Is spending on a credit card and immediately paying it a bad thing?!
Options
prezzacc
Posts: 147 Forumite
Morning.
So I joined the MSE credit club, everything is shiny green and "very good" except my debt to income ratio which is Amber and "fair".
So can anyone explain does this relate to the amount of debt I have on loans and credit cards? I currently have 5 accounts with overdrafts and a credit card and no debts on any, I usually spend the odd hundred on my CC then always pay it off within a week or so! So I assume lenders like to see I have a decent amount on a credit card before paying it off? Or am I getting the wrong end of the stick on what this means?
Thanks
So I joined the MSE credit club, everything is shiny green and "very good" except my debt to income ratio which is Amber and "fair".
So can anyone explain does this relate to the amount of debt I have on loans and credit cards? I currently have 5 accounts with overdrafts and a credit card and no debts on any, I usually spend the odd hundred on my CC then always pay it off within a week or so! So I assume lenders like to see I have a decent amount on a credit card before paying it off? Or am I getting the wrong end of the stick on what this means?
Thanks
0
Comments
-
Paying it immediately can look like you don't use it.
Wait for the statement hen clear in full. It's nothing to do with the amount.
Ignore any rating given to you.0 -
What do you mean by overdrafts? An overdraft facility is available but you dont use it, or you are in five overdrafts at once?
Any other debts, car loans etc?
I cannot see why they would be saying your debt to income ratio is fair if you aren't carrying any debt at all.0 -
I know the world seems to have gone mad over credit score, but it is just one of a raft of indicators that lenders review.
Doing what you are doing is 'good', don't let anyone or anything dissuade you.
Read MSE on credit scores, it may enlighten or not !
I have no credit card, no debt, no overdraft charges, but seem miraculously to live a nice and pleasant life.Debt is a symptom, solve the problem.0 -
I usually spend the odd hundred on my CC then always pay it off within a week or so!
Why would you do that?So I assume lenders like to see I have a decent amount on a credit card before paying it off? Or am I getting the wrong end of the stick on what this means?
They don't see what you spend and what you pay off. They see a snapshot of your balance on a particular day and whether you have missed paying the minimum. What you see on your credit report is what they see. Depending on when you use the card and when the balance is reported, it might look like you have not used the card at all.
Lenders all look for different things, but the general idea is they look to see if you borrow money and then pay it back. They are trying to work out the risk of you paying them back if you borrow money from them.
Setup a Direct Debit, use the card & let the card issuer take the money.enjoyyourshoes wrote: »I have no credit card, no debt, no overdraft charges, but seem miraculously to live a nice and pleasant life.
If you don't need to borrow money then improving your credit history to be attractive to lenders would seem like a waste of time. But how about those people who aren't as lucky as you?0 -
I'm in the same boat and have been doing the same thing.
I have a Vanquis and Barclaycard Platinum with £500 and £800 limits respectively. But when asking Vanquis of late for an increase they said no because I'm not using it.
I thought showing you could be responsible was the key, not the fat you're not using it. Now putting everything on it and letting the direct debit take care of it. Hopefully that will help with a credit limit increase.0 -
I'm in the same boat and have been doing the same thing.
I have a Vanquis and Barclaycard Platinum with £500 and £800 limits respectively. But when asking Vanquis of late for an increase they said no because I'm not using it.
I thought showing you could be responsible was the key, not the fat you're not using it. Now putting everything on it and letting the direct debit take care of it. Hopefully that will help with a credit limit increase.
Potentially, yes.
How do I know? Because I used to make purchases on my credit card then pay the transaction(s) off once they'd been posted to my account before the next statement was generated.
Stopped doing it a few years ago (thanks to a thread I read here on MSE) and have had credit limit increases since.It's not your credit score that counts, it's your credit history. Any replies are my own personal opinion and not a representation of my employer.0 -
enjoyyourshoes wrote: »I know the world seems to have gone mad over credit score, but it is just one of a raft of indicators that lenders review.
Lenders don’t see or review the ‘score’ that CRAs use at all. They use data from the credit report and other things in their own algorithm to create their own.
That is why it is important that the content of the report is correct rather than the score
Also if you want a credit history that helps you need to wait for the statement before paying off the card as otherwise it looks like you haven’t used it at all.2.88 kWp System, SE Facing, 30 Degree Pitch, 12 x 240W Conergy Panels, Samil Solar River Inverter, Havant, Hampshire. Installed July 2012, acquired by me on purchase of house in August 20170 -
Thanks all for your input. To answer a few questions. I'm not overly concerned by this but was thinking of applying for a better cashback credit card so just checked credit score.
I think I've got the answers I came for and to be honest I probably should leave some money on the card and let a DD pay it off rather than put money on it and pay straight away!0 -
Thanks all for your input. To answer a few questions. I'm not overly concerned by this but was thinking of applying for a better cashback credit card so just checked credit score.
I think I've got the answers I came for and to be honest I probably should leave some money on the card and let a DD pay it off rather than put money on it and pay straight away!
Or you could just use money in your bank account and cut the greedy card provider out of the equation altogether.I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter0 -
sourcrates wrote: »Or you could just use money in your bank account and cut the greedy card provider out of the equation altogether.
So then they will miss out on Section 75 protection on any purchases over £100, plus any cashback or rewards they get by spending on the credit card. What a silly suggestion!0
This discussion has been closed.
Categories
- All Categories
- 343.2K Banking & Borrowing
- 250.1K Reduce Debt & Boost Income
- 449.7K Spending & Discounts
- 235.3K Work, Benefits & Business
- 608K Mortgages, Homes & Bills
- 173.1K Life & Family
- 247.9K Travel & Transport
- 1.5M Hobbies & Leisure
- 15.9K Discuss & Feedback
- 15.1K Coronavirus Support Boards