

TakeItAsRed

I am sure you can see what i was saying - about Netflix and other commitments that don't affect your credit??? I was making a point to the OP.

TartanSaver

TakeItAsRed: I was talking to the OP - you and I are in agreement.