Soon to be turning 18

GethinPreston

Hi,

I am soon to be turning 18, and want to start straight away on building my credit for the future. I am not going to be one of these people who use they're credit card willy nilly for just anything - just to put that out there.

I was just wondering how long it would take to build my credit from day one, and how long it would be before I could maybe get a low/0% interest card or a loan for when I decide to get a car. I have already signed for the electoral roll, as I've heard this is a good thing to boost your score.

If anyone could shed some light on this, that would be amazing.
Thanks in advance.

sourcrates

Hi GethinPreston,


Some advice for you.....ignore the score, when did you last see anyone get a loan or credit card, from a credit reference agency ?

They act as brokers, not lenders.

Electoral role is good, maybe get a sim only contract, and in time upgrade it to a normal phone contract, why do you automatically choose to borrow money for a car, instead of saving up for one ?

Credit cards and loans can have their uses, if used correctly, but i would urge caution here, unfortunately, despite your best intentions, things can very quickly get out of hand.

There are many ways to build credit history without the need to borrow money you don`t need, and certainly at your age you do not want or need, the burden of debt weighing on your shoulders.

Ilona

Hi Gethin. This is my advice from an oldie. You will probably think I am old duffer, but you should get all ideas out of your head about borrowing and loans. Even with good intentions there is a good chance it will all go downhill when life throws you some curved balls. Just because everybody else seems to be running around in flash cars, it doesn't mean you have to. They are probably up to their eyeballs in debt trying to pay it off.

Can I ask, how much you are saving at the moment? What is your income? Do you have any money left over at the end of the month/week? You are young, do not throw yourself into the snake pit of borrowing, keep saving for the things you need to buy, not the things you want. The want's come later.

As said above, the credit score is just a number, it's your history that is important. Borrowing money is a sign that you are not managing your finances very well. By all means get on the electoral roll, when you get a card pay it off every month. Missed payments gives you a black mark. Pay all your bills on time.

What did I do when I bought my first car? I saved up some cash, and bought an old beat up Bedford Viva van, because van's were cheaper than cars. After a while, more saving, changed it for a bit better one, and eventually got a second hand car. The same pattern has been going on for years, every time I buy a car I start saving for the next one, after three years I have enough for an upgrade. Result....I have never been in debt, never had a loan, never had an overdraft, and own my house outright.

Please heed the words of this oldie. Sorry I don't mean to lecture, I hate to see any young person tie themselves up in debt. When I was 18 I left home, got a flat in Blackpool, and had the time of my life. I never missed my rent, never spent more than I earned. Please start putting money aside for your first car. Good luck.

ilona

PS. How is your Ebay business doing, started three years ago?

GethinPreston

@sourcrates

I fully understand the down sides to credit cards, and how they can misused - I've seen many people get into heavy debt because of them, and definitely not be one of those people.

The main reason I want to get ahead of it now, is because I don't want to worry about it in years to come, when I go to take out a mortgage.

It was just out of curiosity, as most of my savings aren't in instant access accounts and it would be handy to have a low interest emergency card. I'm not looking to use a card for things that aren't essential. Obviously to build my credit, I would only be using it for day-to-day things that I would usually buy, and then pay the balance in full each month.

As for getting a car, it was just an example. I have the money there if I wanted to purchase one, but was just wondering how long it would take to build credit necessary for that sort of thing.

Many Thanks for your reply.

eskbanker

https://www.moneysavingexpert.com/loans/credit-rating-credit-score/ has 27 tips on how to build/improve your credit history (as above don't obsess about a 'score' generated by credit rating agencies that isn't seen by lenders).

GethinPreston

@Ilona

Hi,

Thank you very much for the reply and advice.
I'm quite lucky that I'm still living at home at the moment, so my outgoings are very little. Every pay I put £500 into a long term savings account, and at the end of the month I'm usually left with £200-300 which I put into instant access savings.

It's not a case that I want to or need to borrow. I just want to get prepared ready for the future.

Ideally after I've built my credit file, I'd just want a card for emergencies or to make big purchases on for the added protection or cashback/reward schemes.

eBay businesses was going well, but with spending so much time at work I couldn't manage to do both.

Gethin

Ilona

Hi Gethin. Thank you for your reply. Well done for saving. You only need to concentrate on paying your way for everything you need, use a card by all means, pay it off every month. Just build up a rock solid profile to show you can handle your money sensibly. No missed payments, and living within your means.

ilona

DCFC79

You don't need to get a credit card as soon as you turn 18, just running your bank account really well is enough, keeping up to date with paying your phone bill, car insurance etc.

Get a CC in say 3 or 4 years time.