Origin Vanquis Credit Card + Turning 18 Advice

T-G-C

Hi all,

I turned 18 in July and swiftly began the adulthood role of ensuring my financial affairs are stable and your credit report is good for the future.

Obviously having no previous credit history, lenders are not willing to invest in the risk involved of having no past records regarding handling of credit.

My Experian score started at 837 which is Fair and Equifax marked me in the 300 range which is Poor (assuming they both have different scoring methods). I have been on the electoral role for months prior to being 18 so identification checks and obtaining a first report was simple.

Obviously apart from their default scores I have no past histories and therefore have the equivalent trustworthiness to companies as someone with a bad past of credit handling.

Generally, I am a responsible person and don't intend to run-up debts the moment I come of age. I am merely thinking about the future, as having a blank credit report at 25 for example would severe any chance of a good mortgage or first proper credit with low interest etc.

I accepted the fact that I wasn't going to bag a good credit card or lending agreement to kick-off a good history of repayments, so I applied for Origin Vanquis Credit Card and although they didn't give me an immediate decision, I received a phone call the next day asking me some questions about my income and regarding a Direct Debit setup - then I was approved. My credit score did decrease when applying because of the search but it's worthwhile when all those green ticks start to appear in the coming months.

I know that my parents will be scolded by the thought of me having a credit card, due to their bad reputation, but like I said, I am one to research things in detail and so know about the risk involved and how long-term borrowing or even borrowing for that matter is out of the question.

Here's what I intend to use it for... I spend £20 in Sainsburys (for example), I have that £20 in my bank account but decide to use the credit card instead of my debit card, I then repeat that throughout the month but keep that real money tucked away so I am not actually borrowing in the literal sense. Then at the end of the statement period, I can use the real money that I kept for each purchase I made and then pay it to my Origin Card which will repay the credit card, making them put the good mark on my credit file.

The interest rate for my card is 59.9% APR, so you can see why i am not borrowing in the literal sense :j

Do you guys think this is a sensible and responsible use of a credit card to build up a good credit file over the coming months? If you was a parent, would you protest about your son doing this to build their future creditworthiness?

And as a question for those experienced with credit cards... as long as I pay back to them EXACTLY what I spent on my credit card (as I described above) on the due date each month on time, will I avoid all interest completely or do they charge interest from the moment you make the purchase? I checked the terms, and I've managed to see they give 56 days interest free on purchases "where you have paid off two or more
consecutive current statement balances in full and on time." so would that mean I am charged interest for purchases immediately and throughout the month or is that not how credit cards work? I won't be using it unless I only have to pay back what I spent on it. That's about the only thing I am not 100% sure of now :rotfl:

Advice, past experiences and opinions would be brilliant.

Thanks everyone!

[Deleted User]

Put regular spend on the card.
Clear in full each month by statement date.
No interest to be paid.
Ignore your credit scores.
Don't worry about your parents.

T-G-C

Deleted_User wrote: »

Put regular spend on the card.
Clear in full each month by statement date.
No interest to be paid.
Ignore your credit scores.
Don't worry about your parents.

Well put, can't argue with that! Thanks mate

MallyGirl

T-G-C wrote: »

And as a question for those experienced with credit cards... as long as I pay back to them EXACTLY what I spent on my credit card (as I described above) on the due date each month on time, will I avoid all interest completely or do they charge interest from the moment you make the purchase?

Pay back exactly what appears on the statement on/by the due date. No need to pay for transactions that haven't appeared on there yet. Keep that money somewhere earning (admittedly tiny amounts of) interest until next month's statement needs paying.
Set up a 'pay in full' direct debit so that you can't get it wrong.
Credit cards can be a valuable tool in adult life.

Candyapple

When you receive your credit card, call them up and ask to set up a direct debit, however make sure you ask them to set it up to take the FULL BALANCE each month and not the minimum. The reason being that it's easy to forget to make a payment or what would happen if you were ill etc. so having a direct debit in place eliminates the possibility of ever missing a payment.

Make sure you are on the electoral roll.

Make sure that your bank account appears on all 3 files.

If you don't have one already, take out a SIM only contract. You can get them as cheap as £5 per month and this will also be reported back to the CRAs (credit reference agencies).

After a year, try applying for more mainstream credit as the job of the Vanquis card will be done (showing that you can handle credit responsibly) and also that way you can use whatever new card to work for you (as in say a 0% purchases card, or one which offers you rewards or cashback for spending).

The free versions to check your credit files are below:
Experian: https://www.moneysavingexpert.com/creditclub
Equifax: https://www.clearscore.com
Call Credit: https://www.noddle.co.uk

Aside from that, ignore the scores the CRAs give you as they are a marketing gimmick and concentrate on the correct info being on your files.

Don't try and make loads of applications in a short space of time as lenders will think you are desperate and also don't forget that to build your credit history takes time.

You sound wise for an 18 year old, good luck and remember to post back here if you have any further questions

[Deleted User]

Please don't obsess about your credit score it is a meaningless number plucked out of thin air to try and flog you credit reports etc.
Personally Id be more inclined to take out a cheap contract mobile deal to build up some credit background, and they won't charge you 59.9% which is just taking the pee.

T-G-C

Candyapple wrote: »

When you receive your credit card, call them up and ask to set up a direct debit, however make sure you ask them to set it up to take the FULL BALANCE each month and not the minimum. The reason being that it's easy to forget to make a payment or what would happen if you were ill etc. so having a direct debit in place eliminates the possibility of ever missing a payment.

Make sure you are on the electoral roll.

Make sure that your bank account appears on all 3 files.

If you don't have one already, take out a SIM only contract. You can get them as cheap as £5 per month and this will also be reported back to the CRAs (credit reference agencies).

After a year, try applying for more mainstream credit as the job of the Vanquis card will be done (showing that you can handle credit responsibly) and also that way you can use whatever new card to work for you (as in say a 0% purchases card, or one which offers you rewards or cashback for spending).

Aside from that, ignore the scores the CRAs give you as they are a marketing gimmick and concentrate on the correct info being on your files.

Don't try and make loads of applications in a short space of time as lenders will think you are desperate and also don't forget that to build your credit history takes time.

You sound wise for an 18 year old, good luck and remember to post back here if you have any further questions

Hi there, thanks for the helpful advice!

In terms of the Direct Debit, the man on the phone cornered me into setting one up upon approval and I chose the Full Payment option, as I know that minimum payment is a no-go for what I intend to use it for. As I sad, I won't actually be borrowing from them literally but merely using it instead of my debit card for making purchases. The real money from each transaction will be stored away until the due date, so there's no risk to not being able to pay it back 100%.

I registered with Equifax and Experian to ensure that I am receiving data from both of the biggest reference agencies. I am under the impression that both store some records that don't match the other - an example is the application I made for my credit card, Experian has it on file that the hard search took place but Equifax do not. Will they both share that data to match eventually or do searches only show on the agency that was used by the lending company?

I've taken on board that the scoring system is not an accurate reflection of anything materialistic. I am on the electoral register but have been for less than 3 years, so this is seen by Equifax as an amber factor on my credit file.

I did apply originally to PayPal Credit - they declined me without putting any soft or hard search on my credit file luckily, so I assume the questionnaire was enough to refuse without a search. I only have one hard search, which is the credit card I was approved for, so that isn't too bad especially since I wasn't refused so I don't have to make anymore applications now. I accepted the fact that I'd be declined for any good card, so rather than applying to loads and ruining my score, I just headed straight for Vanquis as the interest doesn't apply to my intentions of use.

I am probably much more wiser than a lot of people my age regarding this but in this day and age, your credit file is so important and if I follow my parents advice of 'not worrying about as I am only 18' then I'd end up being a 25 year old with no past history and refused for anything like a mortgage, so I feel what I'm doing now in the early stages is the right thing to do.

My mum's been strict on the subject and has told me to stay clear of all things credit (especially since its her address I am under) as I am too young to be getting involved in that area apparently, so I'm hoping the bollocking won't be too extreme when the credit card arrives in the post but at-least I am a clued-on young adult and won't be going on a spending spree anytime soon - only spend what you can already afford in your real bank balance is my motto for now :rotfl:

SuperHan

Provided that you stick to paying it off in full each month, I think you're doing the right thing.


I got a student credit card and overdraft at 18, used both of those, paid them off as required and paid no interest. Got my mortgage at 22 with no difficulty at all (and with a lender that is apparently not usually that lenient with first time buyers).


I now still put pretty much all my spend on credit card (not least because I get reward points for doing so) and move the money across into a separate account on my online banking each week so I have the money to transfer over to pay off in full each month.

MallyGirl

T-G-C wrote: »

My mum's been strict on the subject and has told me to stay clear of all things credit (especially since its her address I am under)

The fact that you live with her is irrelevant. Your credit history is yours, not tied to the address, and so will not affect her.

I had a credit card at 18, a mortgage at 24, paid it off at 38, bought a bigger house and have nearly cleared the mortgage again at 50. Now focusing on pension so that I can retire early
You cannot start too early when thinking about finances and the future. My DD is 15 and has been actively using her bank account/Debit card since 11. She will get a credit card at 18 with good education on how to use it.

T-G-C

MallyGirl wrote: »

The fact that you live with her is irrelevant. Your credit history is yours, not tied to the address, and so will not affect her.

I had a credit card at 18, a mortgage at 24, paid it off at 38, bought a bigger house and have nearly cleared the mortgage again at 50. Now focusing on pension so that I can retire early
You cannot start too early when thinking about finances and the future. My DD is 15 and has been actively using her bank account/Debit card since 11. She will get a credit card at 18 with good education on how to use it.

It's more of a mixture of "my address, my rules" and concerns that I'd make the same mistakes she did when it came to to credit more than anything else to be honest. I am a defiant person when I know I am doing the right thing, so I'll take the bollocking and get on with it. In the rare event I am forced to cancel the card, I'll have to wait until I move out to start building but I am sure I'd be able to convince her before anything drastic is decided :rotfl:

MallyGirl

T-G-C wrote: »

It's more of a mixture of "my address, my rules"

Ah well - that is the price you pay for cheap accommodation - enjoy it while it lasts

Just follow the guidance above and all will be well - just because she made mistakes doesn't mean that you will so show this by being squeaky clean with your credit behaviour.