Credit Ratings - being curious

[meriad]

A colleague and I were having a discussion about credit ratings. I thought that if you apply for a loan / mortagage or credit card or anything similar and are declined that it affects your credit rating. My colleague however doesn't think it affects it because no money per se is involved; but says that it may be indicative of a poor(er) credit rating to start with

Who is right?

[jenniren]

It's a bit of both really Ria. All credit enquiries are logged by the agencies and more than a couple applied for at the same time can raise a red flag and will then affect your credit rating. Likewise if a mortgate/loan is declined this can be indicative of a poor credit rating and if the person involved doesn't know the reason it should be investigated as mistakes do happen.

As an aside to this, it's possible to have a poor credit rating because someone hasn't built up a credit score. This happened to my FIL some years ago, he had never applied for a loan, always paid his bills in full, and it was many years since he needed a mortgage but a store turned down his application for their card. They did apologise when he wrote to query it and offered a card, but he was so upset at the time he declined to take it.

[saundra]

If you get a credit card even for a small amount pay it of in full
Every month and your credit rating goes up
According to Martin lewis on the tv love that fella

[tonicha]

Interesting.

I have never had a credit card, so I'd be turned down flat

[jenniren]

Absolutely Saundra, always pay a credit card in full each month.

It's completely mad Ton, if you've never applied instead of showing you're unlikely to default most companies see you as a risk. That's why some people are able to get into massive debt, the more credit cards/loans etc you have, the more likely it is you'll get more

[Kaz]

We always pay ours off, not that we often use it, it's mostly the debit card.

It's completely mad Ton, if you've never applied instead of showing you're unlikely to default most companies see you as a risk. That's why some people are able to get into massive debt, the more credit cards/loans etc you have, the more likely it is you'll get more

I've always thought that was crazy!

[saundra]

I never had a credit card until I had a computer
And shopped online
To this day I have never used it in a shop
And won't use direct debit either
It's only cash for me im old-fashioned

[cruiser2]

We have direct debits as we get cash back from our bank.
Also have two credit cards. One we use for shopping and again get cash back from the bank.
The other one we use to pay for holidays. Used to get points but this is now stopping because of a change made by the EU.
Just another reason to come out.
We always pay our credit cards off in full each month.

[meriad]

Thanks all - glad neither of us is wrong or right

[Weka]

When I first arrived in the U.K. I tried to get a mobile phone in account. Despite being a vodaphone customer in 2 other countries, they wouldn't open an account for me as I failed the credit check as I had no credit history in the Uk even though we had had a bank account open for 6 months with a credit card (and they upped the limit before we arrived, the nice folk)

Ended up with BT as they agreed to checking me in OZ and NZ. All up it took about 3 months, but I needed a new phone to so it was worth preserving.

Another thing I discovered, each time your turned down it affects your rating. Or at least this is what BT told me. As I had applied with vodaphone online so many times i had probably flagged myself.