Credit Score Tips for New Young Professional

Phil579

Hi,

I am a 22 year old graduate with a new fairly well paid full time job starting in september 2017. Within the next 5 years or so I would like to be in the position to get a mortgage for a house and want to get off on the right foot with my credit score.

To all more experienced members please advise me as you would advise your own 22 year old self on gaining a good credit score. As an example, I have been looking at getting myself signed up onto CreditLadder for my privately rented house, is this a good idea?

Many thanks,

Phill

Dobbibill

A couple of things to do.

Make sure you are on the Electoral Roll.
Do you have a mobile phone contract?
Do you have a credit card?
Spend a little/pay off in full every month on time.
Don't use an Overdraft.

Check all 3 CRAs and see what information they hold - make sure every detail is accurate, even as far as the formatting of your address.
This can be done via MSE Credit Club, Clearscore and Noddle. These are free - do not pay for this service.

Do not use CreditLadder - you don't need to pay for a service that will be of little benefit in the long term.

Ignore the score each CRA gives you - it's their perception of you, which means nothing to a mortgage lender.

Save in a HTB/L ISA for your mortgage.

Time will do the rest.

DCFC79

Its all about managing your money well, you get paid say £500, £300 are for bills etc and the rest is for yourself so dont spend more than the £200 (these figures are an example) eg go overdrawn. Spend wisely, set yourself an amount to save each month. Think of it like a job interview or application even, your credit report is your cv and you have to make it look presentable so no negatives.

Oh forgot to say pay into a pension.

Phil579

I am on the electoral roll,
I don't have a phone contract - bought it outright second hand
I don't have a credit card - should I get one?
I have and use my free graduate overdraft with LLoyds

The rent payment credit score builder part of CreditLadder is free as far as I am aware, and advised as one of the credit score building tips on MSE - I am still sceptical though.

Can't get a HTB/L ISA because I put some savings into a house my mum bought ( thinking it was a good idea with good interest at the time )

Quick Question -> What are the 3 CRAs?

I have a pension though work which I pay 8% and hey pay 12% should I also get a private one?

cjmillsnun

Get a sim only contract. They can be had for cheaper than a PAYG and you can keep your current phone.
A credit card is a good idea. Perhaps see what Lloyds can do for you in that regard (they know you). Always use to no more than you can afford or half the credit limit (whichever is smaller) and pay off IN FULL every month (that way you don't pay any interest!).
Don't worry about the O/D for now as it is standard for a graduate to have an overdraft. Bear in mind the limit will reduce over time or they will start charging interest. One of the two. Get it paid off as fast as you can afford to.

The work pension sounds like it is good. An employers contribution of 12% is very good.

The three CRAs (credit rating agencies) are Experian, Equifax and Callcredit. They all have a paid for service. But there are free ways to get a report every 30 days from each.

For Experian, join MSE's credit club... http://www.moneysavingexpert.com/creditclub
For Equifax, it's Clearscore. https://www.clearscore.com
For Callcredit go to https://www.noddle.co.uk

For all of them ignore the score. It is how the CRAs think that lenders might see you. However lenders all have their own criteria and they don't see the scores the CRAs give you.

What lenders do see is the information on the credit files, and these are what you should concentrate on. Make sure it is accurate (no accounts you don't know about) and that your conduct is good - you don't use too much of your credit (under 50% if possible) and all payments are on time. Keep going like that for a couple of years and you should be able to get a mortgage.

One thing to note, is that lenders may report to only one, two or all the CRAs, so there will be differences. Don't worry unless there are things you don't recognise.

Dobbibill

Phil579 wrote: »

I am on the electoral roll, this is good and demonstrates stability
I don't have a phone contract - bought it outright second hand if you can get a SIM only contract for equal or less money than the PAYG costs you then go for it. You don't need to buy a handset for them to report to the CRAs.
I don't have a credit card - should I get one?Paying in full every month will report to the CRAs. Ring Lloyds - a call won't put a footprint on your CR. If not try the *eligibility checker.

I have and use my free graduate overdraft with LLoyds
Try to avoid using it. This will too be reported to the CRA - you may appear like you can't live within your means.

The rent payment credit score builder part of CreditLadder is free as far as I am aware, and advised as one of the credit score building tips on MSE - I am still sceptical though.
I have a quick look and it says about 'admin' and 'membership' fees. Someone else may know more - for now,
leave it.

Can't get a HTB/L ISA because I put some savings into a house my mum bought ( thinking it was a good idea with good interest at the time )
Save regularly to build up a good deposit.

Quick Question -> What are the 3 CRAs?
Answered above by cjmillsnun with the links.

I have a pension though work which I pay 8% and hey pay 12% should I also get a private one?

Answers in Red to all your points.

* eligibility checker here for you.