UKH

Currently my credit score is very low, I can't get a credit card. The plan is to buy climbing gear with monthly installments to help build it. However, I already have a full rack, ropes and shoes. So I'm looking for suggestions for climbing related things I could buy that won't be a waste of money

I have dozens of back issues of 'Climber and Rambler' for sale which will be worth loads in a few years' time.

Is it just me ?

It does seem a pretty odd post. But my wife had a similar issue a while ago. She has never bought anything on credit, so she has no visible credit score. She was offered a substantial discount on a purchase from a high street retailer - M & S or Debenhams - I can't remember which - if she accepted a store card and then paid with that. So she said yes and applied for the card on the spot. A few moments later the shop assistant informed her that she was not eligible for the store card as her credit score was too low!

Martin

Yeah, it sucks tbh 

Ha, you joke but I'm genuinely looking to buy something on monthly installments that'd hold its value long enough for me to sell it (or be an asset to my climbing gear)

A car?

You don't need to incur actual debt to improve your credit score with a credit card. Paying off your balance in full is better. So don't buy anything for the sake of it, just get a credit card and stick your groceries on it, then pay it off every month.

No credit card, no mortgage, no loans (fortunately, I need none of them). It meant I didn't exist when I came to try to book a covid test... Also meant I had to supply a financial statement for other purposes, as my credit score is presumably off the scale bad. 

You should be able to apply for a credit card with the bank you have a current account with. It'll probably have the worst terms and everything, but as someone mentioned above using it to buy groceries or fuel and paying it off every month should be enough 

Make sure you are on the electoral roll and have your name on the bills.

I had credit score issues recently just because i have moved house too much in the last few years and the local council were taking ages to get me on their electoral roll so I was concerned a high risk despite otherwise having an excellent financial history.

Phone contract

Just get a card, set it to pay the balance each month in full automatically, and get a monthly UKC/Rockfax Digital subscription on it.

As you've said you can't get a credit card, in assuming you've checked the cards that are specifically designated as credit builders?

There are some services like loqbox that will allow you to improve your credit score by making monthly savings payments (I've never used them so can't personally vouch for any hidden catches, but it looks like as long as you open an account with one of their partner banks at the end of the year then it's free).

I'd imagine a year on that (and keeping your nose clean otherwise) would get you in a position to be accepted for a high interest low limit credit card.

Then as others have said, just buy a couple of things each month, and set up a direct debit to pay off the balance in full every month.

It's best to use less than 25% of your available credit and always pay it off, so avoid the idea of buying expensive items and paying them off slowly until you already have a good score, and are sure that's what you want to do.

Food, groceries, etc. Always overpay the bill very slightly 

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Nothing climbing related is a waste of money.... however for full disclosure; my wife might argue this point

The way to improve your credit score may have changed, but ime it helps to

- Have a permanent job with regular income

- Have a history of borrowing money and more importantly meeting the regular repayment expectations

- Have a permanent long term address and be on the electoral roll

- Have evidence of making regular payment obligations like d.debits

It takes time to build up a good credit rating and with spiraling interest rates its understandable that lenders are more reluctant to take on risk than before.

Buying stuff for the sake of it will not help your credit score. Better as others have suggested to get a credit card with a crap interest rate and buy all your normal essentials on that (but set up a d. Debit to pay off in full every month).

Setting up a mobile phone contact, gym membership and utility bills on d.debit might also help to show you can budget. But again, don't pay for stuff you don't actually need.

Is your credit score low because you buy stuff you don't need for a random reason (such as to get a credit card which you don't need)?

👆This👆  purchase everything on credit card and pay it off next day. Groceries, petrol, food, the lot. You'll have a great credit score in 6 months.

Buying things you don't need on credit is an awful idea.

Is that some personal belief thing? Or just never got round to it? It's funny I've had a credit cards since I was old enough to drive, it's just one of those things I never really thought about that much. We have just bought air tickets for a big family trip at Xmas on it, so it's the first time I've ever asked to extend the credit limit (they granted my request almost instantly through the app so I guess that's good credit) and the first time I can remember spending up to the credit limit - now having to remember to use my debit card for the next few weeks for shopping until I pay the credit card bill off! I hadn't actually realised after having the Barclaycard for I guess 30 years, that you can't pay off your balance until they actually ask you to pay it at the end of the month!

Although some credit reference agencies will generate you a "credit score", this doesn't necessarily mean you will or won't get a loan from any given lender. Each will be using their own measures to determine if they want to lend you money and how much, depending on who they are targeting at the time.

They have a portfolio of loans which are bundled up and "securitised" (i.e. sold on as a financial product to investors), and will try to get loans on their books which produce a marketable bundle. This is not necessarily just "good payers" - in fact some companies will penalise people who take out a loan and pay it off immediately because there is no money to be made on that business. As an investor you don't buy into a portfolio of loans containing X number of people with a specific creditworthiness, the portfolio as a whole is evaluated and losses roll up the tranches with those lower rated taking proportionally more of the hit - higher risk, but higher return.

Not saying any of the above advice is wrong, just that there is no magic formula for being given credit.

Except for the "always overpay the bill very slightly" advice.  Why?

I've never encountered a credit card issuer that didn't offer the option of a monthly direct debit to pay off the full amount of the last bill - and I have had experience of a fair few over the years.  Doing it that way means (a) you don't have to worry about missing the payment - which can then impact your credit rating - and (b) you don't end up giving the credit card company money that you don't need to give them and, more importantly, that they don't want (I believe that leaving your credit card account regularly in credit can sometimes adversely affect your credit rating - may sound daft* but it can be interpreted as an indication of poor money management).  If, as suggested, you only use the card to buy the usual stuff you'd have bought anyway - groceries, fuel, the occasional round in the pub etc etc - then the direct debit amount should turn out the same as you'd have paid bit by bit on your debit card or in cash, so there should be no nasty surprises.

Yes, it's possible to be tempted to go mad with a credit card and buy stuff you don't need with it that you can't pay off within the billing period, but that's part of the point: avoiding doing that is what makes you look a safer bet to the ratings agencies.  If I do want/need to make a large one-off purchase I still put it on my credit card - but I make sure that I have the money to pay it off already sitting in my savings account, then transfer that sum into my current account just before the credit card bill is due to be paid.  That way, I get an extra month's interest on it, and it makes my credit rating look even better.

* Here's an example of how non-intuitive credit ratings can be.  A while ago I had to make a large purchase that I knew I couldn't pay off all in one go.  I applied for and was approved for a zero % interest card which I used to buy the item in question, and I set up a direct debit to pay off a fixed amount each month which would clear the debt by the end of the interest free period.  The next time I checked my credit rating I was told that it was lower than before because I'd used more than half the credit limit on one of my cards - which was the zero % one.  To fix that, I applied for another zero % card - one which also allowed fee-free balance transfers - transferred part of the debt to that card and adjusted my direct debits accordingly.  The next time I checked my credit score, it had gone back up specifically *because* I no longer had any card debt over 50% of the card limit - but I'd achieved that by *increasing* my overall credit limit.  Which seems daft, but that's how they work.

Personal loans might be something to look into. You can get one with about 5% interest just now and if you stick the money into an interest-paying current/savings account that is market leading then you get 4% on your money, so in net terms, you are paying 1% annually for the privilege of building credit score.

The application will ask what you need the personal loan for but the bank will never check whether that is what you actually spend it on. All the same, you don't want the savings account and loan account to be with the same bank, that's just inviting anyone to join the dots at a glance.

Yep, as I noted above I just went up to my credit limit for the first time ever buying flight tickets. I had paid off last months bill and then realising I would be up against the limit as soon as we bought the tickets, I tried paying off some of what will be on this months bill, but because I paid last month off in full my card app says I have a zero balance and you can't pay against a zero balance. So now waiting for the start of July when the bill for June comes in and I can pay off the tickets. 

I didn't say that.

You might not need any of them, but once you've built up a good credit score you can actually use them to good effect.

I recently got a credit card with 0% on purchases for 23 months and quite a high limit. That means my monthly expenditure will be going into a high interest savings account, and by the time that period has ended (and I pay it off in full from savings), it will have made me the best part of a grand.

The system, unfortunately, is set up to reward those who least need it, but if you are safe with credit (as opposed to the younger me who should never have been allowed access them!), the sooner you start proving it, the more opportunities you have to access the best deals.

I've heard this said a lot, and it's what I do, but apparently maintaining a debt is more useful than just paying it off in full what it comes to proving credit worthiness. 

This obviously makes companies money and costs us money so it's not great.

Yes simply paying the minimum account of credit card bills on time will help your credit rating, they don't mind you owing money but want to see that you can make the repayments. The advice to pay off in full is that it won't cost you anything in interest.

What I've done before if making a large purchase is to pay off in big installments. So 50% interest free when the bill is due, then the balance a month later with just a small amount of interest charged.

Paying off just the minimum will cost you a fortune in interest and take years to clear the balance.

No belief thing, I just CBA with one. I've had them on and off. The last one was an MBNA deal for a free Jetboil on joining. But they mucked me about so much I told them to stick their card. It was pretty hard to get them to close the account, too. They were very keen to get me to sign up for PPI, and I laughed in their face, but, in hindsight, I could have screwed them for mis-selling PPI...

I probably ought to get one for the consumer protection that goes with it, but a Visa Debit card gives just about the same terms.

I had basically zero credit score a few years back, after vanlifeing for a while, I was in the position of companies finding it hard to locate me when trying to get mobile phone contract, etc.

I have not owed anyone a penny since then - all bills paid in full every month - and have an "excellent" credit score with all three main agencies, so I'd dispute that.

You copied cantclimbtom's post - which read simply: "Food, groceries, etc. Always overpay the bill very slightly" - in your post, complete with two pointing fingers and the word "This".  That suggests that you agree with the advice to overpay.

TBH your advice about paying off a credit card "the next day" is also pretty questionable.  See for example Toby A's post immediately below yours where he notes that he couldn't pay off card debt incurrerd since paying off his last bill, until the next bill was issued.

As I understand it credit providers provide reports at intervals on customer balances to credit reference agencies so whilst the principle of that suggestion is probably sound (though would caution anyone to take advice from someone who’s an expert in credit!) I’d assume practically reports would like show that they hadn’t drawn down on their credit balance? 

Zero point in overpaying, that shows poor financial management, not good.  Credit cards aren't intended for holding positive balances (some will automatically refund them if you end up with one).

Just use it to buy things and pay it off on the statement date.  Keep what you've spent to one side else you'll end up inadvertently borrowing month to month which complicates your personal accounting (e.g. if you use Monzo stick it in a "pot").

I never bought anything on credit or had any loans. The only thing that would have left a mark on my credit rating was a monthly phone bill on a rolling contract of about £10pcm. Had no issue with credit searches when it came to getting a mortgage. I think you'd be better off doing things like signing up to monthly gym memberships and tv subscriptions than rinsing a credit card. Do you have any memberships or monthly subscriptions at all? My mortgage remains the only credit I've ever taken out.  

A lot of subscriptions like gym memberships and Netflix won't even appear on a credit record because they're not credit, each month you pay in advance of usage, and if you don't pay you simply lose access until you do.  You'd need to find one where it actually classed as a loan (as a lot of car insurance does - the monthly option isn't monthly in advance, it's a loan with a stated interest rate to pay the full year's amount).

What can be useful is to take a mobile phone on a contract, that does count as credit as the month to month usage can vary, and if you get one with a handset included you're also de-facto taking a 2 year personal loan to purchase that.

I was sure this thread was going to be about E points