Does purchasing things on credit impact your credit score?

aaryal

Let's say I bought some furniture from one of those vendors where they allow 3-years' monthly payments, interest free. Does that impact my credit score in a negative way (for buying things on credit)?

Thanks.

[Deleted User]

It impacts on how lenders would view you. Whether positive or negative depends on many other factors.

aaryal

Thanks. That's the catch 22 isn't it, that how your actions are perceived by lenders can always change, lender-to-lender. What "other factors" would decide if it is positive or negative impact? I know the answer is likely to be vague but in general, is buying on credit something one should avoid (even if it is 0% interest)?

[Deleted User]

Buying on credit, in itself, isn't bad. It demonstrates (if used correctly) that you can handle credit and don't default.

But an over reliance on it - too much available credit, revolving card balances, PDLs, would lead to lenders not wanting to give you any more.

And all of the above plays into you income as well. A £2k sofa on a 40k salary isn't a big deal. But on a 8k income, it looks more onerous.

The best rule to aply is common sense. Look at your finances and ask yourself, would any of this worry a future lender?

SAHD_Jim

Have you read this yet?

http://www.moneysavingexpert.com/loans/credit-rating-credit-score

SuperHan

Also, remember the point of having a good credit rating is so you can get credit when you want it.

If you're avoiding things like 0% interest credit to preserve your credit rating, there's no point in having one anyway!

[Deleted User]

To start with, it may reduce your "credit score" a little, because you've taken on a new commitment.

However, once you've made half a dozen regular payments on time, you'll look better than if you hadn't taken it, because you're proving you can handle it.

Thrugelmir

aaryal wrote: »

Let's say I bought some furniture from one of those vendors where they allow 3-years' monthly payments, interest free. Does that impact my credit score in a negative way (for buying things on credit)?

Thanks.

Owing money is a negative. You do not have a score. Lenders will rate you themselves depending on the product being applied for.

Nor is the credit actually interest free. The furniture at cost is only around a third of what you paying. The interest is buried in the cost of the furniture.