funny I did all things in this article, which is why I now find this so appalling.
http://money.uk.msn.com/guides/Credit-R ... id=9000769
Why credit can be good for you
By Jessica Bown, moneysupermarket.com
July 24 2008
In the current climate, you could be forgiven for thinking that only the foolhardy are applying for credit cards and loans. However, there are situations in which taking on a new credit agreement is a good idea - even today.
Cardholders with debts that were charged at 0%, but are now subject to a double-digit standard interest rate, should definitely scout around for a better deal.
Those with a number of credit cards and loans may also find they can consolidate these into one loan with a lower rate, making it both easier and cheaper to pay off.
What's more, far from damaging your credit rating, taking on new borrowing - and managing it well - can actually improve your credit score, making it easier to get the best possible deals in future.
Getting a good deal
Your credit history can determine whether you get a mortgage or mobile phone contract - as well as the level of interest you pay on a loan or credit card.
This is because it is not only a bad credit history which affects your ability to borrow. Yes, missing payments and maxing out your credit cards can be detrimental to your score, but people with little track record of managing debts can also be penalised.
For those who have damaged their credit rating in the past by missing or making late payments, building up a more reliable payment history is also the best way of boosting it.
The first step is to get hold of a copy of your credit report to see where you need to improve. You can do this by contacting a credit bureau such as Experian or Equifax.
Once you know where you stand, the best way to increase your score is to pay all your bills on time, all the time.
It can take up to seven years for the effects of a late payment to disappear from your credit file, so it is worth setting up direct debits or some kind of reminder system to make sure you are never late.
Play your cards right
When it comes to credit cards, it is also a good idea not to get too close to your credit limit, as this can also put financial institutions off. Keeping the usage of your credit limits low - below 30% - will help you to get a better score, while paying your bill off in full is the best way to keep your finances in shape and build your credit at the same time.
One problem for people who have failed to keep up with bills and debt repayments in the past is that they are often denied the chance to repair their credit score because lenders refuse to accept them as customers.
Ways around this include taking out a secured credit card that offers you the chance to build up a payment history by borrowing up to the amount you pay into the account. Check first whether the lender reports to the credit bureaus though, as there will be no positive effect on your report if they do not.
Get the best deals
Whatever kind of card or loan you need, it is worth shopping around to get the best rate.
Almost a third of credit card customers have seen the interest they pay rise in the last 12 months, research shows. However, there are still some very competitive deals around - especially if your credit rating is top notch.
The Virgin Credit Card, for example, has a 15-month interest-free balance transfer period, with a debt transfer fee of 2.98%, while Barclaycard has a range of cards offering 14 months interest free with a 2.9% transfer charge.
Steve Willey, head of credit cards at Moneysupermarket.com, said: "Despite all the doom and gloom there are still many excellent 0% purchase or balance transfer deals on the market for those with a good credit rating."
Be choosy
However, it is important not to apply for deals you are unlikely to be accepted for - if you make a number of applications for credit within a short space of time, it will have a negative impact on your credit score.
And it's not just because people have an application declined that they then apply for another product - in many cases it's because they are offered a higher rate than the one they saw advertised.
Many lenders advertise a "typical" rate which means it only two thirds of successful applicants have to be offered it, the other third can be offered a higher rate. The rate you are offered will depend on your credit score.
