Improve Credit Score

tirednerd

Hi there! Based in Scotland here, and first time I join a forum of any kind!

I just had a financial health check with a senior banker at my bank, and found out I have a lower credit score than expected. Apparently, what impacts it are two things:

1. the fact that I've recently changed address, meaning that I have only been in the electoral registry at my new address for 5 months (unfair, as I've lived in this area of the city for many years now)
2. the fact that I don't have a credit card (again, it feels unfair: do I HAVE to get one?)

Any help on how to improve this would be much appreciated!

Mark_d

To prove you can be trusted with credit, you need a track record of using credit responsibly.

A credit card is a good thing - you get various protections on things you buy and you can also get points.  You can set up a direct debit to pay your balance in full each month, so you don't get hit with penalties for late payments and you don't pay interest.

If you don't trust yourself with general spending on a credit card, you could use your credit card solely for your broadband bill an continue to pay for everything else as you currently do

Nasqueron

tirednerd said:

Hi there! Based in Scotland here, and first time I join a forum of any kind!

I just had a financial health check with a senior banker at my bank, and found out I have a lower credit score than expected. Apparently, what impacts it are two things:

1. the fact that I've recently changed address, meaning that I have only been in the electoral registry at my new address for 5 months (unfair, as I've lived in this area of the city for many years now)
2. the fact that I don't have a credit card (again, it feels unfair: do I HAVE to get one?)

Any help on how to improve this would be much appreciated!

The credit score is a gimmick, there is a whole topic on it, right at the top of the page 

What your Credit Score really means - Please read first before posting about a credit score issue.

You would presumably have seen it because it's near the "Create new" option.

Your banker merely used a simple term they know those less financially savvy understand because a simple number is easier to explain than credit history.

You do not want to improve the fake score, you want to build a credit history showing you can borrow and repay responsibly.

Any change like moving address creates instability but these things are quickly forgotten by the computer algorithms particularly if you were previously at a location for a long time.

You don't need a credit card no, but responsible use of one is a good way to build credit history - spend on it, pay in full by direct debit every month. Similarly, a mobile phone contract etc.

The bigger question is why do you care? 

Are you looking to get a loan / mortgage / PCP etc? If so, then build a solid history as above and yes, a CC will help
If it's just a financial check and you are worried about a fictitious number, then don't worry

CliveOfIndia

I do hope this "senior banker" was referring to his bank's own internal credit scoring.  If he means the score you see on the CRA report then he wants sacking - he really ought to know that the CRA score is utterly meaningless, and is not even seen by any lender.

That aside ....as per the previous poster's comment, what a lender likes to see (amongst other things) is a solid history of responsible financial management, borrowing within your means and always repaying what you owe.  A credit card is one of the simplest ways of achieving this.  Use it for routine, budgeted spending, stuff you'd have to buy anyway (food, petrol, whatever), and crucially make sure you pay the full balance every month when you get the statement, without fail.  Doing this means you won't get charged any fees or interest, and you'll gradually start to build up a good positive credit history.

Used sensibly, a credit card is an eminently useful tool.  It's only when you use it to buy things you can't really afford that it becomes a problem.

You don't have to have a credit card - it's just the easiest way to build up a good history for most people.

Address stability is another positive in the eyes of a lender, and being registered on the ER is pretty much a pre-requisite for most lenders.

Aside from that, any form of credit agreement that's well-managed will help - a common one is a mobile phone contract.

But .... never sign up to any form of credit that will cost you money, purely with the intention of improving your history.  Sure, taking out a loan and making all repayments on time will build up some nice positive ticks on your record.  But it'll also cost you interest.  So taking a loan when you don't need one would be utter madness.  Come to that, so would paying for a mobile phone contract when actually a cheap SIM-only deal would be much cheaper, if that would suit your needs.

It's for this reason that a credit card is often recommended - you get all the benefits of building a credit history at zero cost.  You just need to have the discipline to only ever use it to buy stuff you can afford, and which you know for certain you'll be able to repay in full when the bill comes in each month.

fatbelly

Get yourself a credit card that gives you some added bonus. Depending on where you shop, you may fancy an Asda card or John Lewis.

tirednerd

Nasqueron said:

tirednerd said:

Hi there! Based in Scotland here, and first time I join a forum of any kind!

I just had a financial health check with a senior banker at my bank, and found out I have a lower credit score than expected. Apparently, what impacts it are two things:

1. the fact that I've recently changed address, meaning that I have only been in the electoral registry at my new address for 5 months (unfair, as I've lived in this area of the city for many years now)
2. the fact that I don't have a credit card (again, it feels unfair: do I HAVE to get one?)

Any help on how to improve this would be much appreciated!

The credit score is a gimmick, there is a whole topic on it, right at the top of the page 

What your Credit Score really means - Please read first before posting about a credit score issue.

You would presumably have seen it because it's near the "Create new" option.

Your banker merely used a simple term they know those less financially savvy understand because a simple number is easier to explain than credit history.

You do not want to improve the fake score, you want to build a credit history showing you can borrow and repay responsibly.

Any change like moving address creates instability but these things are quickly forgotten by the computer algorithms particularly if you were previously at a location for a long time.

You don't need a credit card no, but responsible use of one is a good way to build credit history - spend on it, pay in full by direct debit every month. Similarly, a mobile phone contract etc.

The bigger question is why do you care? 

Are you looking to get a loan / mortgage / PCP etc? If so, then build a solid history as above and yes, a CC will help
If it's just a financial check and you are worried about a fictitious number, then don't worry

Thank you, and thanks everyone who's replied! I need a good credit score because I'd like to get a mortgage in the near future. 

What I was offered was to switch from my 'current account' to a 'cashback' account (my bank is RBS), which will cost me about £2 per month but that will give me back £5 every month (for using the app etc) + I think 1% rewards using a Credit Card (which would therefore, as I understand it, be free). I was thinking to go for this option, although it kind of sounds too convenient to be true.        

400ixl

tirednerd said:

Thank you, and thanks everyone who's replied! I need a good credit score because I'd like to get a mortgage in the near future. 

What I was offered was to switch from my 'current account' to a 'cashback' account (my bank is RBS), which will cost me about £2 per month but that will give me back £5 every month (for using the app etc) + I think 1% rewards using a Credit Card (which would therefore, as I understand it, be free). I was thinking to go for this option, although it kind of sounds too convenient to be true.        

No, you don't need a fictitious score of any level. As people have explained the CRA scores are meaningless and what you need is a good credit history.

You certainly don't need a cashback account rather than a current account. There may be benefits if the cashback will work for you, but it is not required at all.

A credit card to do some spending on and pay off in full each month will give another source of history that may be useful to have.

Sounds like you saw a financial advisor in the bank who is incentivised to sell you products that they sell. Just like the CRA's who also try to use a "score" to upsell you with products they get commission on.

To get a mortgage you need to be able to demonstrate you are financially secure with enough income and do not have debts which cannot be serviced alongside the mortgage and do not have any historical issues like missed payments, defaults or CCJ's.

Nasqueron

tirednerd said:

Nasqueron said:

tirednerd said:

Hi there! Based in Scotland here, and first time I join a forum of any kind!

I just had a financial health check with a senior banker at my bank, and found out I have a lower credit score than expected. Apparently, what impacts it are two things:

1. the fact that I've recently changed address, meaning that I have only been in the electoral registry at my new address for 5 months (unfair, as I've lived in this area of the city for many years now)
2. the fact that I don't have a credit card (again, it feels unfair: do I HAVE to get one?)

Any help on how to improve this would be much appreciated!

The credit score is a gimmick, there is a whole topic on it, right at the top of the page 

What your Credit Score really means - Please read first before posting about a credit score issue.

You would presumably have seen it because it's near the "Create new" option.

Your banker merely used a simple term they know those less financially savvy understand because a simple number is easier to explain than credit history.

You do not want to improve the fake score, you want to build a credit history showing you can borrow and repay responsibly.

Any change like moving address creates instability but these things are quickly forgotten by the computer algorithms particularly if you were previously at a location for a long time.

You don't need a credit card no, but responsible use of one is a good way to build credit history - spend on it, pay in full by direct debit every month. Similarly, a mobile phone contract etc.

The bigger question is why do you care? 

Are you looking to get a loan / mortgage / PCP etc? If so, then build a solid history as above and yes, a CC will help
If it's just a financial check and you are worried about a fictitious number, then don't worry

Thank you, and thanks everyone who's replied! I need a good credit score because I'd like to get a mortgage in the near future. 

What I was offered was to switch from my 'current account' to a 'cashback' account (my bank is RBS), which will cost me about £2 per month but that will give me back £5 every month (for using the app etc) + I think 1% rewards using a Credit Card (which would therefore, as I understand it, be free). I was thinking to go for this option, although it kind of sounds too convenient to be true.        

Please read the link, the score you see is never seen by anyone else, it NEVER EVER EVER EVER plays any part in a decision on your mortgage, only your credit file which the banks score internally (you will never see this number).

The NatWest group reward account is good, I have one, provided you have the 2 DD (make sure you meet the minimum payment - I think the DD has to be over a certain amount) and log into the account, the net £3 a month is nice to have. Banks offer incentives to get you to use them, even if it seems like a loss leader

tirednerd

Nasqueron said:

tirednerd said:

Nasqueron said:

tirednerd said:

Hi there! Based in Scotland here, and first time I join a forum of any kind!

I just had a financial health check with a senior banker at my bank, and found out I have a lower credit score than expected. Apparently, what impacts it are two things:

1. the fact that I've recently changed address, meaning that I have only been in the electoral registry at my new address for 5 months (unfair, as I've lived in this area of the city for many years now)
2. the fact that I don't have a credit card (again, it feels unfair: do I HAVE to get one?)

Any help on how to improve this would be much appreciated!

The credit score is a gimmick, there is a whole topic on it, right at the top of the page 

What your Credit Score really means - Please read first before posting about a credit score issue.

You would presumably have seen it because it's near the "Create new" option.

Your banker merely used a simple term they know those less financially savvy understand because a simple number is easier to explain than credit history.

You do not want to improve the fake score, you want to build a credit history showing you can borrow and repay responsibly.

Any change like moving address creates instability but these things are quickly forgotten by the computer algorithms particularly if you were previously at a location for a long time.

You don't need a credit card no, but responsible use of one is a good way to build credit history - spend on it, pay in full by direct debit every month. Similarly, a mobile phone contract etc.

The bigger question is why do you care? 

Are you looking to get a loan / mortgage / PCP etc? If so, then build a solid history as above and yes, a CC will help
If it's just a financial check and you are worried about a fictitious number, then don't worry

Thank you, and thanks everyone who's replied! I need a good credit score because I'd like to get a mortgage in the near future. 

What I was offered was to switch from my 'current account' to a 'cashback' account (my bank is RBS), which will cost me about £2 per month but that will give me back £5 every month (for using the app etc) + I think 1% rewards using a Credit Card (which would therefore, as I understand it, be free). I was thinking to go for this option, although it kind of sounds too convenient to be true.        

Please read the link, the score you see is never seen by anyone else, it NEVER EVER EVER EVER plays any part in a decision on your mortgage, only your credit file which the banks score internally (you will never see this number).

The NatWest group reward account is good, I have one, provided you have the 2 DD (make sure you meet the minimum payment - I think the DD has to be over a certain amount) and log into the account, the net £3 a month is nice to have. Banks offer incentives to get you to use them, even if it seems like a loss leader

thank you! so, to sum up, can a credit card help me to get a good mortgage deal, or should I just avoid complicating my life and carry on with my debit card? I currently also have a loan from the bank that I am paying back monthly.

ps. good to know that the cashback thing is not a scam!

 Thank you!

CliveOfIndia

tirednerd said:

to sum up, can a credit card help me to get a good mortgage deal,

Indirectly, yes, in a way.

When you apply for a mortgage (or any loan or any credit product), there are many different factors that will be taken into account.  Some are fairly obvious - how much you want to borrow in comparison to your income, what existing debt you currently have, whether the affordability is reasonable, whether you've got any late payments, defaults, that kind of thing.

But one factor is your credit history.  Basically a lender wants to see a pattern of responsible financial management - borrowing within your means and always repaying what you owe.  Any credit product that you currently have will help with this - your loan, for instance, will be going some way to building a good history.

A credit card - used sensibly - is just a very simple and totally free way to add lots more nice green ticks to your file.  In and of itself it won't guarantee you being accepted for a mortgage.  But taken in conjunction with all your other data, it certainly won't do any harm, and might just sway things very slightly in your favour.

Nasqueron

tirednerd said:

Nasqueron said:

tirednerd said:

Nasqueron said:

tirednerd said:

Hi there! Based in Scotland here, and first time I join a forum of any kind!

I just had a financial health check with a senior banker at my bank, and found out I have a lower credit score than expected. Apparently, what impacts it are two things:

1. the fact that I've recently changed address, meaning that I have only been in the electoral registry at my new address for 5 months (unfair, as I've lived in this area of the city for many years now)
2. the fact that I don't have a credit card (again, it feels unfair: do I HAVE to get one?)

Any help on how to improve this would be much appreciated!

The credit score is a gimmick, there is a whole topic on it, right at the top of the page 

What your Credit Score really means - Please read first before posting about a credit score issue.

You would presumably have seen it because it's near the "Create new" option.

Your banker merely used a simple term they know those less financially savvy understand because a simple number is easier to explain than credit history.

You do not want to improve the fake score, you want to build a credit history showing you can borrow and repay responsibly.

Any change like moving address creates instability but these things are quickly forgotten by the computer algorithms particularly if you were previously at a location for a long time.

You don't need a credit card no, but responsible use of one is a good way to build credit history - spend on it, pay in full by direct debit every month. Similarly, a mobile phone contract etc.

The bigger question is why do you care? 

Are you looking to get a loan / mortgage / PCP etc? If so, then build a solid history as above and yes, a CC will help
If it's just a financial check and you are worried about a fictitious number, then don't worry

Thank you, and thanks everyone who's replied! I need a good credit score because I'd like to get a mortgage in the near future. 

What I was offered was to switch from my 'current account' to a 'cashback' account (my bank is RBS), which will cost me about £2 per month but that will give me back £5 every month (for using the app etc) + I think 1% rewards using a Credit Card (which would therefore, as I understand it, be free). I was thinking to go for this option, although it kind of sounds too convenient to be true.        

Please read the link, the score you see is never seen by anyone else, it NEVER EVER EVER EVER plays any part in a decision on your mortgage, only your credit file which the banks score internally (you will never see this number).

The NatWest group reward account is good, I have one, provided you have the 2 DD (make sure you meet the minimum payment - I think the DD has to be over a certain amount) and log into the account, the net £3 a month is nice to have. Banks offer incentives to get you to use them, even if it seems like a loss leader

thank you! so, to sum up, can a credit card help me to get a good mortgage deal, or should I just avoid complicating my life and carry on with my debit card? I currently also have a loan from the bank that I am paying back monthly.

ps. good to know that the cashback thing is not a scam!

 Thank you!

I would recommend a credit card yes, even if you can't get one with benefits like cashback. You could spend literally once a month on fuel or shopping to replace using the debit card, have a DD to pay off in full every month and just do that for a year and it builds a good history of responsible credit use. The loan will also do this but obviously you pay interest so it's not a cost effective way of doing it, provided you pay on time every month it's fine, just obviously pay it off before applying for a mortgage!