Looking to boost Credit Rating but is my plan solid?

thinkforasecond

Hi everyone,

Long-time lurker, first time poster.

Without going into great length, I’ll do my best to keep this as short and sweet as possible.

Last year, my number one goal was to clear all debt and save enough money together for an emergency fund’. After a year spent scrimping, I achieved these goals and I’m now in a much better position financially. Now onto my goal for 2016…

My aim this year is to begin saving enough funds to put towards a deposit on a home of my own. However there a couple things I wanted to run by those of you with more financial experience than myself.

While saving funds over what I believe will be a two year period, I need to begin working on boosting my overall credit rating. I have yet to do a credit check but I suspect it to be either poor or unknown. The reason for this is due to me having very few direct debits and me always preferring to pay in cash wherever possible.

My plan is to first carry out a credit check to see where I currently stand. After that, I planned on applying for my first (cashback) credit card. This card would be used to pay both my current direct debits. Those being both my monthly rent and car insurance. I’ve contacted both the rental and insurance company who are happy to accept credit card as payment.

I simply wanted to use the card for these two monthly payments – nothing else. Why? I simply do not like using plastic. I prefer cash because I know how exactly how much I am spending. I seem to have far better control of my overall finances when dealing with cash.

Is this a good plan for improving my credit score and helping my chances when it comes to applying for a mortgage loan later down the line?

If you have any added feedback or if I have flaws in my plan, I’d greatly appreciate if you could get back to me as I want to begin kicking this plan into gear as quickly as possible.

Many thanks

hd216

Whilst they may be happy to accept card, most charge a fee for paying by credit card card. You could find that this quite heavily outweighs any benefit accrued through the cashback which is usually 0.5-1%.

Just something to bear in mind!

MuddyFunster

Plan sounds good to me, if you've reached this point because you're a "spend what I've got and not a penny more" type and you have no adverse data on your file then it should work well enough, although I don't spot it in writting I assume you plan to pay your CC balance in full each month?

I'd personally use Noddle to access your file, it's free and easy to use. You might be surprised what data is shown, you might have a nice row of perfect payment history thanks to a bank account, utility bill or mobile phone account etc.

If/when you decide to apply for a CC, if you get turned down for a cash-back card due to lack of history, don't be downhearted - you can apply one of the higher rate, credit builder cards - they might not give you enough of a limit to cover the rent - but you could always stick to £50 a month of say food shopping and pay it at the end of the month in full.

NB, you mention a credit 'score' I assume you've read the stickies and know all the informance in regards to 'scores' - but just incase, don't worry what score Noddle gices you if you choose to use them, it's the data that matters.

Candyapple

If it's your first time getting a credit card I highly doubt you would be getting a cashback card, more like a subprime one due to lack of/no credit history.

Are you doubly sure your landlord would accept rent payments via credit card? I would imagine that would be quite risky to them, especially given the high risk of chargeback(s) occurring months down the line, not to mention the processing/merchant fees.

Don't forget that you will also still need to set up a direct debit to pay at least the minimum repayments on the credit card (wasn't sure if you understood that part as some people think 0% period means no payments whatsoever until the end).

Apart from that, get yourself on the electoral roll if you already aren't, and check Noddle and Clearscore for your credit reports and pay £2 to Experian for theirs for completion of all 3.