How will this affect my credit score?

EmRayMarRhys

I hope I've posted this on the right board.... I'm not strictly a newbie, I read more than I post!

During my first marriage (which ended in divorce seven years ago now) I ended up in a hell of a lot of debt which led to 6 or 7 CCJ's. Once the marital home was sold all these debts were paid off. I knew my credit rating was through the floor so I didn't bother even trying to apply for credit.

Six or seven months ago I wanted to order something off the Next website, it put me through to a screen that basically said I had to apply for an account, now I know they run something where it is an account but you still pay up front so I went through the process. I was really shocked when it came back that I had been accepted for a credit account with a limit of £300.

I was glad of the chance to try to rebuild my rating at this point, and that combined with the fact the interest is something silly like 29% meant that I have paid the balance in full every single month without fail. They have just this month increased my credit available to £900 - which I won't even dream of using!

After this credit success I applied for a mobile phone contract with o2 as this would save money on the amount I was topping up on PAYG. I was accepted for this with no problems whatsoever, and have not missed a payment. That's been running five months now without a hitch.

I thought this was great and I would try for a Capital One credit card to further get my rating up. I was accepted on an interest rate of 37.5% with a £200 limit, again I have paid in full every month - the third statement is due through next week and will again be paid in full (mainly because I don't want to pay THAT amount of interest!)

I believe that the best thing to do is keep some money on the card/account? However with this interest rate I'm reluctant.....

I applied for an argos card this week just gone, I could actually afford to pay for the item I wanted up front, but again I wanted to help my credit rating. Argos card is 29%, and I wanted the six month interest free period. I have however been turned down for this card.

Will this rejection completely screw my rating again? I'm a complete wimp but I'm doing an ostrich with head in sand thing about contacting Experian - last time I did this was in CCJ's ville. I know it's pathetic, but I also know my ONLY debt is to the bank, which is my overdraft. We do live in the overdraft but it's the next thing I want to aim to pay off.

How should I proceed? What is the best way to help my credit rating from here?

GeorgeUK

Have a look at your credit history (free) at https://www.experian.com
Are there still CCJ's there?
I believe they are supposed to be taken off 6 years after the date they start.

It looks like you are applting for alot of credit, so that may be why you were knocked back, but also if you have more than 3 credit checks by comapnies within about 6 months it can start to affect your credit score.
I wouldn't bother trying to find out what your credit score is as different places use different methods to do the calculations.

Do you have alot of credit in comparison to your income?

There is a thread on here about improving your credit rating
http://forums.moneysavingexpert.com/showthread.html?t=364049

Don't try to get any more credit for a while. Just make sure you make the payments on time (as long as they are the min you won't get a mark against your name, but better for you to pay it all off each month).

Keep a note of when any CCJ's if they are still on your history are to be removed. This will improve your rating when they are gone. Companies look at your last 6 months history and see if you have made late payments and if any other companies have recently been looking at your file. If alot of companies look at your file in a short period, it may suggest that your are in need of credit and therefore a higher risk. I think that may be why they rejected you.

CLAPTON

Why do you want a better credit rating... so you can obtain more credit and pay lots of interest to banks rather than spend it on yourself/family?

Now obviously a good credit rating for the convenience of a CC as a budget aid, consumer protection, internet shopping and contract phones etc is very convenient.

But you can get a good credit record simply by using one or two CC regularly and paying them off in full each month hence avoiding any interest charges.

You dont need more and more, in fact as you get more potential creditors will be concerned that you have too much credit available even if you are not using it.

A rejection doesn't show on your report, it merely shows you have applied for credit. However too many applications make it look as if you are desperate for credit and will adversly affect your rating.. so stop applying for anything for 6-12 months.

In any event you should obtain copies of your credit records so you can see whats on them now .. maybe the CCJs have dropped off.

Rather than worry about your rating you should look for ways of increasing your income or reducing your spending and get rid of the overdraw.

EmRayMarRhys

The reason I am trying to buoy my rating up is because before it was so far through the floor and I want to maintain a good rating for the next few years.... I know that not having ANY credit can also count against you.

Once I have paid off my overdraft (approx 3 years I reckon) I want to be able to buy a decent second hand seven seater car on finance (we currently run bangers and as you can imagine it's false economy with the repair costs associated). So I don't need the credit now (my cc, catalogue and phone are all completely up to date and will remain so).

I'll give applications a rest for the forseeable then, work on the overdraft and keep my current borrowing paid up (absolutely no problem). Thanks for the help, will definitely give that thread a read in a bit.

I'm sure you can appreciate that I don't really want to keep money on the cc because of the interest rate!

CLAPTON

No I dont really see that running old bangers is a false economy. The costs of maintenance has to be compared with the capital cost of the 'decent 7 seater' plus all the interest payable plus the servicing etc.
I would have thought that with a history of CCJs etc your first priority would be to avoid debt (except mortgage) at all costs and also to avoid all that interest.