Understanding Credit Score

Gamefreak501 · 20 Apr 2011 at 12:09

Gibbs-UK said:
What ever you do, if you do end up getting refused do not apply for another loan/credit within 6 months after the first refusal, one of the posters mentioned 1 year but as far as I am aware it is 6 months.

There is a company out there called credit plus or something along those lines, basically they will give you a visa/master card and you pay somewhat around £6 per month and youonly use what ever you have on the card, so there is no way you can be over the limit or what not, this is also a very good thing to have to gain a good credit repart.

Ah - prepaid Cards - I forgot all about these - they're a good way to build a Credit File as well - and very low risk because you can only spend what you have put on it.

He'sDeadJim! · 20 Apr 2011 at 12:09

lemonkettaz said:
Hello,

I have recently tried getting a loan however been rejected twice so checked out my credit score and it says I have a poor rating...

I haven't a clue why, what do you need to do to get a loan ? without paying an awful amount of interest on it

There are 2 main credit rating agencies I believe one is equifax, can't remember the other, but if you contact them you can obtain details of your credit rating which should make it easier to work on improving your score. The problem is when you have a credit application declined it will negatively affect your score, you need to contact them before making further applications.

mattyprice4004 · 20 Apr 2011 at 12:09

Use something like Wonga.com to help build your score - you'd only pay about £10 if you had the loan for a couple of days and repaid early. Plus if you go through Quidco you get £15 cashback.

I did this, and my score is much better than it used to be.

[TW]Fox · 20 Apr 2011 at 12:09

Gamefreak501 said:
Ah - prepaid Cards - I forgot all about these - they're a good way to build a Credit File as well - and very low risk because you can only spend what you have put on it.

How would a prepaid card build a credit file when they do not involve credit?

Gamefreak501 · 20 Apr 2011 at 12:12

[TW]Fox;18945565 said:
How would a prepaid card build a credit file when they do not involve credit?

Ah thats a good point, further reading indicates that such information may not be exchanged with the likes of Equifax...so I'm wrong with regard to prepaid it seems.

Source: http://www.what-prepaid-card.co.uk/prepaid-card-questions/improve-my-credit-rating.html

lemonkettaz · 20 Apr 2011 at 12:15

platypus said:
With a low/poor credit rating you'll get a starter card with a horrendous % charge on balances. Just be sensible with it.

I guess this is what I'd get put on? Just to be sure I won't pay any interest as long as I pay the balance off in full ?

If I get one the most that will go on it monthly is £140 to cover food.

Gamefreak501 · 20 Apr 2011 at 12:16

lemonkettaz said:
I guess this is what I'd get put on? Just to be sure I won't pay any interest as long as I pay the balance off in full ?

If I get one the most that will go on it monthly is £140 to cover food.

Nope, you won't pay any interest as long as the balance is paid off in full

platypus · 20 Apr 2011 at 12:22

[TW]Fox;18945543 said:
(There is no 'rating', btw, just a pile of information the lenders can use as they see fit)

I think most people confuse the credit score with being a rating.

lemonkettaz · 20 Apr 2011 at 12:24

As for my credit score/rating? Is there any other reason why it could be Poor?

Or is it just because all I have is a student loan and phone contract?

[TW]Fox · 20 Apr 2011 at 12:25

lemonkettaz said:
As for my credit score/rating? Is there any other reason why it could be Poor?

Or is it just because all I have is a student loan and phone contract?

Have you ever missed any payments?

Your student loan is irrelevent, btw.

britboy4321 · 20 Apr 2011 at 12:41

Just try and get into debt more and pay it off.

A credit card, payments made on direct debit monthly, is ideal for this. Even if they only offer you £100 at the start ..

People who never get into debt are making a rod for their own back later on .. not really fair, but I've seen plenty of perfectly good people be refused any mortgage because they've never proved they can handle debt ..

lemonkettaz · 20 Apr 2011 at 12:58

[TW]Fox;18945673 said:
Have you ever missed any payments?

Your student loan is irrelevent, btw.

All I can think of is when living in a shared student flat, one of us paid late on the gas bill, but never missed a payment? or is that the same thing..

Why would I be put on a bad rating for that...?

[FnG]magnolia · 20 Apr 2011 at 13:01

britboy4321 said:
Just try and get into debt more and pay it off.

The OP is unable to get a loan and therefore can't get into more debt and pay it off. In fact, your post is a summary of the OP's starting post :/

platypus · 20 Apr 2011 at 13:52

lemonkettaz said:
All I can think of is when living in a shared student flat, one of us paid late on the gas bill, but never missed a payment? or is that the same thing..

Why would I be put on a bad rating for that...?

It's seen as defaulting/being late on a credit agreement; whilst it largely depends on whether the account was settled or not, it will still be on your credit history for 6 years subsequent.

lemonkettaz · 20 Apr 2011 at 13:55

6years, does this mean I won't get a good rating till this time has passed?

platypus · 20 Apr 2011 at 14:05

No, it just means it will be on your credit history, which is one thing amongst others that companies use when they decide whether or not to give you credit.

Voltjunkie · 20 Apr 2011 at 14:05

lemonkettaz said:
6years, does this mean I won't get a good rating till this time has passed?

No but if it is on your credit report (it may well not be, you said you've checked it yourself?) then it will be taken into account by lenders when you make applications.

It seems to me that you are being declined due to a lack of credit history and not a poor credit history. Applying for any credit card aimed at people with a poor/non-existent credit history and meeting at least the minimum payments over a three to six month period will improve your rating greatly.

lemonkettaz · 20 Apr 2011 at 14:12

Ok, so definitely the best thing seems to be looking at credit cards, or the best thing to do is to have a look around the banks?

I am with Barclays, so will have a pop in tomorrow...

LordSplodge · 20 Apr 2011 at 14:19

Bengaboy said:
Sorry to hijack the thread slightly, but it saves me starting a whole new one to ask this.

I have about £600 on a Credit Card, and I am paying it back £200 a month. Will this ruin my credit rating because it is not being payed back in a oner? Cheers

Nope as long as payments are made (I.e no defaults) then it has the same effect on your credit file as paying it all back.

The only real issue is are you paying interest? if so pay it off!

platypus · 20 Apr 2011 at 14:39

lemonkettaz said:
Ok, so definitely the best thing seems to be looking at credit cards, or the best thing to do is to have a look around the banks?

I am with Barclays, so will have a pop in tomorrow...

Whilst at University I got a Capital One card with a horrendous (39% I think) interest rate. Limited myself to buying food on it, and settled the full balance each month to avoid interest. Worked a treat.