Advice needed on my idea

superstar_2

david78 wrote: »

You don't have a credit score. Your credit "record" will only improve if you do this successfully. Basically, the more you demonstrate you can handle debt, the better your record.

Thanks Dave! Iam really new to this field. So, can you tell me the diff btw cerdit score vs credit record?

Why is that my credit record will improve in this scenario? I googled, and found an article that if i pay off my CC in full - my credit score goes down!?

nrsql

There's no such thing as a credit score. Companies will have algorithms to allocte marks to customers which will give an indication of their profitability and risk.
If you always pay off credit cards and never go into debt you might be low risk but also not very profiable for the company. Also suddenly taking on debt might be an indication of a change in your circumstances. Might be treated differently for a loan, mortgage or credit card and also might depend on what the company is aiming for at that time.
Worst is to not have a credit card and never any debt as then you don't get any indicators.

Taking an overdraft, managing it, keeping within it's limits would probably be considered a positive thing. It will impact your outstanding debt so might impact the ability to take on other debt (credit card limits etc.) but that doesn't sound like an issue.

superstar_2

nrsql wrote: »

There's no such thing as a credit score. Companies will have algorithms to allocte marks to customers which will give an indication of their profitability and risk.
If you always pay off credit cards and never go into debt you might be low risk but also not very profiable for the company. Also suddenly taking on debt might be an indication of a change in your circumstances. Might be treated differently for a loan, mortgage or credit card and also might depend on what the company is aiming for at that time.
Worst is to not have a credit card and never any debt as then you don't get any indicators.

Taking an overdraft, managing it, keeping within it's limits would probably be considered a positive thing. It will impact your outstanding debt so might impact the ability to take on other debt (credit card limits etc.) but that doesn't sound like an issue.

I have a credit card and have been paying in full - hmm, gonna start paying minimum now then!

Seems like if im in overdraft but manage them well such that never incur any fine, then i will be fine and better off! ??

superstar_2

I went to my branch today and they said they can only authorise [SIZE=-1]£1250 in branch but i can request up to [/SIZE][SIZE=-1]£2750 and that will be via application. So, i took the [/SIZE][SIZE=-1]£1250 and she did the online application for me, i said i wanted [/SIZE][SIZE=-1]£2500. She said i should know in about a week on what happens with that. At least, i have got [/SIZE][SIZE=-1]£1250 to *invest* now.
[/SIZE]

caveman38

My two boys are both with the HSBC and when they were at Uni both had interest free overdrafts. But they were tiered:
Year one - up to £1,000
Year two - up to £1,250.
Year three - up to £1,500.
Year four - up to £1,750.
Year five - up to £2,000
and for 1 -2 years after graduation.
Check that you are not on a similar overdraft scheme.

superstar_2

caveman38 wrote: »

My two boys are both with the HSBC and when they were at Uni both had interest free overdrafts. But they were tiered:
Year one - up to £1,000
Year two - up to £1,250.
Year three - up to £1,500.
Year four - up to £1,750.
Year five - up to £2,000
and for 1 -2 years after graduation.
Check that you are not on a similar overdraft scheme.

Thanks! I am with Bank of Scotland and it says that i can get up to £2750 overdraft - interest free for five years+1 year after that.

Are you asking me to check if my overdraft increases every year or ....?

abunchofletters

I attempted a similar thing when I went to uni. About half way through my first year [way back in January 2003] I withdrew my cash and the £1,200 interest-free overdraft from my Natwest student account and plonked it into my sparkly new Egg account which was about 4% credit interest at the time.

About a week later I got a letter from Natwest telling me I had to call them right away. Sod that, I thought, they can call me. The week after I recieved another letter stating how much interest I was going to incur on my overdraft! This prompted me to action. I moved my overdraft money back to the Naz...Natwest account and went into my local branch.

I argued my case to have this impending debit refunded as this was an interest free overdraft etc. They conceded but I gave up this plan. I think I should have argued that the overdraft was mine to do what I wanted with, regardless of taking it all at once etc. etc.

So out of that little of drama I only managed to earn one month's interest. The fact that you have authorisation should play in your favour but my advice would be to take the money out in stages and occasionally pay some money back in [before taking more out...]. Good luck, I hope you do better!

gt94sss2

abunchofletters wrote: »

I think I should have argued that the overdraft was mine to do what I wanted with, regardless of taking it all at once etc. etc.

A bank can withdraw an overdraft whenever it feels like it.

With student accounts this is normally when an account has no activity for a while and you can also say goodbye to your chances of getting an increase in your overdraft to 'next years limit' unless they see some activity in your account..

When I had a student account with HSBC they used to give me the 0% overdraft and give me a piece of paper showing what date the overdraft would be automatically reviewed..

Regards
Sunil

superstar_2

Thanks gt94sss2 & gt94sss2

I am quite busy now, will get more info on here laters!

Primrose

You may not be offered the full amount of your overdraft and whilst the idea is good in principle, earning you a little money, there's always the possibility that you may not be sufficiently organised, or some other financial difficulty may crop up which makes it difficult to deliver your plan. The other aspect is that you become accustomed to having an overdraft which psychologically can slowly get you into a frame of mind where living with continual debt is an acceptable way of life. Also, of course, with the current "credit crunch" a bank's lending profile could suddenly change and you could find yourself having your overdraft withdrawn.