How to build credit file for 18 year old

cymruchris

Spies said:

kezzygirl said:

Spies said:

TadleyBaggie said:

To be fair the OP never mentioned “score” once and obviously knows it is the history that is important. 

If it's to help secure a mortgage down the line no credit history is irrelevent, none is better than bad. 

So would she be likely offered a mortgage with absolutely no credit history or evidence that she is a good at making repayments? Doubt it very much.

I had little to no credit history and got a mortgage just fine, you may need to have it manually underwritten like I did, and have proof of bills but you won't be refused in the basis of no score or history. 

I imagine that wasn't in the last 12-24 months? Things are a bit tighter these days - so it's good to get a good 'history' under the belt over the period of the next couple of years or so ready for when the mortgage application is needed.

Building a good history takes a lot of time, so it's good to start early. The way everything is going digital/online/AI - then the more positive that shows in this young lady's history can only be a good thing, and allow her the choice of many providers, rather than being limited to a few that have to be obtained through brokers.

All credit to you for doing what you've done in the past - but this is for the young ladies future.

kezzygirl

cymruchris said:

A few things to get you started - you have the first grown up current account - make sure it reports to the CRA's - there are three main ones - have you only signed up to one? We signed up to money saving credit club but it was unable to even show anything, they use experian and it just stated info unavailable.

Make sure she's on the electoral roll.She is on electoral role at our home address but il double check this

What's the deal on her mobile at the moment? It would be good to get on a sim-only contract if the handset she has is reasonable. You can get contracts as short as 12 months - so these would also report to the CRA's. i took a contract out for her in august 2023, it doesnt allow transfer of name/contract. It may be worth us seeing how much it would be to pay off and then she takes a sim only contract. Il have a look into this.

If she has an income, once there's 3-6 months of 'history' showing on her CRA's - then apply for one of the credit builder cards from the likes of Vanquis, Aqua or Capital One. Use the eligibility checkers on their website first. Don't use a comparison site. She works part time and earns probably about 4k a year. She finishes college in a couple of months and will be looking at an apprenticeship or full time employment for a year while she figures out next steps.

She'll likely get given a low limit and a high APR. Use it a little every month for every day spends, and pay off full without fail - another 6 months down the line either apply for a credit increase (if it was a low level to start with) or open a second card from another provider. (Again using eligibility checkers directly on lenders websites).

That should get her on the path to building a positive credit history.

Further down the line of continued paying in full - she'll likely begin qualifying for better cards and rates.

Thankyou, 

kezzygirl

SiliconChip said:

I'd have thought the first thing to do is get her on the electoral register, which will boost her chances of securing credit of any type when she comes to apply for it, and ensure that she is in a position to exercise her vote in the forthcoming General Election.

 https://www.gov.uk/register-to-vote

Just registered her, thankyou!

cymruchris

You might find it takes a couple of months or so for the first adult account she's just gotten, and the electoral roll entry to register on the CRA's - I think one key piece of advice is not to be over optimistic on what's being applied for in the first couple of years. (And I'm sure you'll have considered this - but don't expect an Amex with a 30k limit after 6 months - start low and small and work up.) Once the first accounts show on the credit club/experian - you should find they appear on Transunion and Equifax too. (Credit Karma/Clearscore/Totally Money). Try for a new account every 6 months. (Always after eligibilty checkers) - and at this stage don't close any accounts at all if she gets a better card.

kezzygirl

cymruchris said:

Spies said:

kezzygirl said:

Spies said:

TadleyBaggie said:

To be fair the OP never mentioned “score” once and obviously knows it is the history that is important. 

If it's to help secure a mortgage down the line no credit history is irrelevent, none is better than bad. 

So would she be likely offered a mortgage with absolutely no credit history or evidence that she is a good at making repayments? Doubt it very much.

I had little to no credit history and got a mortgage just fine, you may need to have it manually underwritten like I did, and have proof of bills but you won't be refused in the basis of no score or history. 

I imagine that wasn't in the last 12-24 months? Things are a bit tighter these days - so it's good to get a good 'history' under the belt over the period of the next couple of years or so ready for when the mortgage application is needed.

Building a good history takes a lot of time, so it's good to start early. The way everything is going digital/online/AI - then the more positive that shows in this young lady's history can only be a good thing, and allow her the choice of many providers, rather than being limited to a few that have to be obtained through brokers.

All credit to you for doing what you've done in the past - but this is for the young ladies future.

My thoughts exactly, thankyou

kezzygirl

Ok, new phone contract is out of the picture-they want £455 to pay it off!!! It runs until 2025

Spies

Why is the existing one not in her name? 

cymruchris

Spies said:

Why is the existing one not in her name? 

Because the OP's daughter has turned 18 today - so when it was taken out she'd have been too young to have it in her own name. It would have had to have been applied for by someone over 18.

Spies

You can transfer it into her name... 

cymruchris

kezzygirl said:

Ok, new phone contract is out of the picture-they want £455 to pay it off!!! It runs until 2025

A bit round the houses - but if anyone else at the same address has a contract that's due for renewal - she could apply for a sim only contract in her name - and internally in the family you work out how it's paid (eg mum pays daughter every month - but daughter's bank account pays the bill - but mum uses the actual line)