Various questions about improving credit

FatCat17

Hi there,

I am aiming to improve my credit as I would like to move out within the next year or so (most likely renting) and don’t want my debts to affect my chances of being able to move out/buy a house with my partner in the next few years.

Due to a few years of silly mistakes, I have a total credit limit of £7000 across various online catalogues, which had 98% utilisation this time last year. I have decreased this to 82% over the course of the year. I have been paying the minimum amounts + an extra £200 a month. I am also saving £400-£500 a month for my inevitable move. My first question is, would it be worth increasing the amount I throw at my debts even if this means I will save less?

My second question is with regards to what to do once my accounts start hitting £0 (still some way off). I understand that closing my accounts will reduce the amount of available credit (which as far as I know can be a positive as lenders know you don’t have as much credit that you could use at any moment), but I also know that my % utilisation would shoot up. I’m also concerned that, as I know I will have absolutely no temptation to use these catalogues again, I’m not sure whether this outweighs the positives of keeping them open, as I won’t actually be using the credit if that makes sense.

Also, another slightly different question I have is regarding my phone contract. I have had this for 2 years (£40 a month) and it is coming to an end next month. This is one of the only things on my credit file that I use and pay off in full each month, which is obviously a positive. There’s nothing wrong with my phone and I’m thinking of paying monthly to get more data for less money than I am now, but would no longer having this credit be harmful?

On the note of using credit and paying it off in full each month - I also wondered if it would be worth getting a credit card to use for fuel and paying it off each month, or does this not make sense/is it pointless with regards to my current ~£5k debt?

I appreciate that’s a bit of a mix of questions, but any advice would be appreciated, thanks

[Deleted User]

Yes you should work on clearing the debts especially if they aren’t interest free.

If you have no intention of using the catalogue accounts again, or if the temptation is too strong, then yes close them.

If you change your phone contract to a SIM-only (not PAYG) then it will still be reported.

Use an eligibility checker to see which credit cards you could be eligible for.
And then yes, use for normal monthly expenses and pay in full each month after the statement.

xlnc99

Leave the catalouge account on your credit file even if you dont use it. The will report green every month and it looks better and will improve your credit rating for lenders then it being closed down especially as u dont have many accounts to report on

Pay as you go dont report monthly only sim only or phone contracts. This helps with your credit reporting too so get a phone contract is good for you

boo_star

xlnc99 wrote: »

Leave the catalouge account on your credit file even if you dont use it. The will report green every month and it looks better and will improve your credit rating for lenders then it being closed down especially as u dont have many accounts to report on

No, it won't. It'll report as being unused which is neither a positive nor a negative.

Pay as you go dont report monthly only sim only or phone contracts. This helps with your credit reporting too so get a phone contract is good for you

Phone contracts (and utilities in general) have a very minor effect on your creditworthiness. If the OP is barely spending anything on PAYG there is no point spending money just to make themselves look better to lenders.

xlnc99

incorrect as usual,

it will be reported as unused. i have 5 cat accounts 1 used and 4 unused. all 5 being reported every month

phone contracts have a positive effect on your creditworthy and report if payments are made on time

boo_star

xlnc99 wrote: »

incorrect as usual,

it will be reported as unused. i have 5 cat accounts 1 used and 4 unused. all 5 being reported every month

That's what I said.

phone contracts have a positive effect on your creditworthy and report if payments are made on time

I didn't say they didn't. I said the effect was minimal and not worth paying more for if a contract would be more than the PAYG cost.

[Deleted User]

xlnc99 wrote: »

incorrect as usual,

it will be reported as unused. i have 5 cat accounts 1 used and 4 unused. all 5 being reported every month

phone contracts have a positive effect on your creditworthy and report if payments are made on time

Please stop.
Thai stupidity isn’t very becoming of you.