WIll this improve my Credit Score?

bp5678

Hey my score isn't bad at all. I'm 25 living with my parents and never taken out any loans. I have a credit card which I don't use much (I really should use it more) and have never missed a payment. I have a few contracts like gym memberships, phone bill etc that's always paid on time too. So all in all my credit isn't bad at all I just need to create more of a credit history. My goal is to get on the property ladder.

My friend who bought a house is quite innovative and thinks outside the box. He said:

"Might sound bad but I used to take 0% interest loans out for the fun of it to strengthen me, then pay them back like my £7.5K I paid about £1.2K back every month. That showed them I have that much disposable income. The guys at Nationwide who were processing my mortgage was surprised why I took it"

And

"Join the website loqbox.com . They basically take £20 out by direct debit every month for 12 months then after you can withdraw it but they tell the credit bureaus that you have £240 loan but if you put like £50 in every montg it would be £559"

I was considering doing both of his ideas. Just wondering if this is a good idea or if there's a catch at all? What do you think?

TadleyBaggie

Do 0% loans actually exist, I've never seen one (except when purchasing a car or other commodity). I've seem the loqbox scheme mentioned a few times, the general advice is to avoid.

Your credit score is a made up, meaningless number that no one else can see. It's your credit history which is important.

bp5678

TadleyBaggie said:

Do 0% loans actually exist, I've never seen one (except when purchasing a car or other commodity). I've seem the loqbox scheme mentioned a few times, the general advice is to avoid.

Your credit score is a made up, meaningless number that no one else can see. It's your credit history which is important.

Apparently Sainsbury's have one.
Alternatively, I bank with Nationwide and they have a 2.9% loan. Since I have a current account and credit card with them they can see my income instead of verifying my income. In your opinion would this be worth it?

Thanks for the general conesus on loqbox.

[Deleted User]

Even if taking a loan improved the pretend score, it makes lenders less likely to extend you credit.

Just use the credit card, clearing in full each month. It will show lenders that unlike your friend, you're not reliant on credit and have enough disposable income not to need to borrow.

bp5678

Deleted_User said:

Even if taking a loan improved the pretend score, it makes lenders less likely to extend you credit.

Just use the credit card, clearing in full each month. It will show lenders that unlike your friend, you're not reliant on credit and have enough disposable income not to need to borrow.

Thanks for your answer. My friend actually does have a lot of disposable income. He got the loan purely for this reason... they were impresed how he could shift loads of money to clear off the loan each month.

[Deleted User]

He may well have disposable income.  It's just that he sent the opposite message to lenders, as people with enough cash don't pay to borrow from others. 

Fireflyaway

Taking out a loan gives the message that you don't have the income to pay for stuff. Having debt isn't a positive thing. I'd also be careful because things don't always go to plan. You might have low outgoings and a job now but none of us knows what's round the corner. I took out car finance and could comfortably afford it. Then in quick succession I lost my job and my husband left! What if you lose your job or become poorly ? If you end up missing a payment you will make your credit rating worse. I'd just keep doing what you are doing and save to get the largest deposit you can. 

bp5678

Fireflyaway said:

Taking out a loan gives the message that you don't have the income to pay for stuff. Having debt isn't a positive thing. I'd also be careful because things don't always go to plan. You might have low outgoings and a job now but none of us knows what's round the corner. I took out car finance and could comfortably afford it. Then in quick succession I lost my job and my husband left! What if you lose your job or become poorly ? If you end up missing a payment you will make your credit rating worse. I'd just keep doing what you are doing and save to get the largest deposit you can. 

Thanks, but in the least showy-offy way possible since I live with my parents and have very little outgoings, even if I was out of work for several years I'd still have enough money saved to not have to worry about debt.