Credit Score

[400ixl]

Credit score companies on the whole are marketing companies to sell you stuff. Clearscore is the worst of them all as they deliberately lower the score they give to drive product sales.

The Credit Club from Moneysavingexpert.com is probably the most realistic of them.

Applying for credit can in itself lower your score if you are seen to be making a number of applications.

Using credit available to you can be a good and bad. Using some of it and paying it back monthly is good, use too much of it (e.g. max out your card) even if you pay it off is not always seen as good. Not paying it off is clearly bad. So ideally use one and never go over 50-70% of the available limit paying it off monthly without fail.

Whilst having Direct Debit payments coming from an account is good, unfortunately council tax isn't part of those counted for a credit score. Are their other bills that are or can be paid from the current account? Rent, utilities etc are seen as good and do get taken into consideration.

Savings are also only seen as included if they are part of the balance of the current account.

[Floridarules]

It’s unfair and I don’t agree with it, but the advice on here to get a credit card and pay it off every month is true.😡
Just need to make sure that it’s paid off each month and this creates a picture of stability for the lender when assessing the risk.
Unfortunately the advice posted to buy everything with cash and avoid debt is not going to help someone applying for a mortgage. 😥

[meggy]

Having no credit is ( for credit score) almost as bad as too much credit as there is no payment history to score on. Lots of cards with high balances, lots of new applications will also lower score. Of course ALL credit taken must be paid on time as late payments recorded will not reflect well.

My friend had this issue ( no credit). I suggested she built her score up by taking out a credit card, use it for ( say) petrol expenses, set up direct debit to ensure paid on time every month and in full ( I was not encouraging spending that she could not afford). She also took out a phone contract. Over time her score became much better.

[400ixl]

Spending on the card should be existing spend, just shifting that spend from cash / debit card to credit card and paying it off monthly in one go instead.

[Fuellady]

Originally Posted by tspill

Credit scores are generally only a very rough guide to your credit.
Most companies dont use these at all. When doing a credit check, they will get loads of details about you from the credit agency. They will then have their own rules that they apply to this information to make their decision.
We used Experian and Equifax in my old company and the rules were regularly tweaked and differing fraud techniques arose.
It is very difficult to get the details of how they assess credit for people. Maybe ask them?

See more...

Thank you, we might have to ask them actually. I don't think credit score is the issue with my eldest not getting a cc as she has had her own phone contract for years, plus broadband at her flat in her name, electric etc. When she tries to get a credit report she gets a message saying her address can't be verified. It's very frustrating that she can't get a report to see what's wrong so a phone call might be the best option for us now.

Originally Posted by Chair1519

Credit scores are just weird at times. I get one every month from Credit Karma. Got the account from one of the banks when there had been a data loss by them.

I have a good score but its odd/interesting in the section where it tells me how to make it better. Its full of contradictions.

Firstly I only have a single amex charge card. Don't have a credit card. It informs me I don't therefore have enough credit available and that to have best points I need a credit card with at least £11000 credit on it.

On the other hand I get penalised for having to open a Very account last December. I didn't want to open one but in order to get £50 off an apple product I needed to have an account with them. I paid for the thing immediately and closed the account. However that also caused a decrease the points.

So to get a better score you need to take credit but if you take credit your score can go down.

I also get penalised for not having a mortgage and it advises I should get one. The house was paid off 5 years ago I don't want a mortgate.

At the end of the day the score doesn't affect me at all as I don't want credit. I would hate to be starting off now. You need to prove you are good with credit to increase your score to get better credit rates. MSE have a soft search facilities to see which cards you may get approved for without having to actually apply as applying drops your credit score in itself.

See more...

Yes, this exactly. I also get a report from Credit Karma every month and some months it says I need to get more credit and other months it says I have too much when nothing has changed! It's a minefield.

Originally Posted by danisleigh

My son is 18 and I recently transferred his phone contract from my name into his. I always thought a phone contract was the best way to start getting a credit history.

See more...

This is helpful, thank you. I didn't know that it was possible to change names on a phone contract. We could take it on for a while, then try to transfer it to DD, maybe. It's an option worth looking at.

[Fuellady]

Originally Posted by Mazbar

It is a very difficult one. One of the first thing your daughter needs to do is get something she has to pay with a direct debit, and pay for over 6 months without missing a payment and always be on time. Also she needs any credit card no matter the interest. Only use it for small items and pay it off each month so no interest payment. These are the best ways of improving her credit rating.
When our daughter turned 18 one of the first things we made her get was a credit card, she pays it off every month. She then found it easy to get a mobile contract. By the time she turned 19 her credit score was 975. By the time she was she had no problem buying a car on pcp.
Other things that help, being on the election roll at the address where she applied for the card, having a passport and a driving license even a provisional.

See more...

Thank you. She does pay some things by direct debit already - her rent and broadband, and she is on the electoral roll at her current address. She has a passport and a provisional driving licence too. I think you're right - she needs an easy to get cc to use and pay off every month. I would trust her to do this, she's very responsible at paying her bills. Hasn't asked us for a penny since she left home for college at 17 years old, although they both know we're here to help if they need us. I kind of wish I'd pushed them to take on a bit more credit early on, but it's always a worry when they're trying to find their feet at first that they take on too much.

Originally Posted by klr15

Interesting they won’t let her have a phone contact, I got my first phone contract was 18, I was working part time in McDonald’s and was a student, it was the first credit I’d had as my other phones were pay as you go and I was accepted no problems. I think that was with carphone, could she try somewhere else?

See more...

Yes, I was a bit surprised because my eldest daughter got a phone contract no problem a few years ago. Maybe things have changed and the criteria are tougher now? It was vodafone directly that she tried - she has broadband with T-mobile I think, it might be worth trying them as she has a history.

Originally Posted by cartoonp

Simple advice go to The CAB and get advice

See more...

Good advice, but they think I'm the CAB We'll try various credit routes first, but it's worth keeping in mind, thank you.

[Fuellady]

Originally Posted by Lell

My son and daughter both got mobile phone contacts with O2 and EE as students to start building up a credit history. We still paid them but transferred the money to their accounts. My daughter then got her home Wifi with Three again still a student. Do they have car insurance? If they pay that monthly that is s credit agreement too. By doing a couple of these things my son got his first mortgage without any issues at 22yo.

See more...

Thank you, I feel like they're doing the right things, but it's not working . My eldest got a phone contract no problem a few years ago when she was a student but the youngest doesn't seem to be so lucky. They both have home wifi in their own names, paid by direct debit. Youngest has only had hers since November, so maybe not long enough to impact her score yet? Neither drive, although they do have provisional licences so no car insurance.

Originally Posted by 400ixl

Credit score companies on the whole are marketing companies to sell you stuff. Clearscore is the worst of them all as they deliberately lower the score they give to drive product sales.

The Credit Club from Moneysavingexpert.com is probably the most realistic of them.

Applying for credit can in itself lower your score if you are seen to be making a number of applications.

Using credit available to you can be a good and bad. Using some of it and paying it back monthly is good, use too much of it (e.g. max out your card) even if you pay it off is not always seen as good. Not paying it off is clearly bad. So ideally use one and never go over 50-70% of the available limit paying it off monthly without fail.

Whilst having Direct Debit payments coming from an account is good, unfortunately council tax isn't part of those counted for a credit score. Are their other bills that are or can be paid from the current account? Rent, utilities etc are seen as good and do get taken into consideration.

Savings are also only seen as included if they are part of the balance of the current account.

See more...

It's such a tricky area. Sometimes you can't do right for doing wrong with spending/credit! I was looking at Credit Club today, I'll get them both to sign up.

Unfortunately (!) they don't have a lot of bills. They both pay rent, broadband. Eldest has utilities joint with her flatmate. Youngest electric & gas is a pay as you go meter so that won't help her. Oh, just remembered, youngest has Amazon Prime - she would pay that by direct debit but not sure that counts?

Both have separate savings accounts, so not in their "spending" accounts.

Originally Posted by Floridarules

It’s unfair and I don’t agree with it, but the advice on here to get a credit card and pay it off every month is true.😡
Just need to make sure that it’s paid off each month and this creates a picture of stability for the lender when assessing the risk.
Unfortunately the advice posted to buy everything with cash and avoid debt is not going to help someone applying for a mortgage. 😥

See more...

I agree - they definitely need some credit to help them get mortgages later on. Eldest is already saving for a deposit so we need this sorted sooner rather than later. I would trust them both implicitly to pay off a credit card in full every month. We've talked about this and they would just buy a food shop once a month on the cc and clear it straight away.

Originally Posted by meggy

Having no credit is ( for credit score) almost as bad as too much credit as there is no payment history to score on. Lots of cards with high balances, lots of new applications will also lower score. Of course ALL credit taken must be paid on time as late payments recorded will not reflect well.

My friend had this issue ( no credit). I suggested she built her score up by taking out a credit card, use it for ( say) petrol expenses, set up direct debit to ensure paid on time every month and in full ( I was not encouraging spending that she could not afford). She also took out a phone contract. Over time her score became much better.

See more...

Thank you - yes, getting started with credit seems to be the problem, at least for my youngest. As I've said in other replies, there is an address issue with the eldest which we need to find out about. If/when they get credit, they know how important it is to pay it off promptly.

I'm glad your friend got sorted out, my girls would do the same - baby steps paying small food shop on card then clearing, just to prove credit worthiness. Unfortunately, they can't seem to get a start

[Wee_Red]

I'm repeating others here but I will say something on addresses. I worked for one of the largest phone companies and used to run credit checks daily. I had a couple come in to take out a contract and they were declined straight away. They couldn't figure out why and were absolutely mortified. I couldn't say for definite but based on their address for a year, the problem was obvious.

Years ago, there was a huge new development of 'luxury' flats on the edge of the city centre. The idea is that they would be marketed towards young professionals .
What actually happened was the vast majority of flats were sold then let out by landlords with a less than stellar reputation. It was filled with students, and used as hide outs for drug dealers/takers and sex workers.
So many of the properties in the development defaulted on the mortgages/were repossessed.

Anyone that used this address was always declined for a phone contract even if they had a crystal clear credit rating before hand and paid their rent.

This is something that could be useful in future for your children if they're moving frequently due to education purposes.

Sim only is quite a good starter - start off 30 day rolling and then 'upgrade' to 12 month. The high interest credit card is not ideal but if utilised as mentioned before - it will make a difference to scoring.

MSE credit club is excellent - the likelihood of acceptance checker is brilliant to avoid repeated entries on to the file.

One last thing - Amazon Prime and Apple Music etc will not count as a direct debit. They are paid monthly but taken as a card purchase - removes the need for a credit check for the subscription to ensure more customers.

[400ixl]

Interesting point on subscription services being card purchases.

[Fuellady]

Originally Posted by Wee_Red

I'm repeating others here but I will say something on addresses. I worked for one of the largest phone companies and used to run credit checks daily. I had a couple come in to take out a contract and they were declined straight away. They couldn't figure out why and were absolutely mortified. I couldn't say for definite but based on their address for a year, the problem was obvious.

Years ago, there was a huge new development of 'luxury' flats on the edge of the city centre. The idea is that they would be marketed towards young professionals .
What actually happened was the vast majority of flats were sold then let out by landlords with a less than stellar reputation. It was filled with students, and used as hide outs for drug dealers/takers and sex workers.
So many of the properties in the development defaulted on the mortgages/were repossessed.

Anyone that used this address was always declined for a phone contract even if they had a crystal clear credit rating before hand and paid their rent.

This is something that could be useful in future for your children if they're moving frequently due to education purposes.

Sim only is quite a good starter - start off 30 day rolling and then 'upgrade' to 12 month. The high interest credit card is not ideal but if utilised as mentioned before - it will make a difference to scoring.

MSE credit club is excellent - the likelihood of acceptance checker is brilliant to avoid repeated entries on to the file.

One last thing - Amazon Prime and Apple Music etc will not count as a direct debit. They are paid monthly but taken as a card purchase - removes the need for a credit check for the subscription to ensure more customers.

See more...

Thank you, that's very interesting about the addresses. However, the daughter with the address problem already has a mobile phone contract! It's the other one having the problem with that.

Vodafone did say they would approve her for sim only, but I think she wants a new phone - the one she has is one of my old cast-off's and she's had it a few years. However, it might be worth it for a few months, so that they can see that she's good for it (if the phone holds up that long )

DD who has moved flats a lot started off in halls, then moved to private rent through agencies for the next 3 years. As far as I know, all of the letting agencies were decent and law abiding. She made her final move recently and her and her flatmate have decided this is their final move before going their separate ways/buying their own properties. They've lived together as flatmates since being thrown together in halls in first year and became great friends

Thanks for clearing up about the Amazon Prime etc. not counting towards credit score.