Do loans/credit cards help your rating?

NotNormal

As the title says, do loans/credit cards (and obviously repaying them) help your credit rating?

It's something I've heard mixed things about over the years and having just looked at my credit rating, got curious.

My credit rating is carp right now and the other month I was offered £50 loan, I didn't need £50 as I was only about 2 days from pay day and just needed some groceries so I think I did £15-£20 instead and paid in full on pay day and my credit rating jumped up a bit extra than normal. Was this coincidence or because of this?

I have no plans to start taking out loans randomly, but if I was in need of a fiver a day before pay day it would be good to know if that's having a negative or positive effect on my rating.

glentoran99

Pay day loans are very bad,


You don't have a credit rating

NotNormal

glentoran99 wrote: »

Pay day loans are very bad,

Good thing it wasn't a pay day loan then...

glentoran99 wrote: »

You don't have a credit rating

What do you mean? I've literally just checked my credit rating, it's not great but it exists :rotfl:

glentoran99

NotNormal wrote: »

Good thing it wasn't a pay day loan then...



What do you mean? I've literally just checked my credit rating, it's not great but it exists :rotfl:

And the people that give you this "rating" they will lend you money yes?

[Deleted User]

NotNormal wrote: »

I've literally just checked my credit rating, it's not great but it exists :rotfl:

You've seen a number that a CRA has told you is a credit score. It's not. It's a number that a CRA has given you.

glentoran99

Where are you borrowing £50 from for two days and how much did you have to pay back?

National_Debtline

Hi NotNormal


It's perhaps better to think of the "credit score/rating" as a relative indicator of whether your attractiveness to lenders is improving or deteriorating. It can never be taken as a guarantee of being accepted for any particular product.


Dennis
@natdebtline

NotNormal

Just to clarify I'm not using my credit rating as an accurate representation, merely as a guide that I'm heading upwards and not downwards again.

My question wasn't about whether ratings are worth the screen they're displayed on, but as we are on the page for credit rating questions I was under the impression this was the place to ask a question about the impact I'm having on my credit rating...

NotNormal

National_Debtline wrote: »

Hi NotNormal


It's perhaps better to think of the "credit score/rating" as a relative indicator of whether your attractiveness to lenders is improving or deteriorating. It can never be taken as a guarantee of being accepted for any particular product.


Dennis
@natdebtline

I'm not using the rating in regards to getting credit, I much prefer to spend the money I actually have. But as a reckless youngster I got into some debt that I'm repaying and so I'm using the rating as a guide that I'm heading back up again.

I was just curious if me taking a small loan was in fact helping myself or making matters worse.

National_Debtline

I forgot to add to the previous post:


Any sort of short-term credit, even if it's not marketed as a "payday loan" per se, risks making you less attractive to mainstream lenders. What those lenders see is someone who has had to borrow £20 to make ends meet, which suggests to them that that person would struggle to repay larger commitments. Whether their perception is fair or not doesn't matter, ultimately.


Dennis
@natdebtline

NotNormal

National_Debtline wrote: »

I forgot to add to the previous post:


Any sort of short-term credit, even if it's not marketed as a "payday loan" per se, risks making you less attractive to mainstream lenders. What those lenders see is someone who has had to borrow £20 to make ends meet, which suggest to them that that person would struggle to repay larger commitments. Whether their perception is fair or not doesn't matter, ultimately.


Dennis
@natdebtline

Thank you, that's all I was looking for
I previously had an emergency fund, which I'm now rebuilding and just didn't know whether to feel guilty about that loan or not. So pretty much don't feel guilty but absolutely only do it if there is no other choice?