Most people will turn to a catalogue account when they have a bad credit score or still want to shop but can’t afford to pay it off in one go.
It makes sense, right? It’s a quick, instant way of shopping that doesn’t require you to have the money right there and then, as soon as you need something.
But, besides buying what you want, when you want, does it do anything else to improve your financial situation? Or is it just a way to deal with the circumstances you’re in without having to sacrifice shopping online altogether?
That’s what we’ll be talking about today. We’re going to discuss what catalogue credit is, whether it can improve your credit score, and how to use it to your advantage.
Catalogue credit at a quick glance
- A catalogue credit account can absolutely help you improve your credit score, but only if you know how to manage the account well AND the lender reports to credit reference agencies.
- It can also hurt your score if you do things like miss any payments, apply for too much credit at once, or borrow more than you can afford to.
It’s all about looking at your current circumstances honestly and deciding whether you can handle owning a credit account without getting swept up in the excitement of having so much freedom while shopping.
Forgetting that it’s a legal contract and that your buying habits are being monitored is a quick way to find yourself in an even worse situation than before.
If you’re not 100% sure what catalogue credit actually is, you can read up a bit more about it on our blog, ‘An introduction to catalogue shopping’.
Can a catalogue account improve your credit score?
We’d like to start by saying that a catalogue credit score is not automatically good or bad for your overall credit score.
It’s all about how you use it.
When a catalogue account can help your credit score
If you’re someone who is strict about paying on time, keeping up with all of your bills, and never impulse buying, then you’re the perfect model of what a catalogue credit user should look like.
Go you! Since a catalogue account offers buy now, pay later schemes and lets you break the cost into smaller payments, it’s just a way of making shopping less stressful. However, it’s only less stressful if you do what you’re meant to do.
Here’s how a credit account can help improve your credit score:
1. You pay back on time, every time
If you’re paying off your credit before or on the date that it’s due, then you’re not going to run into any problems or build up interest for yourself to stress over later on.
With every on-time payment, your credit score may rise that little bit more.
2. You only use a small amount of your credit limit
If you’re not maxing out on your credit limit every time you shop, then you’re going to keep your balance low and manageable.
From a lender’s point of view, you’ll appear as someone who is financially literate and knows how to borrow only what you can afford, making you more likely to be accepted for bigger credit or loans in the future.
3. You avoid making several credit applications at once
Trying to apply for too many accounts at once can make you seem desperate and impulsive to lenders, which means you’re a risk if they decide to accept you.
Instead, a single, well-managed account can be more helpful at showing that you can manage a credit account.
4. You use it alongside other things
A catalogue credit account isn’t an overnight fix for improving a bad credit score.
You should be doing other things alongside it, such as paying your bills on time and handling a credit card well, to see a noticeable, positive difference. If you are, then you’re using it right.
When it can lower your credit score instead
As soon as we see something that can help us get what we want quicker, we’re all in. If it’s there and free to use (without thinking about interest or repayments), you might as well make the most of it.
However, that’s when we can get a little bit reckless and forget to read the fine print or just go, ‘It’s fine if I miss another payment; I’ll just pay it when I can, it won’t affect that much.
That’s until you get comfortable doing that, and before you know it, you’re in more debt than you started with. Here are a few quick ways to ruin your chances of being accepted for credit in the future:
1. You miss multiple payments or pay late
Making a few late payments or completely dodging them altogether is a sure-fire way to tell lenders that you can’t handle the responsibility of a loan.
Doing so will only bring your credit score down, and multiple missed payments can show up on your credit report for up to 6 years.
2. You apply for several catalogues close together
As we said before, applying for too many catalogue credit accounts at once can hurt your credit score.
That’s because these can come up as a hard search on your credit report, hurting your profile as it appears as though you’re struggling financially and aren’t in a position to be borrowing.
3. You only make minimum payments while the balance keeps growing
Chipping away at your debt only leaves you more to stress about. While paying something is, of course, better than paying nothing, you end up just spreading yourself thin.
It also means the interest will keep growing, and you’ll dig yourself into a hole you can’t get out of.
4. You use all of your available credit at once
Running close to your credit limit can make you look more financially stretched to lenders.
Even if you’re making regular repayments, it still signals alarm bells and reflects badly on your spending habits.
If you’re using your credit for things you don’t absolutely need, like designer items or indulgences, ask yourself whether it’s worth it and either save up your own money instead, or look for more affordable options.
How long does a catalogue account take to improve your credit score?
Many catalogue accounts take as little as 1 to 3 months to start showing positive improvements to your credit score.
That’s because the lender needs to update its records at the end of each billing cycle to state whether the bill has been fully paid, which often takes 30–40 days.
But again, it’s all about HOW you use it and HOW OFTEN. When you first apply for a catalogue credit account, the hard search may leave a slight dip in your score, but that should smoothen out once you start handling the account responsibly.
How to check whether your catalogue account is helping
Here are a few quick and simple ways you can monitor your account to see if it’s actually helping your credit score go up:
- Check whether your catalogue account appears on your credit reports by requesting a copy from Experian or Equifax. If there are any discrepancies with your payments, get them removed so they don’t bring down your score.
- Check the payment history of your account. If all payments are coming up as being paid on time, that’s a clear sign that it’s improving your credit score.
- Check how closely you are to using the limit. A lower credit utilisation is usually viewed more positively, so use around 25% of the limit steadily to help your score.
Again, it’s not an overnight process, so it’s best to monitor these things every few months to see if the account is worth keeping open.
Better alternatives if your only goal is to build credit
If the only reason you’re opening a catalogue credit account is to simply build up your credit score, then there are plenty more ways you can do so that might take quicker.
Any of these options can help you claw back from that poor credit score that’s weighing you down, and maybe save on high-interest rates while you’re there.
Credit-builder credit cards
A credit-builder credit card comes with higher interest rates and lower credit limits, which, in many cases, can help bad spenders break their unhelpful habits.
These are great for improving your credit score and showing financial stability.
Using a current account well
By opening and managing a current account well, by staying within the overdraft limit, you’re quickly showing future lenders that you can handle a loan.
Taking out a personal loan
A personal loan is a great option if you need to pay for something important, like rent or bills.
Of course, only take what you can afford and look for ones with fixed interest rates and repayment terms that you can follow.
If you want more help on other ways to improve a bad credit score, MoneyHelper has a great guide filled with plenty of options.
Find the right catalogue credit account for you
If you’re thinking about opening a catalogue account, make sure you choose an option that fits your budget and supports your credit goals.
At Catalogues Bad Credit, we take the stress out of your search, helping you compare catalogue options for bad credit more easily so you can find a provider that works for you.
Browse our latest catalogue offers today and take the next step towards rebuilding your credit with more confidence.