Building credit score - should I take out a new credit card?

Buildmycreditscore

Hi All

I went through a period last year where I was using my overdraft with a high credit utilisation on my credit cards and so my credit rating took a hit because of this.

Over the last few months I've been working to build it back up but I've hit a bit of a wall and the growth on my score has been slow.  The top recommendation from Credit Karma is to have a minimum £4,000 credit limit available.

Currently, I have £3,000 available across Monzo Flex and two other credit cards.  My credit utilisation has been well under 50% for many months now, I haven't touched my overdraft and I've had a significant pay increase in the mean time. however, all three have declined my requests to increase my limit

I have a pre-approved offer for another credit card that has a limit of min £1,000 that will take me to the £4,000 that Credit Karma claims will have a positive high impact on my credit file.  

Looking for recommendations on what others would do in this scenario.  I'm not overly keen on taking out a new credit card (especially since I'm assuming I'll expect a short term hit on my credit file for opening a new account / a new hard search) but I'm not sure how long I may need to wait it out until I finally get accepted from one of my existing providers.

Any advice / recommendations are highly appreciated!

MEM62

The 'score' that the CRA's give you is produced for amusement purposes only.  It has no meaning and only you and the CRA sees it.  There is absolutely no point is jumping through hoops in order to try to change a randomly generated number.    Manage you finances responsibly, pay your bills on time and you credit standing will be fine. 

sourcrates

Buildmycreditscore said:

Any advice / recommendations are highly appreciated!

Remove the phrase "credit score" and replace it with "credit history", as only the latter matters.

Buildmycreditscore

Thanks both.  I'm aware the number isn't relevant to outside parties but it is a way of representing what's on the credit file

MorningcoffeeIV

But an incredibly inaccurate and misleading one, so never use it as a proxy for credit worthiness.

MattMattMattUK

Buildmycreditscore said:

Thanks both.  I'm aware the number isn't relevant to outside parties but it is a way of representing what's on the credit file

It is not, it is a way of gamifying a marketing gimmick. 

To raise your credit score some of them will advise you do things which lenders may see as negative. Take your above example of having a minimum of £4k credit limit, that is not beneficial to potential future lenders and does nothing to increase your likelihood of gaining a mortgage in the future for example, however it incentivises you to take out a new credit card via a referral link.

MalMonroe

Buildmycreditscore said:

Hi All

I went through a period last year where I was using my overdraft with a high credit utilisation on my credit cards and so my credit rating took a hit because of this.

Over the last few months I've been working to build it back up but I've hit a bit of a wall and the growth on my score has been slow.  The top recommendation from Credit Karma is to have a minimum £4,000 credit limit available.

Currently, I have £3,000 available across Monzo Flex and two other credit cards.  My credit utilisation has been well under 50% for many months now, I haven't touched my overdraft and I've had a significant pay increase in the mean time. however, all three have declined my requests to increase my limit

I have a pre-approved offer for another credit card that has a limit of min £1,000 that will take me to the £4,000 that Credit Karma claims will have a positive high impact on my credit file.  

Looking for recommendations on what others would do in this scenario.  I'm not overly keen on taking out a new credit card (especially since I'm assuming I'll expect a short term hit on my credit file for opening a new account / a new hard search) but I'm not sure how long I may need to wait it out until I finally get accepted from one of my existing providers.

Any advice / recommendations are highly appreciated!

Hi, you say that as early as last year you were "using my overdraft with a high credit utilisation on my credit cards and so my credit rating took a hit because of this" (as others have said, your credit report took a hit, the score is irrelevant). Unfortunately, in the financial world, you just can't build up your credit history fast.

You say you have three credit cards already so I would leave it at that for now, if it were me. I have three credit cards and have just now successfully obtained a fourth. But I'm not going to use them all and the latest one, with my own bank, is a 0% purchase one which I shall use until the 0% runs out and then pay off in full.

In the past, I've been in terrible financial difficulty and it took me quite a few years to build up my credit report to a respectable level. 

You say you are not overly keen on taking out a new credit card - so go with your gut and don't. 

I find Credit Karma is the worst of all the credit report agencies (even though it's part of TransUnion) - they always give me a very low score (although I know it's not important) and always have hints and tips for 'improvements' which are unhelpful.

Don't take the word of a credit report agency when dealing with your own finances. Handle them to suit yourself. 

If you do ever need any advice or help with finances, you could do worse than contact one of the free debt help agencies - StepChange, National Debtline or Citizens Advice. They all have very understanding, knowledgeable and non-judgemental advisors. They can give advice before things get too bad financially. 

My basic advice would be - don't panic and don't try to rush things. You have enough credit cards at the moment and you seem to be very determined to build up your credit history so you could really leave your credit report to repair itself.  It just does take time and patience is required.  

I'm with MEM62, above, who says "manage your finances responsibly, pay your bills on time and your credit standing will be fine."  In time. You can't hurry love and you certainly can't hurry financial institutions.

Hope some of that is helpful.

Buildmycreditscore

Thanks MalMonroe for an amazing answer.  I decided to scrap getting yet another card as you advised.

I haven’t been overly impressed with CreditKarma, I’ve actually found the details provided in ClearScore to be much better an actionable - Keeping credit utilisation low, keep at least £200 in each account as a buffer and try to spend more of the month with >£1000 than below.  Not sure how helpful the latter two are but they seem like solid advice and at least I know they’re not trying to push any referrals on me with those recommendations. 

I agree that it’s just about giving it time so hoping to end the year with my file in a much better position than how it began!

thanks again all for the advice