Credit Card For Credit Score Building

Sean91 · 20 October 2017 at 8:06PM

Hi Everyone,

Looking on my Clearscore the only negative I have at the moment is not having a active credit card.

My score is pretty poor but I have been pre approved for a capital one credit card at 29.8% APR

I am planning on using this as a fuel card and paying off the balance in full every month, will this

A. Improve my credit score by doing so and

B. Will i incur any interest by paying off the balance in full each month?

Thanks Again

Sean :j

Dobbibill · 20 October 2017 at 8:12PM

Sean91 wrote: »

A. Improve my credit score by doing so and

Probably...will it matter - No!
Only you see your credit 'score' so don't take too much notice of it, pay more attention to the data held in your file and make sure that is accurate. The score will go up a little, then down according to how the CRAs view you that month

B. Will i incur any interest by paying off the balance in full each month?

No - paying off in full on time is the right thing to do.
This will demonstrate to lenders that you are a low risk and when you use credit you pay it back.

Sean91 · 20 October 2017 at 8:18PM

There's not much on my file in fairness,

That is why I thought if I got the card at least creditors can see me making repayments etc.

Dobbibill · 20 October 2017 at 8:30PM

Have you got a mobile phone contract? SIM only will report against it.

Are you responsible for any utility bills? They will also report.

Make sure you are on the ER - this shows stability.

Any standard bank account would also be on there.

Anthorn · 20 October 2017 at 8:31PM

Sean91 wrote: »

Hi Everyone,

Looking on my Clearscore the only negative I have at the moment is not having a active credit card.

My score is pretty poor but I have been pre approved for a capital one credit card at 29.8% APR

I am planning on using this as a fuel card and paying off the balance in full every month, will this

A. Improve my credit score by doing so and

B. Will i incur any interest by paying off the balance in full each month?

Thanks Again

Sean :j

The credit score you see on Clearscore and certain other services is an indication of the score a lender might apply if it used the same algorithm. So it is an indication of how good, bad or indifferent your credit history is. But it might not apply to all lenders or indeed any lender at all.

Paying off the full balance every month will not improve your credit history. A history of credit accounts in good order will build your credit history and you have already started that with your Capital One CC. It is arguable that clearing the whole balance every month is actually credit since the balance on that account in your credit history is likely to be always nil.

However 29.8% APR is pretty high so paying the full balance every month will avoid the relatively high interest. That's if you can: Letting a balance ride for a month provided you pay the minimum payment is unlikely to break the bank and unlikely to adversely affect your credit history.

Sean91 · 20 October 2017 at 10:05PM

I don't currently have a phone contract I use a work phone.

I suppose I can change the utility bills over into my name.

I am also already on the ER, my problem is I can't get any credit what so ever.

Fair enough I made a few mistakes back when I was younger but how do I now show I can repay when I can't get any credit apart from this CC?

Dobbibill · 20 October 2017 at 10:43PM

Use the credit card you have for a while and create a good history. Make sure you never go over the limit or pay late (a direct debit to pay in full maybe)

How many bank accounts do you have? Do you see those on your credit file?

takman · 20 October 2017 at 11:39PM

Anthorn wrote: »

Paying off the full balance every month will not improve your credit history. A history of credit accounts in good order will build your credit history and you have already started that with your Capital One CC. It is arguable that clearing the whole balance every month is actually credit since the balance on that account in your credit history is likely to be always nil.

However 29.8% APR is pretty high so paying the full balance every month will avoid the relatively high interest. That's if you can: Letting a balance ride for a month provided you pay the minimum payment is unlikely to break the bank and unlikely to adversely affect your credit history.

Just completely ignore this advice it is a load of rubbish.

Spending and paying off in full will show that you are responsible at managing credit. When you statement is produced each month that balance will be reported on your credit report and then reported as being paid in full so it will NOT show a nil balance.

If you have a card with a high interest rate and them some months only pay the minimum this will be a big warning sign for lenders you are starting to struggle with repayments so is very bad advice.

SnowTiger · 21 October 2017 at 12:03AM

Anthorn wrote: »

Paying off the full balance every month will not improve your credit history.

Nonsense.

Anthorn wrote: »

It is arguable that clearing the whole balance every month is actually credit since the balance on that account in your credit history is likely to be always nil.

More nonsense.

Lumanous · 21 October 2017 at 12:17AM

Agree with takman, having credit absolutely does affect your history. An absence of any credit history can affect you negatively as you haven't proven either way if you're responsible or not. If you do have credit and pay it off in full each month, this will help build a history. Just make sure you keep on top of it...making a mistake by not paying minimum will affect you badly. But capital one can be a good credit builder as long as you manage it and keep on top of minimum payments. If you can't pay in full, at least pay the minimum payment. Then pay off the full as soon as you can, but I recommend keeping yourself where you can pay in full each month.

Beware on some of the advice regarding utility bills though, not all utility bills contribute to everyone's credit history. Some people have utility bills which affect/form part of their history however some people have utility bills in their name which do not affect their score. I'm not saying you shouldn't try to get them in your name etc, other people may know better but be wary as this may be a pointless move. You could move them and have no impact. Could go either way.

I agree with others on checking the details though, good or bad. Another recommendation would be to check your address history is correct, sounds like it wouldn't matter much but it makes a difference. Try to fill in any gaps, e.g. make sure it doesn't show you 'address-less' for any years. This sometimes can affect history.

Agreed on the current accounts, these should be showing. Having an active account for a long time can help build your history.

I will highlight the noted point though that all or any of these things aren't guaranteed to feed into any 'score' as companies/institutions all use different combinations of factors BUT there is no harm in building a good history, it should help you down the line and can take a while to build up.

Good luck

Dobbibill · 21 October 2017 at 5:00AM

Lumanous wrote: »

Beware on some of the advice regarding utility bills though, not all utility bills contribute to everyone's credit history. Some people have utility bills which affect/form part of their history however some people have utility bills in their name which do not affect their score. I'm not saying you shouldn't try to get them in your name etc, other people may know better but be wary as this may be a pointless move. You could move them and have no impact. Could go either way.

Good point actually - I should have said 'some' report.

What I would avoid doing is setting up a utility bill in joint names with anyone that you don't already have a financial link with - some have been known to create that link.

Credit Card For Credit Score Building

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