www.iva.co.uk

Hi all, just a little advice on vanquis credit card. I completed my IVA last year and I am now starting to clean up my credit profile. I've heard that getting a vanquis card can help towards this. I have applied for one today and been accepted but I notice this has had a negative effect on my credit rating, dropping by 46 points. I'm a little concerned because I got this card to help!

Hi,

Surprised that this had had a negative impact - perhaps when you use it for the first time and pay it off it will help?

Hi.
First of all, do not give a passing thought to your numerical credit score. Lenders don't even see it. The credit score as we know it is just a smoke and mirrors gimmick to give the credit reference agencies a "tool" they can sell you. Lenders all have their own criteria and look at history over scores.

In theory though, the availability of a line of credit is, in the beginning, a higher risk. If you have a £1000 credit limit there is the potential for you to run up £1000 of debt which you haven't demonstrated that you will repay. After a few months of running the account well the perceived risk will diminish and, for what it is worth, the "score" will increase.
So, use the card for small purchases and pay it off each month to build up a good history.

Excellent advice from Foggy, always best to pay off each month and that way the interest rate is negligible too.

Useful advice from Foggy.

Foggy is spot on. Mine dipped 20 points the month I took out the card (I got a Luma card by Capital One) but jumped back up by 40 the following month.