should I leave some money on my credit card to improve my credit rating?

Tom_H

I've never really borrowed much money in my life (except from parents!) and I've been told that this may mean I won't have built up a credit rating, so may find it difficult to get credit in the future - epsecially large amounts like for a mortgage.

I've had a credit card for a few years, but until quite recently always bought things and paid off the balance in full, until I moved into a new flat around a year ago and over streached myself slightly meaning, from about 6 months there was always money on my credit card - I never missed payment though, and I've been paying if off quite quickly over the past couple of months, and will be in a position to clear the balance whenI next get paid in about 2 weeks.

I have been advised that if I leave a reasonabley small amount on the card, and make the minimum payment each month this will gradually improve my credit rating - as I'm planning to try to buy a house in a couple of years or so I'm a little worried that the lack of borrowing in my past may make getting a mortgage hard - so will leaving money on my credit card and paying the minimum each month help my situation? Or will I just be wasting the money I'll be paying in interest? Also Iwas thinking of leaving around £100 - would that be enough, or should I look at leaving even less?

Also while in my flat for around 15 months (I've now moved out and back woth my parents) I was making regular bill payments, and I've had a mobile for years that I've never missed a bill payment on - do things like that help at all toward credit ratings or is it just lent money that counts?

Thanks in advance for any help! :beer:

CLAPTON

generally no

you are best to use the card regularly and pay in full each month... that will show you use credit wisely and pay on time

Rafter

Keeping a balance on the card will make no difference in my view.

More important that you have a good deposit saved up (>25%) are in a stable job and can demonstrate you can afford payments easily (generally meand that the loan is less than 3.5 times your gross annual income.

Also make sure you are on the electoral roll and that any address history is good.

R.

YorkshireBoy

Tom_H wrote: »

I have been advised that if I leave a reasonabley small amount on the card, and make the minimum payment each month this will gradually improve my credit rating...

You've been poorly advised.

It's not necessary to buy (by paying unnecessary interest) a credit rating. Indeed, I have several cards that I don't use, yet the monthly status still shows a line of 'zeros', denoting that my "payments are up to date".

Tom_H

OK - I guess I'll pay it off in full and save myself the interest and the bother of paying it each month!

Thanks guys

Moggles_2

For tips that will help, have a look at the *Credit Rating: how it works and how to improve it guide* especially Martin's *Manage and Improve your credit score* article

Moggles_2

While in my flat for around 15 months (I've now moved out and back with my parents) I was making regular bill payments and I've had a mobile for years that I've never missed a bill payment on. Do things like that help at all toward credit ratings or is it just lent money that counts?

Unless credit facilities are involved (eg. mobile phone), your payment histories with utilities are not normally reported to the credit reference agencies, provided that you are not in arrears. In other words, utilities neither help nor harm your credit history, if you always pay up on time.
Note: British Gas has begun to report new customer accounts to the CRAs in the last couple of months. Obviously, BG needs a customer's permission, so only new account holders are affected

elfen

It's better to pay it off monthly when you do use it and keep it open, as it shows you can handle a credit account correctly (as has already been said) . Your mobile a/c will show up on there, and also make sure you're on the electoral roll at the new address.