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Can you improve a credit rating with direct debits?

(15 Posts)
Campari Fri 18-Jan-13 09:44:15

This might be completely wrong, but I was told by a colleague yesterday that a fast way to improve your credit rating is to set up a direct debit for as many bills as you can, and as long as you are affording them, your credit rating will improve within months??

If this is true, should I ditch cash & make as many outgoings as possible a DD??

The only DD I pay myself is the horse livery, does that count?

Gomez Fri 18-Jan-13 09:47:12

No sorry it will make no difference at all.

MirandaWest Fri 18-Jan-13 09:48:38

Doesn't make any difference - I have lots of DDs and a shot credit rating.

Gomez Fri 18-Jan-13 09:50:48

Well unless the bills are with the CRAs and even then the method of payment makes no difference, they just need to be paid in time. So back to original answer DDs from your account make no difference.

bunchamunchycrunchycarrots Fri 18-Jan-13 10:05:20

I've read that if you ahve a credit card, use it every month, but pay the full amount off each month with no late payments then that can improve your credit rating. Not heard anything about DDs helping though. I guess it simply ensures you never have a late payment so that in itself is good for your credit rating.

Campari Fri 18-Jan-13 10:05:52

I must have misunderstood it then.

MirandaWest Fri 18-Jan-13 10:07:41

I think the credit card thing can help but if you have a bad credit rating getting a credit card is a bit tricky. There are ones that are aimed at people with low credit ratings (and have massive APRs) so you would have to pay it off every month.

Campari Fri 18-Jan-13 10:11:38

What about store cards, for Debenhams etc...I shop there a lot, am I better of getting one of their cards to improve my rating by paying it off fully each month?

CogitoErgoSometimes Fri 18-Jan-13 12:16:19

What I think your colleague is saying is that you will get a more positive credit score if you have loans/CCs/utility bills/HP agreements and so forth that you pay back regularly than if you have no history of credit whatsoever. If someone already has bad credit and a poor track record of debt or late payments, Direct Debits will not improve the picture all by themselves.

If you have no other debts, no history of late payments and so forth and you get a store-card or some other credit card, by paying off the balance in full you should look like a really good risk.

BTW.... you can get your own credit score using someone like Experian. They ask for payment details but if you sign up, print off your report and cancel within the trial period, you won't be charged. When I printed mine I was fascinated by the things that were included or omitted.

noisytoys Fri 18-Jan-13 12:21:02

If you have credit agreements (monthly contract phone. sky tv etc) then it may not vastly improve your credit rating if you pay them, but it will harm it if you don't

FireOverBabylon Fri 18-Jan-13 12:28:07

Campari, please don't get a Store card, if you already have problems with your credit. It's so easy to get hugely expensive and spiralling debt with one of those.

If you know you want to "shop your way to a better credit rating" as it were, get a credit card rather than a store card, and make sure you pay it off every month, even if you have to set up a direct debit to do so.

Originalnex Sun 11-Dec-16 01:47:18

I would assume that if you have Defaults lets say for example you owe £100 to VIRGIN MOBILE and £250 to VIRGIN TV AND BROADBAND... If you set up direct debits to pay these DEBTS off which have defaulted ... I would assume by making payments to the "DEFAULTS/DEBTS" it would make them no longer defaults.. however this still may take a couple of month probably 2-3 months before showing on your credit score as they need to see constant payments

GreenTureen Sun 11-Dec-16 19:02:30

They can help in the way of - it's an automatic payment so except for having the money in your account, you don't need to remember to make a manual payment. So they take away the risk of late or missed payments, which, if you were having them before, will definitely be an improvement.

And Orignalex, that's completely wrong. A default is a default and will remain on your file for 6 years, regardless of whether you're paying or have paid it off.

whyohwhy000 Sun 11-Dec-16 20:20:44

It can because you're less likely to miss a payment, and it's a couple of quid a month cheaper to pay by DD so it can help if money is tight.

bobdylannumber1 Sun 11-Dec-16 23:46:07

Direct debits make no difference to your credit rating, utility bills don't appear on credit report either. You need to pay loans religiously every month no defaults late payments pay also stay out of your overdraft that's a big thing that lenders look at.

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