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How can I get some credit history when no one will lend to me?

(30 Posts)
Babysealion Mon 11-Nov-13 10:05:51

I'm expecting a baby in January and me and DP are saving up for a mortgage. We both work full time.
I'm 18, DP is 22. Our combined income before tax is around 28k a year. However I'm worried that I won't be able to get a mortgage and I have absolutely no credit history. No one will lend to me.
In May I applied for a New Look store card - rejected.
August applied for a Barclaycard - rejected.
Just got a rejection letter today for an Aqua credit card which is apparently specifically designed to help those with no credit history or bad credit ratings to rebuild credit rating.
My phone contract is paid for by my grandad and DP has a car on finance, we private rent. DP has a credit card which he is paying off.
I'm not looking to spend money I haven't got and build up debt - the plan was to put some purchases on that I could afford without the credit card, and then pay it off when the bill comes, just to build up a bit of credit history! Argh. Any advice?

specialsubject Mon 11-Nov-13 10:17:32

can you get your own phone contract? That will help.

also to have a car on finance (always a money pit) and a credit card debt just shouts 'bad with money'. Is your partner's poor record affecting you?

Don't get store cards, huge interest rates.

Babysealion Mon 11-Nov-13 10:22:02

specialsubject DP bought the car on finance before he met me and it's almost paid off. He overpays it every month. The CC debt will also be paid off by next year, we have enough savings that could pay it all off in one go but I don't really feel comfortable dipping into the savings with my upcoming maternity leave (will be going onto SMP)

ShatnersBassoon Mon 11-Nov-13 10:22:18

Get your own phone contract, open a catalogue credit account e.g. Next, take out your own insurance policy for the car and pay monthly.

Get rid of the car finance and credit card debt asap.

Babysealion Mon 11-Nov-13 10:22:50

The only reason I wanted a store card was to try and get a bit of credit history in my name - ie buy a pair of jeans, go online and pay it off a few days later.

Babysealion Mon 11-Nov-13 10:24:32

Shatners I don't drive so there's no point putting me on the insurance. I didn't think of Next.

CogitoErgoSometimes Mon 11-Nov-13 10:27:59

If you keep applying for credit and being turned down that's going to look worse on your credit history than by doing nothing. If you have a regular income, a current account, use a debit card and have done so for several years I would suggest you book an appointment with your bank and talk to them about the problem. As an existing & trusted account holder, they may be able to offer you some advice. But don't just keep applying for credit willy nilly if you're being turned down or you really will look like someone with financial problems.

Babysealion Mon 11-Nov-13 10:30:29

Thanks Cogito I did wonder if that could be part of the problem. I won't be applying for anymore now anyway for a while.
But say at the end of next year we had enough for a mortgage deposit - would they automatically say no as I have no rating?

Babysealion Mon 11-Nov-13 10:34:06

It frustrates me so much because a lot of my friends have gone off to university and have been given huge interest-free overdrafts, been able to take out credit cards/store cards etc yet I can't get anything despite the fact I have a regular income and we are never in our overdraft or anything like that.

Cindy34 Mon 11-Nov-13 10:42:42

Make sure the ID checks will go through.
So check that you are registered to vote from the address at which you currently live.
Any documents you have, partners driving licence as example, have your current address on, credit card and car finance as linked to the address - having debts is not always a bad thing, as it shows they can be paid off. Only a bad thing if big arrears build up, in my view.
Bank account - is that linked to your address?

Mortgage companies will look at affordability, so is there the available income to pay the repayments, including if the mortgage rate goes up by say 2%.

Rockchick1984 Mon 11-Nov-13 10:45:25

What is your annual income? A common mistake people make is not checking what the minimum salary requirements are for a product (credit card, storecard etc). My mum recently got turned down despite having excellent credit history - she didn't notice that the minimum annual salary was £10,000 and she earns less than that since going part time.

ShatnersBassoon Mon 11-Nov-13 10:46:24

Your partner has two rather risky credit accounts and your income isn't large enough to cope with more risk. That's all there is to it. Your student friends are likely to earn more than you within three years. The credit companies' decisions are based on logic and likelihood. Don't take it personally.

If in a year's time you have got rid of the risky debt and are earning enough between you to comfortably afford the repayments, a mortgage should be possible. Don't admit defeat yet!

Cindy34 Mon 11-Nov-13 10:46:35

As you have had store card rejected, I would try to find out why. Look on Experian, Equifax, websites to see how to get the very low cost credit report. MoneysavingExpert site I expect will have info about getting credit reports, so look there.

Cindy34 Mon 11-Nov-13 10:48:31

Details here www.moneysavingexpert.com/loans/credit-rating-credit-score#files for how to get Statutory Credit File from each of the main credit reference companies.

CockyMcChicken Mon 11-Nov-13 10:54:15

I would advise you check what's on your credit file (I use checkmyfile, their customer service is top notch and they can advise you).

Make sure you are on the electoral role.

And don't apply for anything else for 2 months. Then try a mobile phone contract or a vanquis credit card.

Your partners credit file will only have impact on you if you are linked, do you have a joint account? His car finance and credit card are a good thing IF he has kept up with payments and never defaulted. It shows he is reliable at paying back.

LadyKooKoo Mon 11-Nov-13 11:39:34

As you are only 18, I doubt you have any adverse credit but check your file anyway with CheckMyFile. They are by far the best and easiest to understand. Make sure to cancel it before the 30 days are up though so that you don't get charged the sucscription cost. Get your DP to do the same.

If you and DP do not have any joint financial links (bank account) then even if he has rubbish credit, this should not impact you.

Make sure you are both on the electoral role.

Don't apply for any credit for six months, two, as previously suggested, is not enough.

Get a mobile phone contract in your name.

Babysealion Mon 11-Nov-13 11:43:58

We have a joint bank account for paying the bills, but this has only been set up since around September. DP has never missed a payment on either his credit card or car finance. Like some other people on here have said, I always assumed this was a good thing because even though he has the debt it shows that he's paying things off and not missing payments?

passedgo Mon 11-Nov-13 11:48:45

The moneysavingexpert provides a really good page on how to get yourself a good credit rating, it's an absolute eye-opener.

One of the key things is to NOT ask for credit, especially from a low budget store like New Look. John Lewis maybe, but that's about it. To the creditors, it looks like you are desperate or can't manage your money.

I had no idea of this until recently. I have a poor credit rating because of a handful of missed payments even though I have massive capital in property.

passedgo Mon 11-Nov-13 11:59:31

You are very young to be getting a mortgage, you might be better off getting your name on the council housing list in a decent area and biding your time.

Keep out of debt! If your friends are getting cards and spending that's their problem later on. Your new baby is your priority now, do what you can to avoid debt and you should be OK. Never buy new baby things, they really do grow out of them so quickly. Have you joined the local baby groups yet?

You have 50 years of working life ahead of you to build up pension and property.

LadyKooKoo Mon 11-Nov-13 12:10:33

Nothing wrong with getting a mortgage early. I was 20 when I bought my first house and at 33 now, I can confidently say, it was the best (financial) decision I have ever made.

nextphase Mon 11-Nov-13 12:39:20

Get your name on the electrol role.
Get your name on the bills at your current address.
Pay in full all the time.

Get the phone contract in your name.

Forget New Look etc. Store cards are not good. Concentrate on getting a footprint without havign credit available, and then look very carfully at the requirements for a credit card - maybe talk to your bank.

Sounds like you've bene sensible to date. Keep it up.

passedgo Mon 11-Nov-13 12:52:12

Ladykookoo, 13 years ago that was the right decision but right now things are very different. Young first-time buyers could easily get caught in negative equity if the bubble bursts (which it may), that's why the government have set up that silly help to buy scheme. Also, when interests rates go up they could be paying more than in the rented sector with little equity later on. I don't think these risks are worth taking when you're 18 and pregnant.

A council home will be more secure and they may be able to buy it eventually.

Babysealion Mon 11-Nov-13 12:54:02

I never thought about getting a council house. We can afford to rent privately though, would it be bad if we did go on the council house list? I'm very conscious of the social housing situation in this country and would hate to think that we were adding to that problem when we can afford to rent without a council house.

TheFantasticFixit Mon 11-Nov-13 13:02:09

I'm not sure why passedgo has advised that you go into council housing when you clearly don't 'need' to. hmm

There's some great advice on here and OP it sounds like you have really got your head screwed on. You are expecting a baby and want to provide a secure home for him or her, that's great. You are not too young to have a mortgage, especially given your circumstances. If you can afford new baby things then why on earth wouldn't you have them? Of course they grow out of them quickly but I you can keep hold of them for any future children that you may have or, if you buy wisely sell the goods that hold a good value (ie pram). I don't know many new, first time mums who don't want new things for their baby.

I would echo the advice to talk to the bank ASAP and get their advice re the mortgage etc. especially with the current Help to Buy schemes running, you could be in your new home even sooner. There is a way of your partner having the mortgage and your salary being taken into account or the total loan amount iirc, but don't quote me on that.

Above all, best wishes for this very exciting time thanks

Babysealion Mon 11-Nov-13 13:08:37

TheFantastic yep I just want to provide a nice, secure home for my baby. The baby was unplanned but I don't want him to suffer or go without just because the pregnancy was unplanned and I'm young - I'm planning on going to university next year, so perhaps our mortgage plans could be put on hold until I've finished my degree and then we have more time to save as well.
Re the baby stuff, we've been very lucky as my family have helped us quite a lot - my mum has bought the pram, and my auntie had a baby a few months ago so they have kept all their old baby stuff for us, and my grandparents bought the nursery furniture as a gift. We've just bought cheap baby clothes though as I know they grow so quickly, and a lot of people have bought us baby clothes as gifts. I feel lucky that we're in a fairly good financial position (despite the CC debt and car finance, but like I said those will be paid off soon enough) but just wish I didn't have this constant black cloud hanging over me. With renting, I just feel like we have no security and it feels like money being poured down the drain IYSWIM - we're going to pay a lot in rent overall, with nothing to show at the end of it, whereas when you're paying off your mortgage, the house is actually yours, which is why we're desperate to get onto the property ladder as quickly as possible.

passedgo Mon 11-Nov-13 13:27:07

It's great to have a mortgage but when you're on an average salary and very young, with a baby on the way and hoping to study for a degree, I would advise you to stay debt-free if possible.

Getting on the housing ladder is great when prices are going up relentlessly but salaries haven't gone up for the past 20 years or so and it's only a matter of time before people (ie first time buyers) simply will not be able to afford mortgages and house prices will have to come down. Help to buy mortgages are good because the government picks up any losses however they are an indication that the housing market has reached a point of no return.

Also remember that owning a property in itself costs money. You have to find money for repairs and maintenance, buildings insurance and if it's not properly insulated your bills could be much higher.

And bear in mind that if your partner loses his job you could lose your home. This doesn't happen if you are in social housing. As I said before, if you do choose social housing, consider the location carefully.

Cindy34 Mon 11-Nov-13 17:33:58

If you are going to go to university, do you really want to decide now where to live? You may well want to live near university.

Pay off debts. Avoid getting into debt. Build up a savings pot, as the larger the deposit the more choices you get of lenders when it comes to getting a mortgage.

colditz Mon 11-Nov-13 17:36:21

Get a catalogue.

"With renting, I just feel like we have no security and it feels like money being poured down the drain IYSWIM - we're going to pay a lot in rent overall, with nothing to show at the end of it, whereas when you're paying off your mortgage, the house is actually yours, which is why we're desperate to get onto the property ladder as quickly as possible."

Owning a house a good long term ambition. But getting a mortgage aged 18 when your combined incomes are low, you have a baby and are hoping to go to uni isn't sensible!

There are lots of advantages to renting - you don't have to pay the house insurance or get a new boiler if it dies. It's cheaper to move if you two end up getting jobs somewhere else. If DH loses job or has hours reduced, it's easier to get help with the rent through Housing Benefit than it is with a mortgage.

RedHelenB Mon 11-Nov-13 19:31:16

When you are a student you can get your student account with credit card! Really not a good idea to get a mortgage based on 2 salaries when very soon you will be down to one! After your degree when you're in a graduate job ( hopefully) you will be plenty young enough to start with buying a house.

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