Credit score confusion

feelinfab28

Hi, I'm very very new to all things related to credit. Up to now I've only ever used a debit card, and I've been told by my family that I shouldn't get a credit card. However I'm aware that having a good credit score will help me to get a loan for a house in the future (in the UK).

The problem is when I try to check if I have a credit score already on experian, it says it's unable to verify my identity. I don't know if I need to actually get a credit card first, or if I need to call them. Help?

retiredbanker1

Are you on Electoral roll?
Are you eligible to vote in UK?
Do you have any financial products in your name such as a mobile phone contract or an authorised overdraft facility on your bank account?
How old are you and are you UK citizen?

Exodi

There are three main Credit Reference Agencies (CRA's) - Experian is one, TransUnion is another and Equifax. Each will likely hold a credit report on you and we recommend checking all three (using the free mobile apps - Experian, CreditKarma & ClearScore respectively).

Credit decisions are made based on your affordability (e.g. the loan compared to your income) and credit history (e.g. whether you have ever defaulted). Having no credit history isn't a dealbreaker as obviously at some point in time, we all would have had to take out our first line of credit without credit history. It's better at least than having history which shows you are a late or non-payer!

The main thing is making sure the loan is affordable and that you regularly check your credit reports (to make sure there are no debts you're unaware of, or an account has not been closed correctly).

How old are you? Do you have a current account? Do you pay utility bills?

Please don't become obsessed by the credit 'score' they give you on these apps. This is largely a marketing gimmick and is not seen, nor cared about, by lenders - yet everyday we people saying things like "how did I get rejected on this loan when I have a 999 credit score?!?!"

CliveOfIndia

Your score is irrelevant, it's just a meaningless marketing gimmick.  What you should aim to be doing is building up a favourable credit history.  This is a record, visible to all lenders, that you can use credit responsibly, borrow within your means, and always repay what you owe.

A credit card is indeed a very simple way of achieving this.  Just use it for routine, planned spending (food, petrol, that sort of thing), wait for the statement to arrive each month, then pay it in full before the "payment due" date.  Doing this will gradually build up a good history, and will cost you nothing in terms of fees or interest.

With little or no previous history, you'll most likely need to try a credit-builder card first: https://www.moneysavingexpert.com/credit-cards/bad-credit-credit-cards/

These tend to offer low limits and charge high interest rates.  The interest rate is irrelevant so long as you always pay in full every month.

In terms of getting access to your credit reports, if they're not recognising you then it may be worth giving them a shout.  But in the meantime, there's nothing lost by doing a few eligibility checks to see which cards you might have a chance of being accepted for.

Brie

CliveOfIndia said:

A credit card is indeed a very simple way of achieving this.  Just use it for routine, planned spending (food, petrol, that sort of thing), wait for the statement to arrive each month, then pay it in full before the "payment due" date.  Doing this will gradually build up a good history, and will cost you nothing in terms of fees or interest.

While I agree with Clive mostly I would amend his comment and say set up the direct debit to clear the full amount each month.  That way you don't have to think too hard about it and shouldn't get caught out by not making a payment.  If you aren't sure you can clear it in full then at least set up the DD for the minimum or a set amount you know you'll have.  And then pay the rest asap.