Just taken out a credit card and credit score went down?

Ben8282

thomas812 wrote: »

I was thought to believe that a lot of financial situations depended on your credit score Incorrect they depend on the information contained in your credit files and how good you are with money, hence I got a credit card to show that I can borrow money and pay it back. Surely repaying your PCP is already showing that?
I didn't realize I should wait for the statement, I just paid it early because I could. Now that I know that I will wait for the statement next time, thanks! Not relevent as it is too early for anything regarding this card to have yet been reported and therefore this action and the drop in your credit score are not connected



So my "credit" score before was essentially nothing as they had no way to figure out how reliable I am and now that I have a credit card, they can now actually keep track of my spending and reliability/trust? Interesting.Yes they did because you are repaying your PCP loan for the expensive car you bought earlier this year as per your previous posts



People around me told me to start building up a good reputation/score whilst I am young, so I took out a CC in the idea to boost it and pay it back in FULL every month. I will setup a d/d and hopefully that'll sort things out. Good advice from these people

I am on the electoral roll and am very good at paying my bills on time (never missed one)



Brilliant reply, thank you!

That is exactly what I want to use my credit card for, and now that you said when you take out a credit card it automatically goes down and is normal behavior makes me feel better.
It doesn't automatically go down for everybody. It depends how good your credit files were to begin with, how often you take out new credit, how many hard searches and so on. Credit scores of those in the lower bands tend to fluctuate more than the scores of those in the higher bands, presumably as those providing the score realise that there is little point in trying to persuade somebody with excellent established credit history to take out a recommended credit score building product.

thomas812 wrote: »

Hey all,

I just took out my first credit card 2 weeks ago from Barcleys. I used it for £160 of stuff and paid it off instantly. However I just got my new credit report and my score went down 32 points..

I am young however have never missed a bill, and I thought responsible usage of a credit card would boost my score, but it hasn't?
I didn't take out a credit card because I wanted to pay things with it, I could easily put it all on my debit but I wanted one purely to boost my Score slowly.

Any reasons for this? I don't understand..


Thanks.

Interesting that your credit score was good enough earlier this year for you to buy an expensive car on PCP. Did the score not drop after you took out this PCP debt? Obtaining an expensive car at a young age on PCP is much more likely to damage your ability to obtain credit than a single hard search for credit card.
As the card was only obtained 2 weeks ago, nothing should yet be reported with regards to your conduct of the account as the payment due date of your first statement cannot possibly have yet been reached.

thomas812

yksi wrote: »

You'll hear around here all the time that the score "means nothing". It's not quite true... you will clearly see that it reacts to new things appearing on your credit history, but it is only an indicator for you. The credit agencies know that humans like pretty numbers, and get stressed when they drop and get excited when they rise. That number is designed to make you think that if you pay them for a special service they can help you with your credit history.

That part is balderdash. Feel free to keep an eye on the number if it makes you feel better, but it's much more effective to be aware of how certain behaviour affects the way lenders see you. If the number drops slightly, ignore it. If it falls dramatically, find out why (as you have done here).

Your big aims right now are going well. Use the card every month, hopefully under a quarter of your limit, wait until the statement comes before you pay it off. The card issuer reports on your report each month and it will show what your balance was, what you repaid, and the fact you're in good standing with them (green tick). When they offer you a limit increase, accept it (but there's no need to spend more).

Watch your applications for credit (including finance for anything, anything buy-now-pay-later, anything interest-free, and stuff like mobile or internet contracts, and pay-by-the-month insurance), if you apply for anything at all that says it will do a hard credit check, stop and think first, see if you can use a "comparison site" instead as it will only pop one search onto your files, not one for every lender. One or two applications at once are fine. Five in a row and other lenders will think you're in money desperation. Either way, they'll eventually fade off your history and matter less as time goes by. Nothing is ever the end of the world on a credit history!

Brilliant reply, makes things so much clearer! Thank you!

Ben8282 wrote: »

Interesting that your credit score was good enough earlier this year for you to buy an expensive car on PCP. Did the score not drop after you took out this PCP debt? Obtaining an expensive car at a young age on PCP is much more likely to damage your ability to obtain credit than a single hard search for credit card.
As the card was only obtained 2 weeks ago, nothing should yet be reported with regards to your conduct of the account as the payment due date of your first statement cannot possibly have yet been reached.

I believe the PCP did not effect my score dramatically, I was less aware of my score 8 months ago. But have been paying the PCP everymonth and intend to keep it that way.
But thanks for the reply again

I guess I will just have to see what happens.

maxximus75

Ben8282 wrote: »

Interesting that your credit score was good enough earlier this year for you to buy an expensive car on PCP. Did the score not drop after you took out this PCP debt? Obtaining an expensive car at a young age on PCP is much more likely to damage your ability to obtain credit than a single hard search for credit card.
As the card was only obtained 2 weeks ago, nothing should yet be reported with regards to your conduct of the account as the payment due date of your first statement cannot possibly have yet been reached.

The search would be recorded hence the drop in "score".

boo_star

thomas812 wrote: »

Brilliant reply, makes things so much clearer! Thank you!



I believe the PCP did not effect my score dramatically, I was less aware of my score 8 months ago. But have been paying the PCP everymonth and intend to keep it that way.
But thanks for the reply again

I guess I will just have to see what happens.

Sadly it's just telling you what you want to hear.

The CRAs will bump up your score, or usually ding it, based on criteria that lenders don't really care about.

No lender will give a fig about you opening a new current account, or closing one. The CRAs, however, do for some inexplicable reason.

They also have a habit of giving "untouchables" high credit scores for again, inexplicable reasons.

Given their inability to score people in a fashion that even approaches how a mainstream lender would score anyone their scores should be ignored. They simply can't be trusted.

Thrugelmir

thomas812 wrote: »

I was thought to believe that a lot of financial situations depended on your credit score and how good you are with money, hence I got a credit card to show that I can borrow money and pay it back.

You've applied for and been accepted for a line of credit. You've no history as to how well this account will be administered. Credit history is built over the longer term i.e. years as opposed to minutes.

phillw

boo_star wrote: »

The CRAs will bump up your score, or usually ding it, based on criteria that lenders don't really care about.

Maybe, but in this case I would say some lenders would care about it.

The anecdotal, "friend of a friend who heard about someone bankrupt with a perfect credit score" not with standing. Credit scores are a rough indication but can't give any certainty that any particular lender will actually lend you any money today, because they each have wildly different risk profiles that vary over time for business reasons (they may find themselves over insured for bad debts for example). The only way to find out, would be to apply. But that will both hurt your credit score and very likely your ability to obtain credit.

My score on MSE CC is only classed as fair because of too many credit applications and poor account stability because I keep switching, I've got 6 searches in the last year which resulted in 3 accounts being opened & I do switch accounts regularly. That will probably spook some companies, but I don't particularly care. However if I were looking to get a huge mortgage then I'd probably not be so reckless with searches.