Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • timmay2606
    • By timmay2606 17th Jun 17, 3:00 PM
    • 28Posts
    • 11Thanks
    timmay2606
    Pay it all of or leave some balance -what's best for my credit score?
    • #1
    • 17th Jun 17, 3:00 PM
    Pay it all of or leave some balance -what's best for my credit score? 17th Jun 17 at 3:00 PM
    Hi, I've recently come out of an IVA and want to start rebuilding my credit rating. I signed up for a credit card and have been accepted, and my SO and I have agreed that we'll use it to have a positive impact on our credit (not for lavish spending beyond our means - learnt that lesson!)

    To increase my score as quickly and effectively as possible, am I best served by maintaining a balance on the card but ensuring payments, or clearing the balance completely each month?

    If it's best to keep a balance, what percentage of the credit limit is best to maintain?

    Cheers in advance...



    P.S. apologies for spelling - on mobile...
Page 1
    • zx81
    • By zx81 17th Jun 17, 3:07 PM
    • 12,678 Posts
    • 12,936 Thanks
    zx81
    • #2
    • 17th Jun 17, 3:07 PM
    • #2
    • 17th Jun 17, 3:07 PM
    Clear in full. Anything else will look as if you can't afford your regular spend.

    Also ignore your credit scores entirely. It doesn't reflect anything about how lenders will view you. Just manage your credit responsibly
    • Somerset La La La
    • By Somerset La La La 17th Jun 17, 3:29 PM
    • 383 Posts
    • 99 Thanks
    Somerset La La La
    • #3
    • 17th Jun 17, 3:29 PM
    • #3
    • 17th Jun 17, 3:29 PM
    As above. Scores are relatively meaningless, but can be amusing to monitor!

    I've not paid any interest and my 'score' and (more importantly) credit rating with lenders is constantly improving. Ultimately what lenders think counts. I had a score of something silly like 54 with Experian and opened 2 credit cards in the same month after seeing that!

    If you want to give your credit file (or 'score'!) a big boost, and if you trust your partner, or already a link with them (mortgage etc)..... then add yourself to any bank account they have which is run well, and over 6 years old. You'll instantly benefit from the positive history.

    If you DON'T already have a link - think very carefully before creating one, as it'll drag your other halves score down (assuming their file is good). Likewise, if they have more recent issues than you have, don't link yourselves by combining the account, as you'll end up dragging yourself down.
    Ex-Bankrupt, Discharged 09/2015
    Cap1 Platinum - Jul 2016, £4,000.... Consolidation game!
    Aqua Reward (0.5% Cashback) - Nov 2016 - £1,950
    Vanquis Chrome 24.7% (rare use, want high limit reported) - July 2017, £1,000
    Drafty (Reports as a credit card!) - £300
    Rebuild for Mortgage (10/2018)
    • BobQ
    • By BobQ 17th Jun 17, 6:00 PM
    • 9,649 Posts
    • 12,522 Thanks
    BobQ
    • #4
    • 17th Jun 17, 6:00 PM
    • #4
    • 17th Jun 17, 6:00 PM
    Hi, I've recently come out of an IVA and want to start rebuilding my credit rating. I signed up for a credit card and have been accepted, and my SO and I have agreed that we'll use it to have a positive impact on our credit (not for lavish spending beyond our means - learnt that lesson!)

    To increase my score as quickly and effectively as possible, am I best served by maintaining a balance on the card but ensuring payments, or clearing the balance completely each month?

    If it's best to keep a balance, what percentage of the credit limit is best to maintain?

    Cheers in advance...



    P.S. apologies for spelling - on mobile...
    Originally posted by timmay2606
    If you want to live within your means why are you even asking the question
    ?
    Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.
    • timmay2606
    • By timmay2606 17th Jun 17, 6:43 PM
    • 28 Posts
    • 11 Thanks
    timmay2606
    • #5
    • 17th Jun 17, 6:43 PM
    • #5
    • 17th Jun 17, 6:43 PM
    So many reasons. For example, I'd like to be able to shop around for a fresh mortgage while rates are low, but that's not going to happen with rubbish credit.

    I'd also like to get gas central heating in. This will cost around 5k to replace the electric system, but with a decent rate I can offset the payments against the savings, and be no worse off, but in 5 years time I'll be quids in.

    Finally, and most appealing, is the fact that for the past 5 years I've been driving around in bangers, which, given the maintenance required, costly MOT failures, poor fuel economy etc, I've calculated that it'd be just as cost effective to lease a car instead.

    Just because I've been living within my means, it doesn't mean that with the right flexibility I can't make my money go further.
    • Grzegorz Kowalski
    • By Grzegorz Kowalski 18th Jun 17, 4:32 AM
    • 17 Posts
    • 6 Thanks
    Grzegorz Kowalski
    • #6
    • 18th Jun 17, 4:32 AM
    • #6
    • 18th Jun 17, 4:32 AM
    I think the problem is quite similar to the dilemma: If you quit smoking but still have a one vap per day, did you really quit?
    • MatthewAinsworth
    • By MatthewAinsworth 18th Jun 17, 5:58 AM
    • 2,799 Posts
    • 1,112 Thanks
    MatthewAinsworth
    • #7
    • 18th Jun 17, 5:58 AM
    • #7
    • 18th Jun 17, 5:58 AM
    I understand the dilemma especially if you had a 0% card, not that that's what you're saying

    I'm not convinced replacing heating system or cars worthwhile, in my last place storage heaters never bothered me and if you lease a car you're paying for depreciation - if you're doing a lot of miles maybe it makes more sense, but if a banger is too expensive to repair just scrap it, surely cheaper than depreciation?!?
    Or maybe buy a 3 year old car - the worst of the depreciation gone
    • MatthewAinsworth
    • By MatthewAinsworth 18th Jun 17, 6:10 AM
    • 2,799 Posts
    • 1,112 Thanks
    MatthewAinsworth
    • #8
    • 18th Jun 17, 6:10 AM
    • #8
    • 18th Jun 17, 6:10 AM
    If you put the cost of a car lease or new heating system into a stocks and shares ISA with aggressive allocation you're quite likely to do better, just don't try to time the market and don't sell in a crash, have faith that it always bounces back. Index.
    • takman
    • By takman 18th Jun 17, 9:28 PM
    • 2,479 Posts
    • 2,069 Thanks
    takman
    • #9
    • 18th Jun 17, 9:28 PM
    • #9
    • 18th Jun 17, 9:28 PM
    You definitely need to pay it off in full every month to build up a good credit history. Also make sure your no getting near the limit each month either just in case.

    Finally, and most appealing, is the fact that for the past 5 years I've been driving around in bangers, which, given the maintenance required, costly MOT failures, poor fuel economy etc, I've calculated that it'd be just as cost effective to lease a car instead.
    Originally posted by timmay2606
    If the costs of repairs on a second hand car is more than the cost of depreciation on a new car then you are buying the wrong cars!.
    • Nebulous2
    • By Nebulous2 19th Jun 17, 7:05 AM
    • 1,520 Posts
    • 921 Thanks
    Nebulous2

    If the costs of repairs on a second hand car is more than the cost of depreciation on a new car then you are buying the wrong cars!.
    Originally posted by takman
    Some of my colleagues are paying £250 a month on a lease through the company. I paid £600 for my car. Keeping it 3 months and scrapping it would have seen me in profit.

    A mid-budget car will lose £3k+ a year. It should be easy to run a car for less than that.
    • forgotmyname
    • By forgotmyname 21st Jun 17, 4:10 AM
    • 25,449 Posts
    • 10,093 Thanks
    forgotmyname
    I spent more than 50% of my cards limit one month and then paid in full at the end of the month and my "SCORE" dropped.

    I would imagine a lender would rate me better than that useless score because my CC provider upped my limit very soon after.
    Punctuation, Spelling and Grammar will be used sparingly. Due to rising costs of inflation.

    My contribution to MSE. Other contributions will only be used if they cost me nothing.

    Due to me being a tight git.
    • DonL
    • By DonL 22nd Jun 17, 6:57 PM
    • 12 Posts
    • 0 Thanks
    DonL
    From own personal experience in trying to rebuild my credit the best options that I have come across from credit card usage have been any of the two:

    Paying in down in full each month or
    Making sure you credit card utilisation is less than 50%

    I am always checking my equifac report and whenever it goes above 50% it goes from green to amber, staying below this keeps you green.

    Not sure if that helps x
    • DonL
    • By DonL 22nd Jun 17, 6:58 PM
    • 12 Posts
    • 0 Thanks
    DonL
    That was supposed to say equifax
    • Chrysalis
    • By Chrysalis 22nd Jun 17, 11:08 PM
    • 1,976 Posts
    • 916 Thanks
    Chrysalis
    generally I think as long as utilisation isnt too high and you are meeting the credit terms, then score will rise over time, but it rises "faster" when full payments are made.

    Those of us with 0% BT cards usually dont pay the cards off in full tho (otherwise whats the point of the BT cards), and still see our scores rise over time.

    Whatever card I choose to use for purchases is paid in full every month tho, and my overall credit utilisation has never gone over 50%. This has been helped also by the fact I have a couple of catalogue accounts I barely use with 4 figure limits at 0 balance or close to 0 balance.

    The scores are a guide but do not necessarily have a resemblance to how companies assess if they want you as a customer.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

1,203Posts Today

6,868Users online

Martin's Twitter