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I was just on my online banking app (Lloyds) and it offered me a credit score check, which came back as 'Good' as well as feedback on how to improve to 'Excellent'. It lets you run a simulation on various options and essentially recommended that if I take out a credit card with a larger limit (£4k+) and 'manage it correctly' this will fairly swiftly bump me up to Excellent and was in fact the only change I could make other than take out car finance which seems excessive. Although would tie in nicely with my other thread about buying a van...
I mentioned it to a friend and they seemed to agree that it was the way to do things, and suggested using a credit card for all monthly expenses before paying it off each month and essentially using it like a current account. Is this what the bank will view as managing my credit well? Or would they rather see me have the ability to put 'x' amount on a credit card, but not actually have to use it?
If it's the former, any recommendations for the cards that currently give the best rewards/cashback/points etc. or the best place to compare?
I've only ever paid for cars etc. outright and never really delved into finance or loans. But I'm hoping to get a mortgage sorted once the general s**tshow of interest rates and house buying settles next year (if it does) so I've got a bit of time to try and get some marginal gains!
Go to Moneysavingexpert, theres a whole raft of info about this but essentially yes, the former is true and will improve your credit score. The latter can hurt your rating, too much credit (unused) is as bad as too little.
Yes- it shows you can be trusted with other people's money. It also helps if you had a £4k limit on your card but only use £2k each month then you have a credit headroom.
A friend's parents were lent money to buy their house from his grandparents. When they wanted to move, the bank their current account & savings were with wouldn't give them a mortgage as they had no credit history so were seen as a risk, despite a healthy balance on both accounts.
If it’s the former, any recommendations for the cards that currently give the best rewards/cashback/points etc. or the best place to compare?
As above, everything you need to read is on MoneysavingExpert.
But yes, get yourself a 0% purchase CC, use it cleverly. There are various benefits too, useful if your going on Holiday, use it to boost your Credit Rating, use it to get the extra protection on larger purchases etc etc...
Thanks, I'll head on over there and do some reading. Oddly they wouldn't extend my current £2k limit past £2.5k when I requested it recently for a bike purchase so I just bought it outright but they will happily offer me something many times larger on a new card. But perhaps the type/age of card I have with them just can't be increased past a certain point.
My monthly outgoings are pretty small currently and mostly direct debits (just gym, phone, car tax essentially) and I'm not a big spender on a daily/weekly basis I just have the occasional splurge on a bigger purchase (bike normally!) but I'll see about swapping across to a card that gives me a useful reward/cash back and see how that plays out. My car insurance is due shortly so perhaps I can chuck that on it for starters...
i never spend anything on debit cards, (except online car tax) my credit rating is 999.
debit cards online, something goes wrong its your problem (money already gone, to be reclaimed) vs a credit card its their problem (transaction put on hold)
my amex pay 1% cashback, i'm due £155 next month. (min £3k spend pa to get it) can be used via paypal for websites not accepting.
my barclaycard pays 0.5%, they do 0% cash transfer loans at circa 3.3% fee for 18m.
Santander 123 c/c pays cashback on petrol , supermarkets etc..
as per martin lewis, pay off in full every month..
Credit Karma is a useful thing to refer to - credit score along with suggestions on improving it. Shows the factors that affect credit score in general along with personal suggestions based on your own current score.
It suggests trying to maintain a credit utilisation rate of between 1% and 25%, i.e. don't use all your credit.
I use a cashback card for all purchases, paid off monthly in full thankfully.
Go to MSE, as above. Get a card, set up direct debit to pay it off in full every month a couple of days after payday.
When it comes to a mortgage, it likely won't make a fig of difference to anything anyway unless you have a history of non-payments.
We buy everything we possibly can on a credit card and pay off each month.
Look out for the one with the best points/vouchers etc.
I would tend to avoid looking at credit scores. Credit is very subjective to the lender.
When it comes to a mortgage, it likely won’t make a fig of difference to anything anyway unless you have a history of non-payments.
"History" doing some heavy lifting there. A mate was refused a new phone contract on a much lesser rate than he's already on because of 2 or 3 missed payments even though it was with the same company and it was their fault the payments weren't taken. Obviously your score doesn't reflect that unless you put a correction appeal in but it's still potentailly enough to make you a bad credit risk.
It does look like I won't be spending enough each month to utilise the better cashback cards, unless I book myself a nice holiday using an introductory offer on a first purchase which probably defies the point of having it to save/make money. I'll do some digging as I may just be better off using a 0% card for purchasing and not overthinking the rest of it.
“History” doing some heavy lifting there.
I have a shocking credit score despite [sorry about this] owning two houses collectively worth >£2m with just a £60k mortgage (will be paid off this year), not having an overdraft, loans or any debt or use of my credit card. Never missed a mortgage payment but apparently I defaulted on a water bill for < £200 back in 2014 so I'm a bad risk!
I try not to let it get me down. 😉
“History” doing some heavy lifting there.
Perhaps. Where I was going with this was, you're unlikely to get a better mortgage rate from a lender because someone's rated you as 'excellent' rather than 'great,' they'll just say yes or no. Though I realise since posting, it might mean that more lenders say yes.
In any case, you don't have "a" credit score, rather it's someone's best guess as to your credit worthiness and that could vary between lenders.
I have a shocking credit score
My mum's the same. She's never owed a penny to anyone in her life. Her house was a lump payment from the sale of the family farm, she's never had a credit card, phone is PAYG. Her 'credit rating' is toilet.
Somewhat perversely, you have to be in debt to prove that you're trustworthy enough not to be in debt. I've maxed out a £10k credit card, twice. My credit rating is deemed excellent.
It is amazing how the credit scoring industry has become an "inertia marketer" for the banks.
Not sure if it will make a difference to a mortgage application but a credit card will definitely help your credit score.
It is useful that Lloyds coach you in this with a scenario model, I largely see the credit score industry as a racket.
I used Experian when checking for old loans to potentially make a claim against and my score was 999. I have a credit card that is used for all purchases and paid off each month on time, I get an occasional car loan and have paid mortgage on time for two decades. The score report said that it was good because I did not have many loans etc. The following months saw me bombarded with offers of loans facilitated by Experian 🙂
Yes I was quite pleased, they let you pick various options to see what would improve things the most and even customise it. For example you can see the difference between the effect of larger limit/less use compared to smaller limit maxed out on a credit card and adding a loan/car finance for 'x' amount etc.
Ultimately I'm sure they're using this information/tinkering to then try and offer me loans or similar down the line but it seems quite handy to help get your head around things!
Get a card and set it up to automatically pay the full balance each month. There is no point having a 0% card unless you plan to overspend/use it as a short term loan and not pay it off fully each month.