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What would you do? I have £3,000 in NS&I premium bonds. I have a very poor credit rating due to a rough few years.

by jmoth10500 10 January 2010 |

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My mortgage advisor has told me to get a credit card to help build up my credit rating. I have now been refused twice on application for credit cards, I would rather not apply for any more as it will leave marks on my credit file. I have noticed that I have been pre approved with my bank a loan upto £20,000 no questions asked.

Would you, get a £5k loan over 18 months costing £540 for the term, put the money in premium bonds, where it will stay, obviously giving me the chance of winning a lump sum.

In my mind, it would improve my credit rating, add £5k to my bonds and cost me just over a £1 per day.

Any advise would be welcome.

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804

MikeGG1 posted
What sort of debt do you currently have?
Do you have any Credit Card at the moment?
Was that offer recent?
Mike
Posted on 10 January 2010 | Love 0 loves Report
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jmoth10500 posted
unfortunately 5 years ago I went Bankrupt, I have managed my finances perfectly since. I have not needed any credit since. I earn 25K P/A and save £750 per month. The offer was Friday.

Thank you
Posted on 10 January 2010 | Love 0 loves Report
804

MikeGG1 posted
Don't take out credit. That is an expensive way to repair your rating.
When were you discharged from your bankruptcy? Information stays on your record for 6 years.
It sounds as though your best approach is to get one of those credit mender credit cards. They charge a very high rate of interest but that would be no problem if you settle in full every month. Set up a direct Debit to that effect to make sure.
With those credits, you should have a good record by the time you have been discharged for 6 years.
Another thought is that if your bank have offered you a loan, maybe you could get a card from them. They can obviously see how you have been managing your bank account.
Mike
Posted on 10 January 2010 | Love 1 love Report
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jmoth10500 posted
I will Google that, My finances are 110% in control. Thank you for the advise.
Posted on 10 January 2010 | Love 0 loves Report
804

MikeGG1 posted
You might do better talking to a human being in branch. He/she could actually look at your account. That way you can test the water without it registering as an application,
Mike
Posted on 10 January 2010 | Love 0 loves Report
410

manzanilla posted
Would you, get a £5k loan over 18 months costing £540 for the term, put
the money in premium bonds, where it will stay, obviously giving me the
chance of winning a lump sum.

No, that is the silliest suggestion that I have ever heard. Premium bonds pay a DREADFUL rate of interest, no one who isnt a higher rate tax payer should think about having any money in them, let alone borrowing to do that! The lump sums you would win would almost certainly be of the £25 variety!
Carry on building up your savings. And try to find a better home for them the Premium Bonds.
manzanilla
Posted on 10 January 2010 | Love 1 love Report
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jmoth10500 posted
Good, thank you.

Do you have any suggestions on a better place to park my money?

Jono
Posted on 11 January 2010 | Love 0 loves Report
410

manzanilla posted
Halifax 2 year bond 4.2% looks good for the £3k you currently have.
Then principality's Regular Savings Bons for £500 a month of your regualr savings (nb only if you are SURE you wont miss any months payments).
At the end of 2 years, your credit rating should be better and your deposit will be MUCH bigger.
Don't fret about getting a credit card at the moment. Leave it a year then approach your own bank first.
Posted on 11 January 2010 | Love 0 loves Report
804

MikeGG1 posted
Principality is OK if you pay at least £20 per month and is only for 12 months.
If you have dependent children then Norwich & Peterborough will give 5% rather than 4.5%. Stroud & Swindon also do 4.5% with a £10-£250 range.
All for 12 month regular savings and taxable.
Premium Bonds are the equivalent of 1.5% tax-free.
Mike
Posted on 11 January 2010 | Love 1 love Report
75

Ed Bowsher posted
Hi Jono,
if you're very keen to get a credit card, you might be able to get a 'credit builder' card. We published an article on these cards last week:
http://www.lovemoney.com/news/credit-cards/clean-up-your-credit-rating-4375.aspx
Ed
Posted on 11 January 2010 | Love 0 loves Report

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