If The Person Who Named Walkie Talkies...
ChatterBank5 mins ago
Improving Credit Score Quickly
15 Answers
I am seeking advice from all you financial experts out there, as to the best way of improving a credit score quickly (say in 6 months)
We are helping our grand-daughter buy a house, by putting up the 10% deposit into an account, which we will get interest on. She and her fiance can then get a 100% mortgage. They have been told there is no problem with the amount they are asking for, as far as the affordability check is concerned. They both have reasonably well paid jobs.
The problem is his credit score. Hers is perfect as she has been working for a number of years, and has been obsessive about making sure all her payments are made. He has just graduated from University, having had no debts (other than student loan), and a bank overdraft. He has just started his first job, he works in IT so it potentially will be a well paid job. He has taken out finance for a car, and has his car insurance on monthly payments, so as far as demonstrating his ability to keep up payments these hopefully will count towards a good score. The overdraft was paid off with his first salary.
They went yesterday to talk about the mortgage (called a family boost), and everything was fine, apart from the fact that he has no credit record for them to use. What I would like to know is, how can he (other than making sure he makes his payments now), build his credit score up within a few months. They would like to start looking at property next Spring if they can.
Currently they are living with his parents, so don't even have bills, other than mobile phones, or rent to pay. It will give them some opportunity to save, but the bank told them that even if they did have the 10% to put down, they still wouldn't get a mortgage, due to his lack of credit record.
They are considering taking a 6 month rental, to try to build it up, but I am not sure if this is such a good idea, it's a very costly way to do it, if there are other things he could do. He is on the electoral register. On the other hand, they are both very keen now to live together independently.
We are helping our grand-daughter buy a house, by putting up the 10% deposit into an account, which we will get interest on. She and her fiance can then get a 100% mortgage. They have been told there is no problem with the amount they are asking for, as far as the affordability check is concerned. They both have reasonably well paid jobs.
The problem is his credit score. Hers is perfect as she has been working for a number of years, and has been obsessive about making sure all her payments are made. He has just graduated from University, having had no debts (other than student loan), and a bank overdraft. He has just started his first job, he works in IT so it potentially will be a well paid job. He has taken out finance for a car, and has his car insurance on monthly payments, so as far as demonstrating his ability to keep up payments these hopefully will count towards a good score. The overdraft was paid off with his first salary.
They went yesterday to talk about the mortgage (called a family boost), and everything was fine, apart from the fact that he has no credit record for them to use. What I would like to know is, how can he (other than making sure he makes his payments now), build his credit score up within a few months. They would like to start looking at property next Spring if they can.
Currently they are living with his parents, so don't even have bills, other than mobile phones, or rent to pay. It will give them some opportunity to save, but the bank told them that even if they did have the 10% to put down, they still wouldn't get a mortgage, due to his lack of credit record.
They are considering taking a 6 month rental, to try to build it up, but I am not sure if this is such a good idea, it's a very costly way to do it, if there are other things he could do. He is on the electoral register. On the other hand, they are both very keen now to live together independently.
Answers
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One method commonly used is to apply for a credit card (possibly one with a low credit limit designed for people with limited credit history) and then use it a couple of times each month and (crucially) clear the full balance every time a statement is produced.
Otherwise have a look at the MSE site - they have pages devoted to improving/establishing a credit record.
Otherwise have a look at the MSE site - they have pages devoted to improving/establishing a credit record.
My credit score became really good after getting some pay day loans and paying them off early.
This isn't a good idea to do.. It just so happened to work like that for me.
Best bet (and what my girlfriend did) was get a credit card. You then use this to buy petrol or food or something that you'd normally not need credit for. At the end of the month, you pay it off. This helps bmp your credit score in a matter of months.
This isn't a good idea to do.. It just so happened to work like that for me.
Best bet (and what my girlfriend did) was get a credit card. You then use this to buy petrol or food or something that you'd normally not need credit for. At the end of the month, you pay it off. This helps bmp your credit score in a matter of months.
If he has managed to take finance out on his car his credit score cannot be that bad. Have they actually been declined a mortgage because of his lack of credit history? or are they just offering an uncompetitive rate? Renting a house does not count as credit for your credit score. What he can do is apply for a credit card and if successful use it at least once a month and pay the balance every month. This will help his score but it may take a while. I would also advise to shop around for a mortgage. My daughter had to try three different banks before she could get one.
I did wonder about rent, I just wondered if it could help to demonstrate that you were a regular payer of bills etc. But it isn't a credit agreement I admit.
Getting a credit card is, I thought a good thing to do, and yes definitely use it every month say for food, or fuel for the car, and making sure it is as Martin Lewis says, paid off IN FULL!! I'll direct them to the link to moneysaving expert.
Thing is about applying for a credit card, just as the minute, is that he's applied for 2 lots of credit recently, one for the car finance, and one for the car insurance. I believed it was not a good idea to apply for too much credit in a short time in case they think you're desperate. Maybe he should wait a month or so to do that.
I certainly agree though that taking a rental is a step too far, unless of course, they so desperately want to move out of his parent's home in the short term.
As far as the mortgage is concerned, they really only went to discuss the detail of it and the affordability. the bank did a soft check, and came back with it being very unlikely he's be accepted for that, or any other mortgage. After questioning him a bit more about his credit history, they said to check his own credit record, but that the problem lay with having little or no credit for anyone to look at.
Hopefully a few months of paying the credit he does now have, regularly and on time, will improve things.
Getting a credit card is, I thought a good thing to do, and yes definitely use it every month say for food, or fuel for the car, and making sure it is as Martin Lewis says, paid off IN FULL!! I'll direct them to the link to moneysaving expert.
Thing is about applying for a credit card, just as the minute, is that he's applied for 2 lots of credit recently, one for the car finance, and one for the car insurance. I believed it was not a good idea to apply for too much credit in a short time in case they think you're desperate. Maybe he should wait a month or so to do that.
I certainly agree though that taking a rental is a step too far, unless of course, they so desperately want to move out of his parent's home in the short term.
As far as the mortgage is concerned, they really only went to discuss the detail of it and the affordability. the bank did a soft check, and came back with it being very unlikely he's be accepted for that, or any other mortgage. After questioning him a bit more about his credit history, they said to check his own credit record, but that the problem lay with having little or no credit for anyone to look at.
Hopefully a few months of paying the credit he does now have, regularly and on time, will improve things.
best way to pay off a credit card is with a direct debit, if they can afford it - it eliminates the risk of accidentally missing a payment.
There's some info on first-time credit cards here (but it's a couple of years out of date so may not still be totally accurate)
https:/
There's some info on first-time credit cards here (but it's a couple of years out of date so may not still be totally accurate)
https:/
Absolutely, direct debit all the way, couldn't live without them!! I have discovered from the link to the mse website, that there is now a way to get your rent included in your credit file. So that's a bonus if this is what they decide to do.
Personally if I was them I'd stay put for 6 months, get a credit card, use it well and then see how things are. They have lived there for some time now, before they had no choices at all because he was still at Uni. Now it's looking like they have choices, but obviously need to make the right ones.
But they have to make their own decision, I am just trying to get links to information that will help with their decision making process.
Personally if I was them I'd stay put for 6 months, get a credit card, use it well and then see how things are. They have lived there for some time now, before they had no choices at all because he was still at Uni. Now it's looking like they have choices, but obviously need to make the right ones.
But they have to make their own decision, I am just trying to get links to information that will help with their decision making process.
Paying rent is not a good idea if they're living with his parents rent free, as the equivalent amount of money could be put into a savings account in order to boost their available deposit.
The small spending and monthly paying off a credit card is a good method to help their credit score.
They should also speak to a Mortgage Broker to check the best deals on the market, not just rely on their bank.
The small spending and monthly paying off a credit card is a good method to help their credit score.
They should also speak to a Mortgage Broker to check the best deals on the market, not just rely on their bank.
I think the consideration of renting is not purely in the hope of improving his credit score. They are now finding living with his parents more difficult, when you have no choice you tend not to think of any other options, when you do have options, it starts to make how you are living look unbearable. He had no income, so they were stuck. Now he does have an income.
I fully agree about being able to save if they stay where they are, and as far as advising them, I am torn between saying please stay where you are, and yes I understand you want to be independent. In fact, saving for a deposit is now no longer an issue, although of course they are going to need to furnish a house when they eventually get it. We are going to put the deposit amount into a savings bond, which allows them a 100% mortgage. The interest rates on both mortgage and savings are very reasonable, as far as the savings are concerned better than available anywhere else.
They went to the bank, expecting to be in a position to apply for this mortgage fairly soon, once the affordability issue was settled, which it was. But of course, met with the problem of his almost non existent credit record. I know people think that living with parents is the very best option anyone can have. If you've ever done it you know it isn't. We did it 50+ years ago and after 6 months were climbing the walls. And my parents were very reasonable and accommodating!!
So far as ideas of how to improve the credit score go, the credit card, used responsibly seems to be the best one, given that they are doing everything else. And currently, he doesn't yet have the information from the credit reference agency. I think when they get that they'll be in a better position to know how much improvement is needed, and how long this is likely to take.
They have been given a lot of advice about mortgage brokers also. I am in two minds myself about them. Either you have to pay them, or you have to rely on them to get the best deal for you, rather than the one that pays them the most commission. We have used one in the past, but we knew him from school, so had rather more trust in him than in someone we didn't know. Could have been misplaced but we had no option at the time as this was a buy to let mortgage which are very much more complicated to organise.
I fully agree about being able to save if they stay where they are, and as far as advising them, I am torn between saying please stay where you are, and yes I understand you want to be independent. In fact, saving for a deposit is now no longer an issue, although of course they are going to need to furnish a house when they eventually get it. We are going to put the deposit amount into a savings bond, which allows them a 100% mortgage. The interest rates on both mortgage and savings are very reasonable, as far as the savings are concerned better than available anywhere else.
They went to the bank, expecting to be in a position to apply for this mortgage fairly soon, once the affordability issue was settled, which it was. But of course, met with the problem of his almost non existent credit record. I know people think that living with parents is the very best option anyone can have. If you've ever done it you know it isn't. We did it 50+ years ago and after 6 months were climbing the walls. And my parents were very reasonable and accommodating!!
So far as ideas of how to improve the credit score go, the credit card, used responsibly seems to be the best one, given that they are doing everything else. And currently, he doesn't yet have the information from the credit reference agency. I think when they get that they'll be in a better position to know how much improvement is needed, and how long this is likely to take.
They have been given a lot of advice about mortgage brokers also. I am in two minds myself about them. Either you have to pay them, or you have to rely on them to get the best deal for you, rather than the one that pays them the most commission. We have used one in the past, but we knew him from school, so had rather more trust in him than in someone we didn't know. Could have been misplaced but we had no option at the time as this was a buy to let mortgage which are very much more complicated to organise.
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