> Never owned a credit card, don't have the slightest wish to do so.
Bizarrely, never owning a credit card will negatively impact your credit rating.
Bizarrely, never owning a credit card will negatively impact your credit rating.
When somebody does a credit check on you they don’t get a score, only a remark on whether that person has done any negative with respect to their credit worthiness. Thus there is really only the negatives which count.
Credit reference agencies instead report credit history.
The difference is a subtle but very important one, as it allows companies to assess your individual circumstances, rather than base decisions on an arbitrary score.
The above misunderstanding is so commonplace that the Redit UKPersoanlFinace sub had (has?) a bot explaining this on every UK post mentioning 'credit score'. Here "credit scores" are instead a marketing gimmick launched by credit reference agencies to get consumers to subscribe to monitoring services. The 'score' they give is meaningless.
https://blog.moneysavingexpert.com/2021/06/martin-lewis-cred...
By the same logic credit scores don’t exist in the US either. It’s just an approximation, your bank still makes their own decisions.
I had this issue, and had to get a credit card and buy stuff on it for a year... basically without using credit you may not have a credit rating.
I always lose my cards and have to get them replaced, so have been back on just a debit card for a few years now.
I had to get a credit card as mortgage got denied because my credit record didn't exist. Three months after the card, I got approved.
This is despite me earning an extravagant wage relative to my age for over a decade and never missing rent/utilities/council tax.
Bad system.
It isn't that a lack of credit card hurts your credit rating, but that a lack of any credit hurts your credit rating in Canada or the US.
There are other ways to get an initial credit rating than a credit card, although I agree that this is the path most easy, and chosen by many to get that first rating.
The method I employed, was to buy a car and had a parent cosign. I made all the payments, and this was enough to kick start, and give me at good credit rating.
I also didn't say 'you need a credit card to get a good credit score', I said not having one will negatively impact your score. This is 100% correct; Your credit score is made up of various metrics on how you manage debt, one of which is credit cards. You will get a % boost if you have a card that you manage well, whereas without a credit card, you will get no boost at all in that category. Granted, you may make up for it overall in other categories, but in the main, for most people, my statement still stands. Credit scores start at 0, and only improve if you show you can manage debt across multiple products.
Credit bureaus are definitely legislatively controlled here, and court decisions have an effect on them too.
That aside, I didn't say low utilisation, I said no utilisation. This has a good chance of your card being cancelled by the card issuer, which has a negative effect on your credit.
Bottom line is, unless you plan to use the card, there are better methods of increasing your credit score, so it's not a good idea to get one.
Only since then have I actually had anything on my credit report (monthly broadband payment, phone contract, monthly car insurance payment because I didn't want to keep paying the whole 3k up front every year after moving out, etc) and despite that the score has remained unchanged.
In our case, the bank required a savings account containing a 10% deposit in the name of a family member, which is returned to them with interest after 3 years (unless you fall into arrears). ~50% of that money was our own savings and the rest was from parents savings, which allowed us to get on the property ladder with ~1yr less saving and no cost to our families after the 3yr period.
If you got approved for $40k, there's something else funny going on.
https://www.which.co.uk/money/mortgages-and-property/mortgag...
Neither are truly unsecured. It just takes longer than an outright repossession because it takes two or three court claims instead of just one.
The debt collection industry relies on this, and regularly forces sales of property to pay back CC and other debts.
So CCs are disastrous for people who can't pay their debts. Not only are the interest rates extortionate, but for lenders they're almost as safe as a secured loan. And because of the high rates they can be considerably more profitable.
But it's true that in the era of negative interest rates, only silly people don't owe money.
Not going into debt unnecessarily is a great thing, but it's not a data point in your favour, it's the absence of a data point.
I have to spend everything on a credit card, then when i get home from shopping 45 minutes later go and pay it off using a debt card.
Its so unfriendly for the consumer.
Keeping an eye on my spending and borrowing on a daily basis is now a negative?
I assume you sit in the same camp that thinks i can afford £1400 monthly rent for 5 years but not an £800 mortgage yeah?
You are aware that interest rates have been incredibly low for years? They have to go up to keep a lid on inflation, and the BoE needs to be able to do that without worrying about mortgage borrowers being overstretched.