my 20 yr old lad, who has had a shall we say ‘troublesome’ teenhood, is trying to get his life sorted. he’s in a halfway house at the moment and receives disability benefit.
he wants to start managing his own finances, as up til now ive pretty much paid everything out of my bank, and hes paid it back (or not which is usually the case :-)) whilst this helps him out in the short term, its doing nothing to get him a grounding for the future.

he wants to start paying for his phone himself, so has been to carphone warehouse to take out a contract. they refused as he has no credit history. i suggested giffgaff may be the best option for his phone, but he says he needs to pay by direct debit to start his credit history rolling, even if its just a rolling monthly contract.
a quick google gives mixed answers, some saying it doesnt help at all.

so……over to the ‘real experts’ 🙂

if paying a phone contract by DD has no effect, he may as well go the giffgaff route, paying each month by debit card. if it does have an effect, then maybe we ought to look at some of the other networks.
i found a decent sim only monthly contract from ‘the peoples operator’ (never heard of em before but apparently use EE network). rang them to ask if they did DD, they said yes ‘but they dont do a credit check so that wont help his score’. that just confused me more.

can anyone help me out here please?

thanks

1. Get one of the easiest credit cards to get, no matter what the interest. (Moneysavingexpert is friend there)
2. Make a few purchases, small value.
3. Pay minimum one month, or maybe two.
4. Then clear off.
5. Repeat for say, 3 cycles.
6. After this has been done, move up to the next level of CC (again, see MSE).

After about 12 months, job jobbed.

Clearscore or Noddle will allow you to view a credit score for free and it will suggest things to improve his current rating. Direct debit is affecting my score from a look yesterday.

My credit score is non-existant. I checked with one of the on-line companies and it is completely empty of any information. I have never been in debt, had a loan/mortgage/overdraft and always pay off the (one and only) CC in full by Direct Debit. Funnily enough, when I tried to get a phone on contract via an online purchase I was told it was not possible due to my credit score?????

You might want to get that fixed then welshfarmer. You have a cc therefore you have a credit history.

1. Get one of the easiest credit cards to get, no matter what the interest. (Moneysavingexpert is friend there)
2. Make a few purchases, small value.
3. Pay minimum one month, or maybe two.
4. Then clear off.
5. Repeat for say, 3 cycles.
6. After this has been done, move up to the next level of CC (again, see MSE).

After about 12 months, job jobbed.

thats a good idea, ill suggest that to him and help him out with that. hes not good with money at all tho, so ill see if i can sort something out where a DD pays off the (hopefully small) balance rather than relying on him making a payment.
im still not sure whether the phone DD will help him or not, but im leaning towards thinking that it certainly wont do any harm, so probably do that too.

thanks

vanquis credit card, they seem to give them to anyone, low credit limit. Very account, they give them to most people and build decent credit. Could end badly though if he is not serious

Anything that requires a credit check to obtain will build your credit score, but conversely applying for too many things that require credit can cause you to be refused further credit as it appears that you are in real need of it.

Phone contract is a good start, as are the credit builder cards. There is a flag that shows whether you clear the balance in full monthly which is sent to the credit reference agencies – while clearing the balance shows you have the funds to do so, a lender may see you as less profitable by not making the lender any interest income.

How expensive is the phone contract? Could you get a SIM only deal paid by direct debit as a first step as it is lower risk for the lender so more likely to be accepted? When you take a conventional phone contract the network is fronting you the phone and you pay it off over time, whereas SIM only their risk is only in that month’s call use.

How expensive is the phone contract? Could you get a SIM only deal paid by direct debit as a first step as it is lower risk for the lender so more likely to be accepted?

thats exactly what we’re looking at, hopefully for around a tenner. he says he needs 1Gb data and unlimited texts, not bothered about minutes.

thanks

EDIT: oh, and ill look into that vanquis card ^^^, thanks.

Being on the electoral role helps.

not sure how possible that will be, hes got mental health issues and as i mentioned before is in a halfway house type place.
im hesitant to get him sorted with a credit card until he has his own place really, which may be 2 or 3 months depending, but id have thought a phone contract would be ok.

thanks

ill suggest that to him and help him out with that. hes not good with money at all tho,

I don’t mean to be an arse, but if he’s “not good with money” and being refused credit, perhaps it’s not the wisest of moves to be trying to improve his credit rating so that he can potentially get himself into difficulties? You’ve said yourself that he usually doesn’t pay you back, which I understand is a reasonably normal “bank of mum and dad” arrangement but a formal credit agreement won’t be so forgiving. (And arguably, by letting him off his debts to you, you’re not actually doing him any favours in teaching him to take responsibility for his finances.)

You say he wants to pay for his phone; that’s great, but that doesn’t require a contract. A PAYG deal will still allow him to pay for his talk plan and has the advantage of not running up huge debts / destroying his credit rating if he can’t / won’t pay one month. No pay, no phone service. If money’s tight one week he can choose to forego the phone in order to put his money towards something more important, can’t do that on a contract.

I’m kinda with Cougar on this one. Even just for a short term.

Phone contracts are fairly stringent when looking at credit scores.

Also, his address may have debts listed against it which I believe can result in refusal of credit.

I was just about to add what spooky said – his address will do him no favors here, and registering his phone at your address probably won’t help matters.

yeah, id thought of all those things (apart from the present address thing) but my conclusions were that its still a good thing that he wants to get sorted in the big wide world now. and yes, bank of mum and dad is quite normal so i think its better for him to find out its a bit different out there if you dont pay up.

im of the opinion the sooner he starts trying to live a normal life (including money management) with no mollycoddling the better, but as you mention about the credit card, id probably try and dissuade him from having credit available just yet.

thanks 🙂