Credit Rating/Obtaining Credit

V-Spec · 17 Apr 2008 at 17:19

LordSplodge said:
Ahh, my bad, but how does that explain the prevalence of credit to those persons in debt (again not defaulting) versus the difficulty that some people have who are not in debt, apart from the fact they have little or no credit rating?

Because the more debt you have without missing payments and defaulting, obviously proves that you're reliable because you're handling your current financial commitments by making the payments on time each month.

If you just have one credit card and maybe a contract phone, whilst you have relativley little debt, your still pretty much unproven and hence more of a risk.

Lunatic Dreyfus · 17 Apr 2008 at 18:19

This thread finally provoked me in to doing one of the many tasks I'd set myself during my week off. It's also one of the few I've actually got around to doing. Thank you OCUK.

Anyway, it's quite alarming when you sift through your report (as I've just done) and not only see what they hold on you, but just how up to date it all is. Thankfully I've been a good citizen and paid everything off on time, and as a result I have been rewarded with a 'Good' rating.

The basic truth of credit appears to be this... As long as you get yourself buried under a ton of debt and then pay it all off nice and cleanly, then the Credit Brigade love you. If you have no record, then that could mean you're a potential defaulter in the making. It's a classic case of being guilty and having to prove your innocence, so to speak.

Credit's a messy area, but sadly a necessity in today's world.

greengiant · 17 Apr 2008 at 18:29

Interesting thread.
I'm hoping to get myself a mortgage in a year or two (work relocating, so good excuse to move out of parental home!). I take it I'd be advised to get myself a credit card and get myself a credit rating as currently I have no credit card or store card? Phone is pay & go to.

Brum Man · 17 Apr 2008 at 18:32

greengiant said:
I take it I'd be advised to get myself a credit card and get myself a credit rating as currently I have no credit card or store card? Phone is pay & go to.

I would personally. May not be too much of a problem if you go for a mortgage with your own bank, but outside of that other companies have nothing to really judge you on.

V-Spec · 17 Apr 2008 at 19:39

greengiant said:
Interesting thread.
I'm hoping to get myself a mortgage in a year or two (work relocating, so good excuse to move out of parental home!). I take it I'd be advised to get myself a credit card and get myself a credit rating as currently I have no credit card or store card? Phone is pay & go to.

As has already been suggested, if you want a good credit rating you're going to need to get some credit first, buy something on interest free or get a credit card or loan for £1k and pay it back in 1 year, a few small things will give a big boost..

ste_bla · 17 Apr 2008 at 19:42

greengiant said:
Phone is pay & go to.

Try Onestopphoneshop as they have some really cheap contracts so would be just as cheap as PAYG with the bonus of increasing you credit status

Smitho3 · 17 Apr 2008 at 20:13

Ok let me break it down:

Interest free sofa £1500 being paid by DD
High interest Store card was being paid monthly by DD for 6 months then paid off full balance (all £1500 of it) 5 months ago
High interest Store card with small balance being paid off monthly via DD
one small credit card with £300 on it with minimum payments coming out each month for past 4 years which i kept in place to show i can make regular payments
I also have a mobile phone contract and have never missed a monthly direct debit payment

In total i have about £2000 of debt all being perfectly managed, I have lived at this address for over a year and am on the electoral roll, have been employed for 3 years with a good salary (have around £400 disposable income a month after all bills including debts!) but have a poor credit rating and cannot get accepted for credit.... something smells rotten!

Glaucus · 17 Apr 2008 at 20:14

yep what's experian bring up?

Smitho3 · 17 Apr 2008 at 20:23

Your score is: 467 on a scale of 0-1000
A higher score generally indicates that lenders will consider it less risky to lend money to you.
This score reflects the information held by Experian on the date shown here: 17/04/2008
Your credit score category is:

Very poor

Glaucus · 17 Apr 2008 at 20:36

but does it show any missed payments. Have you looked at alias/

Smitho3 · 17 Apr 2008 at 20:39

theres one missed payment from 2005 but the account status is settled and there is one "missed" payment from 2 months ago which was due to edge cancelling my direct debit for no reason! as soon as they told me the direct debit had not gone through i paid and set the direct debit back up. This is in the process of being rectified. I think it may have something to do with the 16 or so searches on my file...

Glaucus · 17 Apr 2008 at 20:43

yeh searches will do it and the missed payment. You might want to get the missed payment rectified then just leave it a few months.

V-Spec · 17 Apr 2008 at 20:54

Missed payments don't make that much of a difference, i've got 3 missed overall, in what period are the searches from? if there all in the last 12 months then that makes a very big difference, if there overall then it shouldn't matter much.. i've got about 20 searches going back to 2002.. I don't tend to apply for more than around 1 thing in credit per year because of the searches.

Smitho3 · 17 Apr 2008 at 21:18

oh dear, all of them are within the last 12 months (various current accounts being opened + a couple of loan apps that i decided not to bother taking.) looks like i need to wait a year before i apply for any new credit... in the mean time i will try and use capitol one to increase my rating. thanks for the advice guys

Dist · 17 Apr 2008 at 21:21

Since i have no contracts and no credit cards/overdrafts, i guess my credit rating must be poor as well after reading this thread. Whats annoying is that by the sounds of it i wont be able to improve my credit rating either as i have no reason to go into debt, i very rarely spend money, and have no need for a phone contract at the moment. Is there no other way to increase credit rating?

Roland0 · 17 Apr 2008 at 21:58

Dist said:
Since i have no contracts and no credit cards/overdrafts, i guess my credit rating must be poor as well after reading this thread. Whats annoying is that by the sounds of it i wont be able to improve my credit rating either as i have no reason to go into debt, i very rarely spend money, and have no need for a phone contract at the moment. Is there no other way to increase credit rating?

but why would you want a good credit rating if you dont ever want to get credit? just get a credit card and get some prezzies and pay it off if you do!

Dist · 17 Apr 2008 at 22:15

Stoned_SpaZZZ said:
but why would you want a good credit rating if you dont ever want to get credit? just get a credit card and get some prezzies and pay it off if you do!

Because although i dont need credit right now as im a student, in a few years time i will need good credit, especialy when i start looking for a house.

Energize · 17 Apr 2008 at 22:25

When I opened my bank account I got a credit card with a £1,500 limit without even asking despite having no credit history and no job.

V-Spec · 18 Apr 2008 at 09:17

Dist said:
Since i have no contracts and no credit cards/overdrafts, i guess my credit rating must be poor as well after reading this thread. Whats annoying is that by the sounds of it i wont be able to improve my credit rating either as i have no reason to go into debt, i very rarely spend money, and have no need for a phone contract at the moment. Is there no other way to increase credit rating?

The only way to get a good credit rating is to apply for credit, remember you don't even need to use it as the biggest weighting is the amount of active accounts and a good payment history... you could easily give yourself a good headstart by going and getting a couple of store cards (burtons/debenhams/etc) which are easy to get, the great thing is that you don't even need to spend a penny, so long as they exist and are active on your credit file your rating will probably be "fair" or "good" after as little as 6-12 months..
A lot of credit advice companies recommend that you never close store card or credit card accounts, just leave them active with £0 balance and forget about them, as they're always contributing to a good score.

Smitho3 said:
oh dear, all of them are within the last 12 months (various current accounts being opened + a couple of loan apps that i decided not to bother taking.) looks like i need to wait a year before i apply for any new credit... in the mean time i will try and use capitol one to increase my rating. thanks for the advice guys

The best way to improve your rating with 20 searches in the last 12 months, is to do absolutley nothing at all, the reason you have a poor rating is because the amount of searches vs the amount of active accounts, lenders view this as risky as it shows that you "mess around" a lot with applications, thats like almost 2 applications for credit per month.. Your best off sitting on it for at least one year tbh..

Hedge · 18 Apr 2008 at 11:07

My credit is totally destroyed.

Got myself into 5 grand debt and was missing payments left right and centre. Then i lost my job, then couldnt afford payments.

So now i just pay them back at about 60 quid a month (although i can afford to up that now, however they froze interest so im not gonna say anything

)