Overdraft - good or bad?

tygar2

Hello All,

I am trying to improve my credit file after some financial trouble in the past. All adverse information (defaults) has fallen off my file and I learned my lessons from the experience.

For the last 6 years, I have had one credit card with a £1300 limit. This is used and paid off in full every month without fail. I used it as a sort of credit builder. I am on the electoral roll and have a new 4-month-old joint mortgage. Besides the mortgage, I have no other debt.

I am signed up to Clear score, Totally Money, Noddle and MSE Credit Club. The general feedback seems to be along the lines of that I increase the amount of credit I have. I know their credit scores are meaningless - it's my file I am looking to get into top shape. I am looking into switching to First Direct for the cashback and have been asked if I want an overdraft - is this a good idea? I do not have any plans to use it - will only take it if it improves my credit file. Is applying for a new credit card or increased limit on my existing one better? Have read mixed things on overdrafts so a bit confused.

All advice is appreciated

Thanks

[Deleted User]

Having an overdraft but not using it, shows you are trusted and not desperate.

I'd also have a minimum of two or three cards.

binaryuniverse

It's definitely worth having the FD overdraft. For a start it's interest free on the first £250. Even if you don't ever plan on using it (but you never know), it's a useful buffer to have, for an emergency.

And yes, having the overdraft on your file, and demonstrating you don't need it will help improve your look to potential creditors.

tygar2

Thanks for your responses, the buffer bit sounds good especially at 0% - will go for it after the account is open.

Should I also get a new credit card or should I wait a few months? Was eyeing the Halifax Clarity for travel abroad. I use a Monzo debit card for that at the moment.

Are your responses as to it being a positive based on any documents/ guidance I can access or is it more of shared knowledge and experience?

[Deleted User]

In my case, it's lender experience.

But most of it is common sense, in terms of how you would assess someone who asked to borrow money from you.