Bad (or not the best) Credit score.

ichidan

I've never taken out a credit card or loan in my life (apart from student loan). As I've never needed to. I buy cars outright as I'm cheap (my cars are <£2000). The only loan I'll ever need is a mortgage.

Apparently I don't have a good credit score. Or at least not the best. A mortgage broker mentioned something about A* and A credit scores. That mine couldn't be an A* as I didn't qualify for Halifax's best LTV of 5%, but the 10% LTV, and that this is also why I can't borrow 5x my salary and only 4.5x.

Also this screwed me up when I tried switching my parent's British Gas card payment system over to direct debit. I couldn't do it as they ran a credit check and said I had a bad score. I could switch their E-on electricity payment system over to quarterly debit card payments. But British Gas being backward as they are would only allow direct debit which is subject to credit score.

I signed up to Experian a year ago to see if I could improve it. The only thing Experian said was bad about my credit score was that I wasn't on the electoral register. My parents had removed my name from the address as I wasn't living there. I've subsequently added my name, hoping this would improve my credit score.

Still I have a bad credit score.

The only thing I can think of to improve my credit score is to get a credit card, and buy with that and clear it every month.

But this seems like an old wives' tale. As some have said it will make a difference, while others have said it won't.

So whats the general consensus.

I think it sucks that this hidden 'black box' tells me I have a bad credit score, but won't say what it is. Furthermore, sucks that paying 15 quid a month for Experian can't tell me why I have a bad credit score either, and that you can't just cancel online. Sounds like Experian is just another scam.

Is there any way I can find out why my credit score is bad. Or is it just a case of guessing. It could take 50 years before I find out what it is. Is there any service/agency that I can pay to find out why I have a bad credit score, and fix it.

It's just nuts.

The only real offenders I can think of are:

1. My £10,000 student loan (dating back to 2000). I've not paid a penny back on it, simply because I've not been asked to, and I was told it wouldn't affect anything. (I know I feel bad that I used tax payers money to help to me get an Electronics degree [which wasn't even necessary to work in the software industry. As I'm a self-taught programmer]. but figured as it only grew at inflation rate, and my earnings have grown far faster. I'd wait until I absolutely had to pay it back.)

2. My O2 mobile phone contract. Which appears as a £240 loan, that is paid back as £10/month. It does look ugly on my Experian credit report. But what can I do? I don't think O2 will let me pay the whole £240 all in one go as its a mobile phone contract.

3. My father was on my company, and he (not the company) got declared bankrupt about 6 years ago (near the end of 2008). I remember as I put my business bank card in an ATM one day on my lunch break at work, and the machine chewed it up. So I had to remove his name from the company.

4. I have 6 points on my driving licence.

5. I got suspended from middle school.

anselld

Having a credit card and paying it off *will* help and so will being on the electoral role.

Is your father listed on the report as a financially linked individual?

The rest makes little or no difference.

PS. I hope you are not sheltering earnings in your company to avoid liability for student loan repayments.

DpchMd

I'm not going to lecture you on whether you should or shouldn't be actively trying to repay your student loan, however, it's likely that these issues are linked.

It's possible that your student loan lender hasn't been able to track you down, for the same reasons that your mortgage lenders aren't comfortable lending to you.

Not being on the electoral role at your current and previous addresses is likely to be having a big impact, as well as your limited credit history. Sign up for your free report at Noddle.co.uk and see if you're showing on the current register.

Using a credit card for expenditure and paying it off in full is not just useful to build a credit history, it's prudent money management. Not only could you qualify for financial rewards (cashback, airlines etc) but you are afforded additional protection against fraud.

Check you're on the electoral role, start using a credit card and pay your debt. These simple steps will make you much more appealing to lenders who will potentially be risking hundreds of thousands of pounds on you.

jamesd

The O2 contract is a credit agreement and consistent on time payments on that will be of small help to your score. It doesn't look ugly on your credit report if it's all on time, it looks good to a potential lender.

A credit card will help more. Two credit cards will help more still, but stop at two. Use each a little every month, have a standing order set to pay at least the minimum payment so you never, ever miss a payment.

Different types of credit also help, so a small personal loan will increase your score. You can pay off all but a little of it early on so that you pay almost no interest but still get the regular monthly payments on your credit record.

I used each of these approaches starting a few years before getting a mortgage from one of the fussiest lenders around.

What you should not do is apply for more credit within six or so months of applying for a mortgage. Nor from being accepted to moving in. It's too late for this to help your credit score and the recent applications have a small lowering effect.

ACG

I have never come across A and A* credit scores - neither as a broker or when I worked for a lender.

I would suggest finding a new broker. If you have no bad credit there is likely to be a 5% mortgage out there for you - albeit it may not be the best rate available.

ichidan

Ok so on Experian credit expert I have a score of:

861 out of 999 (Fair)

1 Negative score factor:

- You have no settled non-mail order credit accounts.

3 Positive score factors:

- The average age of your credit accounts is 52 months.
- Your total non-mortgage credit balance is £10.00
- You are using 3 non-mortgage credit accounts

Your lending balance:
Credit/store cards £0
Loans/hire purchases £10
All accounts £10

Says I have 3 open accounts (no closed accounts). 1 for instalments (O2), and 2 for TV,Phone,Internet: HUTCHISON 3G UK LTD, O2.

This is the only negative thing on my credit report. It seems stupid, just a 10 pound/month mobile phone contract (there's 30 pounds left i.e. 3 months), but O2 website won't allow me to pay the 30 pounds off in one go, it must be at 10 pounds a month.

Once the O2 contract has been paid off, is that treated as a settled account? If I could call up O2, maybe I can pay the remaining 30 pounds off directly, or if they refuse, I could cancel my contract, pay any fees, just to make the Loan appear closed and make my report better.

I've applied for a capital one credit card, so I'll be able to improve my credit score, but I guess that'll take maybe 1 or 2 months before it has any effect?

jamesd

More like six months before a new card has a positive effect. The initial effect is negative due to a recent application and recently opened account.