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Original poster

How do you improve your credit score

29 replies

Praisebe · 22/12/2017 05:38

Me and DP are both 25 and are currently trying to get a bank loan for some some home improvements instead of having to wait and save the money each month
We wanted to borrow £10,000 over 3ish yrs and pay it back at £300 a month. We've never had any credit card or loans or store cards etc before.
So fastfoward we applied for the loan and according to the initial process we we're eligible they were happy with our earnings etc but 3 days on and they have rejected the application on grounds we only have a "fair" credit score of 723 and 711 respectively Xmas Confused so we are wondering how we boost this score when they won't lend us money in the 1st place to prove we are good clients and good at paying things back Xmas Sad is there something we are missing ??

OP posts:
Chaosofcalm · 22/12/2017 05:49

Are you on the electrical roll?
Maybe get a credit card and make sure you pay it off in full every month.

Go on the moneysavingexpert website for better advice.

Original poster
Praisebe · 22/12/2017 05:55

Yes we are on the electoral role and we have looked into getting a credit card but can't see what the difference between a card and a loan would be ? They are the same value and if we got denied the loan then surely we will get denied a credit card on the same grounds ?

OP posts:
BikeRunSki · 22/12/2017 06:04

Your credit score is influenced by your history of paying back borrowed money in the form or loans and credit cards etc. I’d you have never borrowed money, then you have no “form” for paying it back. If you get a credit card and just use it for everyday transactions for a few months, and pay it off every month, this will help creditors see that you are good for the money.

Original poster
Praisebe · 22/12/2017 06:20

But isn't a credit card the same as a loan ? If we got denied the loan then a credit card would also be denied surelyConfused

OP posts:
Smarshian · 22/12/2017 06:25

You are more likely to be granted a credit card with a lower limit and higher rate until you can prove you are good with credit. You are unlikely to get a loan at a decent rate until that is proven. Do you have a mortgage though as that should give you a good boost to your score.

Original poster
Praisebe · 22/12/2017 07:23

No we aren't looking to buy until the housing prices crash in the next few years.
We'll look into a credit card with the same bank and see what they say , what do you put on a credit card ? I can't think of anything we'd use it for all our bills are already taken by direct debit automatically and we don't really spend on anything else the only thing we need a loan for is the large purchases for our home improvements

OP posts:
Lillylollylandy · 22/12/2017 07:37

You don’t have a mortgage but you want £10K for “home improvements”? £10K is a lot of money to spend on something that won’t benefit you in the long run. What are you planning on doing?

Lillylollylandy · 22/12/2017 07:38

I’m assuming you’re renting of course, if you already own a property outright then ignore me!

Original poster
Praisebe · 22/12/2017 07:41

We need it painting and new carpets plus new furniture and fittings. How will we not benefit if we are living there long term Hmm

OP posts:
Magmatic80 · 22/12/2017 07:42

Use the credit card for petrol, groceries, online shopping etc. Just make sure you religiously pay it back each month. More importantly, don’t spend £10k on improving a property you don’t own 😱

Magmatic80 · 22/12/2017 07:43

Furniture is fair enough as you can take it with you, but landlord should be paying for pairing and carpets. If you pay to improve it, you might find yourself priced out at the next rent increase time 😞

Jellybean85 · 22/12/2017 07:44

Yes get a smaller credit card and use for groceries or something and pay back every month.
But 10K is a lot to invest in some one else's property, foolish really, it may add to the value of the home and they may raise rent/boot you out to sell it...

TotemIcePole · 22/12/2017 07:45

When you apply for a mortgage in a few years, they would look at that £300 outgoing. If you still have it.

It would reduce the amount of mortgage you could get.

I looked recently with a £40 a month outgoing childcare bill, they would lend me £112,000.

Without it, they would lend me £125,000.

Even though 12 months of £40 is a£480 annual outgoing.

Crazy.

I would save that £300 a month now, towards a deposit for the house you want.

Earlyriser84 · 22/12/2017 07:46

I wouldn't spent £10,000.00 improving a rented property. What if the landlord decides to sell up or wants his property back ? They get the benefit of the improvements whilst you're still paying it back !

Can't you rent somewhere else instead ?

OrinocoDugong · 22/12/2017 07:47

I don't think the pp were advising you to get a credit card instead of a loan. Paying for expensive home improvements on a credit card would be very unwise.

What would improve your credit score would be to get a credit card with a small limit and start spending a bit of your monthly outgoing on that every month and then also - and this is the important bit - pay the card off in full each month. That will show the bank that you can be trusted with credit. Every time you pay a credit bill on time you improve your credit score. Do this for 6 months and then try again for the loan.

Original poster
Praisebe · 22/12/2017 07:50

Its a housing association with a lifetime tenancy no landlord or anyone to boot us out Hmm its in the tenancy agreement we can do as we please with it to make it our own

OP posts:
Smarshian · 22/12/2017 07:57

As pp have said it's absolute madness to spend 10k on improvements to a home you don't own. Put that cash away to put towards a mortgage.
Also how can you be so sure that the housing prices will crash in the next few years?

Lillylollylandy · 22/12/2017 08:04

Bit of a drip feed there, OP!

Lifetime tenancies are becoming increasingly rare so I wouldn’t be in a rush to move on from that. Also people have been waiting for the house price “crash” for the best part of 20 years now - current thinking is there will likely be a correction in the market but not a crash.

HelveticaVanBuren · 22/12/2017 08:11

Your credit score is worthless. Lenders don't see it and credit reference agencies - the ones who fabricate your score - don't make lending decisions. The credit score is a marketing tool developed by credit reference agencies in order to lure you into buying their "improve" services.

Lenders make lending decisions based only on the information in your credit report: your repayment history; number of creditors; late payments; "quality" of lenders (such as payday loan companies); and things like that - this does not include your credit score.

Original poster
Praisebe · 22/12/2017 09:01

If that's the case then how did they quote or exact credit scores and list that as the only reason they couldn't lend to us Hmm bank's work together with Experian to get that info and make their decision

OP posts:
MortgageTips · 22/12/2017 10:51

Praisebe - Have u checked ur Experian, ur Equifax & ur Call Credit Reports ? As some lenders only look at one of these reports, & commonly they do not record the same/identical info - u can have a great score with one and a low score with the other. This can help u fathom what is dragging u down & how you can move forward.

TotemIcePole - Not all mortgage Lenders take Child Care Costs as an expense - So u can potentially borrow the higher amount even with ongoing child care costs.

TotemIcePole · 22/12/2017 12:50

MortgageTips Thank you, I will bare that In mind, I use a I.F.A & hopefully he will find me a good deal.

Indigo911 · 22/12/2017 12:56

Definitely get a credit card for a year and use it for food shopping and any little bits and bobs you buy. Pay it back in full every month and only ever spend 30% of the limit they give you per month. That will bump your credit scores up within 12 months and you should then get accepted for the loan

HermioneWeasley · 22/12/2017 12:59

Agree with others saying use a credit card for normal purchases. Set up a standing order from your current account so it’s automatically paid in full each month. Have a look at cashback deals so you actually earn back a little of what you spend.

HelveticaVanBuren · 23/12/2017 10:48

@Praisebe

I'm not going to argue with you; you're the one struggling to get a loan, not me.