No Credit - Poor 501 Score

SeekerskintStudent24

Hello - I've never had a c.card, never been in debt - so I have a poor 501 credit rating. Trying to get a credit card to pay for a £650 training course (adult student) - to increase my employment opportunities - but application calculator says i'm not eligible for any cards. Self-employed as cleaner & receiving benefits so total annual income of around £21,500. Not sure what I can do, any thoughts please?

Nasqueron

Your score plays no part in your lending as lenders never see it.

If you have never had debt then the lack of history would be a part of that poor eligibility

How were you planning on paying the CC back? Monthly and pay interest? Given your lack of credit history you're likely to end up with high APR cards so would be paying a lot of interest, have you factored that in?

Could you simply save the money you'd be using for the CC and pay without credit? 

DullGreyGuy

SeekerskintStudent24 said:

Hello - I've never had a c.card, never been in debt - so I have a poor 501 credit rating. Trying to get a credit card to pay for a £650 training course (adult student) - to increase my employment opportunities - but application calculator says i'm not eligible for any cards. Self-employed as cleaner & receiving benefits so total annual income of around £21,500. Not sure what I can do, any thoughts please?

Try your own bank or a credit builder card... ideally look to those with a soft search initial application process. Alternatively I've always found ClearScore's eligibility checker to be vastly more reliable than not only other similar sites but at times better than the banks own one. 

CliveOfIndia

The previous two posters have both made very valid - though in some sense conflicting - points.

With little credit history to go on, you'll be restricted to credit-builder cards - which come with a very high APR.  Or, as mentioned, your own bank can be a reasonable bet, as they can at least see how you've conducted your finances with them.

However - and this is an important one - you really don't want to be sticking stuff on a high-interest credit card if you're not able to pay it off in full at the end of the month.  You'll be saddling yourself with some pretty high interest costs.

Unless you can get accepted for a 0% purchase promotional rate - which is unlikely with little credit history.

Saving up beforehand is the most MSE approach.  But if time really is of the essence, it may be worth asking the course provider if they have any finance packages available.  In all likelihood you'll still end up having to pay some interest, but odds-on it'll be a lot lower than what a sub-prime credit card would charge.

SeekerskintStudent24

Thanks for this, really useful. I don't want to be loaded with a high APR. I'll see what the course provider can do, if anything - I really need to complete training soonest. Otherwise, will take me a few months, but I'll save. I can see though I'll still have to start building up my poor rating, so I'll have to take the high APR on a credit builder card sooner or later. Thank you, it's my first foray into credit & loans. 

CliveOfIndia

I'll still have to start building up my poor rating, so I'll have to take the high APR on a credit builder card sooner or later. Thank you, it's my first foray into credit & loans. 

If you're looking to improve your credit history (well done for not mentioning the meaningless score !) then a credit card can be the simplest way of achieving this - and, used correctly, it won't cost you a penny.

The majority* of credit cards work the same - use them for routine, budgeted spending, and crucially make sure you repay the full balance as shown on your statement, every month, without fail.  As long as you do this, you won't be charged any interest, and you'll gradually start to build up lots of nice green ticks on your credit history.

If (as will probably be the case) you're only eligible for a credit-builder card initially, these tend to have much higher APRs than more mainstream cards, and will offer lower credit limits.  But the APR is irrelevant as long as you always repay in full, and the low initial limit needn't be a problem - even if you just use it for a couple of grocery shops a month, it'll do the trick.

All you need to remember are 3 golden rules:

1)  Only use it to buy stuff which you genuinely need and can afford

2)  Never exceed your credit limit

3)  Make sure you absolutely, always repay in full (not a penny less) every month.

*If you're curious as to why I said the "majority" rather than "all" cards - there are some cards which charge an annual fee, but these are in the minority and tend to be seen as more "premium" cards.  They offer perks in exchange for the fee, whether it's travel insurance, free airport lounge access, whatever.  They can work out to be good value for some people, if the value of the perks genuinely outweighs the fee for your particular personal circumstances.  But you're highly unlikely to be accepted for one of these as a "newbie" anyway, even if you wanted one