Using catalogues to improve credit history

welly_59

In the last couple of months ive cleared all my outstanding debt (roughly £5k), not a large amount for some but an achievement for me. Mainly due to massively increased disposable income.

Im now in the situation of trying to improve my credit history. I have 5 settled defaults, 3 dropping off in Feb 2019, and the other 2 are only 2 years old unfortunately. Also I have 2 settled CCJ's, both just over 3 years old.

I'm currently ineligible for any credit cards so thats out of the question. I think this is due to some of those defaults being to companies such as Cap1 or Vanquis.

I have though managed to recently open a credit account with JD Williams and Freemans Catalogues. What is the best way to manage these accounts to make my history look better?

Small purchase of £20 a month, paid off in full when the invoice comes in? or spread it over a few months?

I know its screwed until the CCJ's drop off, but he, anything is better than what state it is currently in!

jimbo26

Doesn't matter how much you spend, just manage it well and try not to pay interest (paying interest doesn't affect your history, just something to avoid if you can as it saves you money). Make sure you set up a DD so you never miss a payment as this won't look good to any potential lender.

Try using a pay monthly SIM as this will also report to the CRAs, again making sure a DD is set up to pay it each month.

welly_59

I have a pay monthly SIM, which is being reported to the CRA's so that's one good thing.

I don't intend to spend much on them, as tbh I can buy anything I currently want at a cheaper price with cash elsewhere.

Just curious if they should be treated like a credit card ie small purchase and pay in full when statement comes through or to carry a small balance each month

[Deleted User]

If you carry a balance, you'll tell lenders you're living beyond your means.

welly_59

Fair enough. I'll just buy a t-shirt or something and clear it when the statement comes through

Dettol

Deleted_User wrote: »

If you carry a balance, you'll tell lenders you're living beyond your means.

Can you explain that...so everyone of us with credit cards or anything that carries a balance is showing we are living beyond our means.:eek:

Willing2Learn

I buy a lot of stuff on 3-months interest free credit through Very.co.uk.
I tend to buy things up to £1000 for 3-months interest free. When there is a balance, it does not seem to impact on my ability to successfully apply for other credit.

binaryuniverse

Dettol wrote: »

Can you explain that...so everyone of us with credit cards or anything that carries a balance is showing we are living beyond our means.:eek:

If you have to borrow...

If you have debt that gathers interest, and you haven't paid it off (bar a mortgage), why haven't you paid it off? That's the question lenders will try to ascertain an answer to.
Think of the same scenario at a more local level. If a mate of yours asked to borrow money, and you knew they already owed someone else money, would you not be a little unsure about giving them the cash?

However, debt at promotional rates are viewed far more leniently than debt that gains interest. If they see you have debt at 0%, they know you have no immediate need to pay it off.

Lenders can not see savings. So what you owe others, plus income, is all they have to go on.

A4445

On the other hand some lenders may not give credit to customers that always pay in full as they are unlikely to make any money from them. Credit card companies would unlikely to be in business if everyone paid in full.

binaryuniverse

Lenders have different products that suit different profiles. Possibly stretched across multiple brands.
The ones that pay in full are subsidised by the ones that don't. They also make money from the transaction fees.

The ones that can afford it get the nicest products, which allow them to get richer. The ones that can't get the poor products, that keep them locked in to the the debt trap. Such is the backwards world we live in.

jimbo26

binaryuniverse wrote: »

If you have to borrow...

If you have debt that gathers interest, and you haven't paid it off (bar a mortgage), why haven't you paid it off?

So any borrowing that incurs interest is seen negatively by lenders? Does that include loans, vehicle finance, car insurance etc as well?