Improve Credit Score - New Strategy?

dmiller13

I'm 26 and beginning to look into mortgages (although it will most definitely be a few years before it gets serious). My score is on the average to low side, so says Noddle.

My question is, do you think it would make a huge improvement to my credit score, say if you were to take out a credit card, put £200 or so on it, and just pay off the minimum, taking the hit on interest, knowing that it's potentially an investment on your credit score?

I generally try to stay out of all debt and overdrafts but I have heard that can be just as damaging for my score. So trying to work out some strategies that won't cost too much but leave me in the best position for borrowing in the future.

Cheers,
Drew

ClioScott

Ignore the score as lenders don't see that, its the data in your credit file that are the important bit.

If you do get a credit card use it for small purchases such as fuel, shopping and pay off in full each month.

[Deleted User]

Never pay interest for a credit history.

Paying the minimum on a £200 balance shows you are penniless and are reliant on credit

Fireflyaway

Using a credit card responsibly does in my experience anyway, improve your score. be mega careful because forgetting to pay on time or using too much of the available credit is definitely a negative on the old file. Do you rent? There is a scheme whereby if your landlord agrees you pay the company, who then pays the landlord, so that paying your rent on time actually builds up your credit worthiness.

[Deleted User]

Fireflyaway wrote: »

Using a credit card responsibly does in my experience anyway, improve your score. be mega careful because forgetting to pay on time or using too much of the available credit is definitely a negative on the old file. Do you rent? There is a scheme whereby if your landlord agrees you pay the company, who then pays the landlord, so that paying your rent on time actually builds up your credit worthiness.

A score which in itself represents nothing

Nasqueron

The "score" is given in an attempt to sell you services to improve said score, sold by the people who control said score. Can you see why the score is pointless?

Credit history is what matters - paying on a CC and paying off in full every month shows you are a responsible borrower, capable of handling finance. Paying off the minimum gives a flag on your account that you aren't managing your credit well (i.e. you can't afford to pay off in full) which is a negative for lenders.

Be on the electoral roll, take out a contract with a mobile phone (even if SIM only), establish a history of borrowing and paying back

Nebulous2

Credit history and the many and varied "scores" that derive from it are an indicator of whether you have behaved responsibly with debt. If you've ever looked at competency-based recruiting they tell you that "past behaviour is the best indicator of future behaviour."

It becomes very silly and pointless to me if you skew your behaviour just to improve a meaningless score. That is especially the case if you spend money on it. That is very much the tail wagging the dog.

Look at the basics as they count, electoral roll, stable employment, pay everything on time. Have credit in your own name, rather than a friend or relatives, monthly mobile phone, credit card used for essentials and paid in full.

Once all the basics are in place there are the less clearcut ones - a bit is good or ok too much is bad ones. 0% interest deals paying minimum, maybe car loans (Controversial on here, but I've been young and car obsessed and it's an itch many people really need to scratch)

Then there are things I think are almost always bad - running in an overdraft, carrying an interest paying balance on a credit card.

Finally there are things that leave a nuclear crater where your credit history used to be- with you in the bottom of the pit having to climb up painfully, then look back to the still smoking hole.... payday loans, regular missed payments, defaults, CCJs.

Fireflyaway

!!! wrote: »

A score which in itself represents nothing

Scores do mean something. I have a low one because my financial behaviour is poor. My husbands is higher as his financial behaviour is better. Scores are not totally made up / fictional / irrelevant no matter how much you want to believe it.

Scores help you see if your behaviour is viewed well or not by lenders. I accept they are not the only factor to look at but if they were totally meaningless they wouldn't exist.

[Deleted User]

So someone who gets made bankrupt with tens or even hundreds of thousands of pounds of debt gets given a 999 score by Experian.

Explain that and how that shows good behaviour?

Lenders don't see the scores.

They're there to keep you coming back and to sell you unneccessary “improvement” products

boo_star

!!! wrote: »

So someone who gets made bankrupt with tens or even hundreds of thousands of pounds of debt gets given a 999 score by Experian.

Explain that and how that shows good behaviour?

Lenders don't see the scores.

They're there to keep you coming back and to sell you unneccessary “improvement” products

This is exactly the example I was going to give.

There are also people with immaculate credit files who get low “scores.”

If you can’t trust that the “score” is accurate, it’s completely useless.