Do you have direct debits on bills and other stuff as that helps raise your credit score a bit.
Not true I’m afraid. The only way they ever would be recorded is if they are paying off credit
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No it is very much true. As it’s still classed as borrowing and it’s
recorded as such. Which is why you have to be over 18 to be allowed to have
a credit card.
It’s the credit that your providers are giving you that is being recorded on your credit history - e.g. a pay monthly phone contract, some elec + gas providers etc. Simply setting up a direct debit to a company will not be recored on your credit history.
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a direct debit itself will not increase your credit rating as banks do not pass this information to CRA therefore it is impossible to impact your ‘credit score’. The thing the direct debit pays could affect your score if they are ‘credit’ accounts.
The only information bank account providers provide the CRA is the overdraft limit, the negative balance on your account etc. If your account is in credit (positive balance) it is reported as £0.
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You are half right. If direct debits are returned unpaid often it will have
an effect on your credit score as you are seen as a not so great credit
risk.
Did you know that your bank gives the credit reference agency a snapshot of
how well you are running your account? Do you know how often they do the
above? Every month.
I digress, a few direct debits being paid is not going to turn a bad credit
record into a good one overnight, but a good few bounced direct debits can
have a effect on a great credit rating as it symbolises you are not
managing your money as well as you used to.
It’s a bit like a person’s reputation very hard to build up a very quick to
destroy.
When I had my credit score done I was shown my credit balances on my accounts. Maybe things have changed as admittedly this was a good few years ago.
Have a look here http://www.telegraph.co.uk/finance/personalfinance/borrowing/2784030/How-to-get-1010-on-your-credit-rating.html some great advice on how to build credit ratings.
credit balances on credit accounts and bank accounts are very different (they are opposite), which I why I mentioned bank accounts in my response.
If we are talking about credit accounts, then yes the balance is shared monthly with CRAs, if we are talking about bank accounts which are in credit then £0 is shared with them. If the bank account is overdrawn then that balance is provided to the CRA on the monthly snapshot.
Having a returned direct debit will not affect your credit score by your bank account. It will only affect it as you didn’t pay the credit account.
e.g. if I owe X credit card and I fail to make a payment due to a bounced direct debit, X credit card will mark my credit file.
If I owe X credit card and I make a manual payment (bank transfer etc) and still have a bounced direct debit, X credit card will not mark my file as I made a payment.
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I hear you but yes bank account data is shared with the credit reference agencies. Which pays to reason that if you manage your account badly that will be communicated to them also. Of course it’s more damming if you manage your credit card account badly but it’s all recorded.
When you open a current account you have to agree to them sharing information with credit reference agencies. Do you think they only do it when you open your account? Think again.
As for direct debits let’s clear things up. Does it hurt (your credit score) to have a good few direct debits? No. Can it help to have a good few direct debits? Possibly.
If you can’t get a credit building credit card then the next best thing is to run your current account well. In doing so you are showing that your bills are paid in full and on time and the best way of doing that is via direct debit.
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Data that is shared by Banks (bank accounts and not credit cards) is limited to negative balance, overdraft limit (credit limit) and total payments made (if in overdraft). It does not include DD or SO. So having 1 DD or 100s will not affect your ‘credit score’ at all. [quote=“patrice58, post:39, topic:5373”]
When you open a current account you have to agree to them sharing information with credit reference agencies. Do you think they only do it when you open your account? Think again.
[/quote]
I clearly said on a monthly snapshot 
I’m sorry, but DDs do not affect your ‘credit score’. The DD failing / bouncing and therefore not paying the credit account does as it is the credit account who will report this and not the bank. I guess things might be confusing on your credit report if your credit card and bank account is the same provider however they should be under separate lists are they have different functions along with different data shared about them.
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I agree with Adam, Direct Debits bouncing on a current account would not be reported to any of the three major credit rating agencies in the UK. If the direct debit bounced and the credit account therefore wasn’t paid by the due date, this well could be reported but it’s the fact that the due amount hasn’t be paid rather than anything to do with the direct debit
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No they definitely had my credit balances on my current accounts. They had
my credit card balance on a separate part of the credit report.
As for the direct debit part of your post. It’s all about account
management which the bank will then feed back to the credit reference
agencies.
Credit balance as in money you actually have in the bank or money you owe the bank? If the latter then that is correct, if the former then that is very worrying and should never have been passed over. Who do you bank with ?
The way you manage your bank account is not reflected in your credit report as it is not shared with them. As stated already, CRA only gets limited information such as negative balances, overdraft limits etc. It is all quantitative data and nothing about payment methods such as DD.
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It was the former not the latter. It was a good few years ago now. To be
honest I can’t even remember who I was banking with at that time possibly
first direct.
I find myself going back to the credit card for car hire deposits all the time.
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Ah yes, deposits. Certain hotels are also a pain without a credit card as they’ll attempt to put a hold on a large deposit that gets dropped after the room is verified to not be completely trashed after checkout.
I hear about this less in the UK now but internationally it’s still a problem, especially with convention goers in the US.
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Absolutely Tom - air miles and protection. Simple as that. Some people think these are insignificant, and maybe they are if you’re not disciplined enough to put every last penny on credit, but if you do…I’ve had about fifteen long haul flights in the last two years purely from my credit card (I literally never earn miles from airlines, because all my flights are free!), and I’ve had a few refunds in the 00s or even 000s when things have gone wrong. I literally never use my current account except for bills, and I don’t understand why anyone would. I have only used Mondo to run down the initial £100, and an extra tenner just to register it with my internet banking. Having run it down, I prefer Travelex Supercard for forex, because at least the transactions end up back on my credit card. For UK transactions, I have no idea why anyone would choose debit over credit.
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Student, I have both Debit, Credit, and Mondo, could you possibly elaborate on the benefits of credit? I’m really confused to use which card for which. (Are points the only benefit?)
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Points and consumer protection. Often, if you receive faulty goods or substandard service, and the company fail to cough up, you can claim off the credit card.
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The credit card protection is all just a nice theory to me. In all the years I’ve been using credit cards iv never had to use it so, as a consequence, it really carries very little importance in my mind. (Not saying it’s not important, just that it’s coloured by my lack of need for it)
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