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Credit card or Phone contract best option for me

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Assets
Assets Posts: 13 Forumite
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I need to get a loan around £10,000 at my bank in September - October. Need it really bad so I am kind of desperate for some detailed advice. Despite that I've been with the same bank for over 10 years, my credit score states 'excellent' on Experian and I've been with the same employer full time for 4 months (and will be 6 months in September), my bank not showing me any potential loans as available on their app. I heard that this might be because I have no history of borrowing with them. There is an option to apply for a credit card Representative 33.9 APR variable. I never used a credit card in my life so not sure how to use it. (If use it and spend some money just to show I use it and then put money back on it will it charge me 33.9%?) Also there is another option for me is to get a mobile phone contract which I also have never had yet. Would two months of having either credit card or a mobile phone contract increase my chances? Which option would be better for me to boost my chances of securing a loan with my bank?

Comments

  • Brie
    Brie Posts: 14,772 Ambassador
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    If you get a card, spend on it and set up a direct debit to pay in full each month you won't pay interest at all.  It's a good way to build up a credit history.  It may take a couple of months for this to show on your credit history depending on how frequently the bank updates to Experian etc.  

    Phone contract for what?  A monthly sim (EE costs about £8) is good, using it to buy a phone as well can be over the top expensive.  Use your new CC to buy a cheap phone and get a monthly contract and sim to use that phone.  

    Credit score isn't looked at by a bank.  Your bank will be able to see how you use your money, overdraft etc which will be more important.  

    Also get yourself on the voters register - that will take longer but is good in the long run.  
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  • MattMattMattUK
    MattMattMattUK Posts: 11,235 Forumite
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    Assets said:
    I need to get a loan around £10,000 at my bank in September - October. Need it really bad so I am kind of desperate for some detailed advice. 
    What do you "need" this loan for? Depending on what you need it for then other finance choices might be available. 
    Assets said:
    Despite that I've been with the same bank for over 10 years, my credit score states 'excellent' on Experian and I've been with the same employer full time for 4 months (and will be 6 months in September), my bank not showing me any potential loans as available on their app.
    Your credit score is a meaningless number, ignore it.
    Assets said:
    I heard that this might be because I have no history of borrowing with them. 
    That could be a factor yes, do you have mobile phone contracts, utility bills, are you on the electoral roll?
    Assets said:
    There is an option to apply for a credit card Representative 33.9 APR variable. I never used a credit card in my life so not sure how to use it. (If use it and spend some money just to show I use it and then put money back on it will it charge me 33.9%?)
    They charge interest on any any unpaid balance, no on everything you put on it. A credit card is a good thing to have provided you pay it in full every month, if you do not pay it in full every month then it is very bad. 
    Assets said:
    Also there is another option for me is to get a mobile phone contract which I also have never had yet.
    It might go some way to help.
    Assets said:
    Would two months of having either credit card or a mobile phone contract increase my chances? Which option would be better for me to boost my chances of securing a loan with my bank?
    In my opinion, no. If they will not lend to you now they are unlikely to lend you £10k in a couple of months time.

    How old are you, do you rent, live with parents, what do you earn and how much of what you earn is left over at the end of each month? You could be in a situation where you not only lack a suitable credit history, but also fail on affordability. 

  • sammyjammy
    sammyjammy Posts: 7,956 Forumite
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    edited 12 July 2024 at 1:44PM
    OPs previous thread on same thing for reference best options for a newly employed — MoneySavingExpert Forum
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  • born_again
    born_again Posts: 20,519 Forumite
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    Rather than just looking on app.
    Try talking to bank about loan. Would make far more sense, as they will run through what they might be able to offer.

    CC or Mobile contract is only going to affect your available credit & could have a negative effect on loan application.
    Life in the slow lane
  • CliveOfIndia
    CliveOfIndia Posts: 2,549 Forumite
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    Assets said:
    Would two months of having either credit card or a mobile phone contract increase my chances? Which option would be better for me to boost my chances of securing a loan with my bank?
    If the main issue is your lack of credit history then a mobile phone contract will go some way to starting to build a history.  However, unless you actually need a contract, it would be foolish to spend money unnecessarily simply to build up history.
    Correct use of a credit card is often the simplest way of building history - use it regularly for planned, budgeted purchases, wait for the statement to arrive then always pay the full balance, every month, without fail.  This will cost you absolutely nothing, and will gradually start to build up a favourable history.
    However, the major issue you're going to face is lack of time.  Two month's worth of history, whilst a good start, will make next to no difference in itself to how a lender views you.  You'd need to have at least 12 months, probably more, before it made any real difference.
    I think born_again has given some really good advice there.  Whilst doing these things online is undoubtedly convenient, sometimes the old-fashioned method of actually speaking to someone can be the best option.

  • Assets
    Assets Posts: 13 Forumite
    First Anniversary First Post
    born_again said:
    Rather than just looking on app.
    Try talking to bank about loan. Would make far more sense, as they will run through what they might be able to offer.

    CC or Mobile contract is only going to affect your available credit & could have a negative effect on loan application.

    Whenever I try speaking to my bank's customer advisorsthey just point at my app saying if you are not offered any loans on the app that means there is no loan. So you think it is best for me to avoid a credit card now. Are there any options for me at all to borrow money? I saw some websites like little loans allegedly they for people with bad credit history but they are offering huge amount of comission which if I sign up for repaying will be simply unaffordable for me. I don't trust them but just feel desperate.
  • ManyWays
    ManyWays Posts: 1,372 Forumite
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    No new borrowing now will help improve your credit record for at least 3, probably 6 months. And in the short term it will harm it.

    Little Loans representative interest rate is over 70% - that is mad for a large loan.

    Have you used MSE's "soft search" checker? Worth trying: https://www.moneysavingexpert.com/eligibility/loans-calculator/search/

    What do you want this loan for? You may need to find other ways round the problem and unless you say what the need is, we can't suggest any.
  • Assets
    Assets Posts: 13 Forumite
    First Anniversary First Post
    ManyWays said:
    No new borrowing now will help improve your credit record for at least 3, probably 6 months. And in the short term it will harm it.

    Little Loans representative interest rate is over 70% - that is mad for a large loan.

    Have you used MSE's "soft search" checker? Worth trying: https://www.moneysavingexpert.com/eligibility/loans-calculator/search/

    What do you want this loan for? You may need to find other ways round the problem and unless you say what the need is, we can't suggest any.
    I will try MSE soft search thank you. So far I only tried a search on Experian and the only legit solution for me it came up with is 'Little Loans' which as you already know is horrible. Their APR goes even higher the more you borrow and the more time you need to repay back. The need is honestly to bring my wife and my baby daughter to the UK asap. I met my wife abroad and we married there and she is currently there in another country. To bring them here by law I need to meet a certain income requirements which is now minimum 29k per year, which I currently make (I make 33-34k) and I work maximum amount of hours possible that my employer can provide. Visa fees are huge and come down to 8-10 k for both of them and need to be made in one single payment, plus of course a plane ticket for them to get here. The government is planning to increase the annual income requirements for the sponsors soon. They have paused the increase for now but seeing how impatient our society grows towards solving the migrant crisis I fear they might increase it again rather sooner than later.. If I am not making above those increases in future (which I would say next year) it will be nearly impossible for me to adjust to it/find a new job or whatever and it may take years untill I can reunite with my family. So I want to bring them here asap. I just want simple happiness and be able to see my baby in person more than once a year.
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