First time credit card - bit of advice!

cashaholic

Hi, I am sure this has been asked many times but I couldn't find out exactly what I wanted when I had a look so thought I would put up my first post!

I have a new Natwest Platinum card of a few months old. For one reason or another this is the first credit card I have ever had. I am paying off a second personal loan that will expire next month finishing off the £2500 I borrrowed. When I got the card Natwest gave me a £1400 limit which seemed ok and will be fine for me however..

1) Is it worth looking to systematically increasing that limit, even if I don't require it, to give me 'better' credit opportunity for the future. As in if in 3 years the limit is, i don't know £5k, and I suddenly need £6k. Am i more likely to get the £6k I need if I had built up the limit between now and then rather than leaving at current value. I would have also thought that having a larger amount of credit available to you that you don't use would favourably show your restraint on a credit report?

2) If so, how is the best way to go about this, do I simply ring up every 6 months? What should I ask for?

2) Lastly and not least (!) How should I use the card? Since I received it I have used it every month and paid off in full every month, I have only reached about half way to the limit. I have read varying oppinions that could be persuasive to the fact that nearing your limit, not paying off in full provides profit to the bank and greater lending availability. I don't like this theory and if it is the case would not pursue it but I would like to know either way.

Penny (I'm saving, sorry) for your thoughts and hello forum! :beer:

CLAPTON

Spending regularly and paying in full each month will help improve your credit rating.

There is no need to mindlessly spend and/or pay interest

If you think you may need to have 6k in the future then best to start saving for that right now.
madness to actually plan to pay lots of interest to a bank (except for a mortgage of course)
you say you're about to finish paying off your current loan. resolve that will be the very last time you pay a penny in interest.

Moggles_2

I have read varying opinions that nearing your limit, not paying off in full provides profit to the bank and greater lending availability. I don't like this theory and if it is the case would not pursue it but I would like to know either way.

This is just one of those urban myths that occasionally does the rounds. Leaving part of your balance on a card attracting interest is unnecessary

It takes time to build a good credit history, but you don't have to be a big spender. The chief thing is to keep within your Ts & Cs. If you always pay up on time each month and don't exceed your credit limit, your credit history will steadily improve and your credit limits will take care of themselves

cashaholic

Thanks both.

Moggles - I heard this, does this mean your limits will naturally be increased by the bank over time if you are a good customer? I would much rather leave it that way over contacting them to increase it.

Moggles_2

cashaholic wrote: »

Does this mean your limits will naturally be increased by the bank over time if you are a good customer? I would much rather leave it that way over contacting them to increase it.

Lenders differ in this respect, as with nearly everything else, but provided that you keep within your Ts & Cs, most will increase your credit limit by increments over time.

If you request an increase of more than £500, be prepared for a credit check

cashaholic

OK we we shall see then!

Any one reading this who owns a Natwest credit card and who knows how they operate when it comes to increasing limits then please share the knowledge!

izools

Natwest were the first bank to give me a credit card, initially with a £400 limit (well I was only just 18 and working part time!).

They increased it by £100 every six months if I called them and asked them to do so.

I would imagine, that if you pay in full each month and spend a notable amount each month (as you say, upto £700 is great) they should be happy to consider you for an increase after six months.

They may want to make you wait 12 months for your first increase, and then do it six month therafter, this is how RBS work with their credit cards, I would imagine Natwest will be the same as they are essentially the same bank.

They probably won't increase it automatically as that would to against the new code of ethics about providing customers with unrequested credit facilities, however most lenders get around this by increasing your limit and advising you in writing the process to reduce it if you don't want it.

Call them in six months, if they say no, then chances are you will get an auto-increase on your 12th statement.

However, please note that when applying for credit in future, some lenders will consider how much available credit you have. If you have a £7,500 limit and a £100 balance, they won't be thinking "Can he afford this new facility ontop of the £100 existing borrowing?". They will be thinking "Can he afford this new facility if he were to max out his existing facilities".

It is swings and roundabouts.

As others say, once you've paid off your loan, put your cash to one side so that if you do need £6K in future, for whatever reason (the only thing I can think of is a family fatality... but anyway), you won't have to rely solely on credit.

nickmack

Moggles wrote: »

This is just one of those urban myths that occasionally does the rounds. Leaving part of your balance on a card attracting interest is unnecessary

It's certainly undesirable for the customer. But that doesn't mean clearing your balance each month necessarily improves how you are scored by all lenders.

It's unthinkable that some kind of 'Profit scoring' isn't a significant part of the assessment model used by Credit Card companies. Indeed one of Martin's main points in the Credit Rating - How it works and how to improve it is that 'Credit scoring's about profit not risk'.

That doesn't mean you need to go out and spend on your card and pay interest charges to boost how you are rated, but it's useful to be aware that being thrifty doesn't always make you more attractive to creditors.

Moggles_2

nickmack wrote: »

It's certainly undesirable for the customer. But that doesn't mean clearing your balance each month necessarily improves how you are scored by all lenders. It's unthinkable that some kind of 'Profit scoring' isn't a significant part of the assessment model used by Credit Card companies. Indeed one of Martin's main points in the Credit Rating - How it works and how to improve it is that 'Credit scoring's about profit not risk'. That doesn't mean you need to go out and spend on your card and pay interest charges to boost how you are rated, but it's useful to be aware that being thrifty doesn't always make you more attractive to creditors.

To be fair, you've quoted me out of context. I was replying to the suggestion that nearing your credit limits and not settling credit card bills in full increases credit limits.

Well, only the credit card companies concerned know the answer.
We don't know how any given lender views our credit files. Then again, as long as we're getting the credit cards and limits we want, does it matter?

The important thing, IMO, is not to part with a penny more in interest charges and fees than is necessary

marksoton

nickmack wrote: »

It's certainly undesirable for the customer. But that doesn't mean clearing your balance each month necessarily improves how you are scored by all lenders.

It's unthinkable that some kind of 'Profit scoring' isn't a significant part of the assessment model used by Credit Card companies. Indeed one of Martin's main points in the Credit Rating - How it works and how to improve it is that 'Credit scoring's about profit not risk'.

That doesn't mean you need to go out and spend on your card and pay interest charges to boost how you are rated, but it's useful to be aware that being thrifty doesn't always make you more attractive to creditors.

Which, lets face it is the biggest oxymoron going.

The consumer/customer has no idea where they stand.

It's about time anyone offering credit made their criteria clear, simple and transparent.

Whilst each case is individual the current system is ridiculous.

Loopy_Girl

Oxymoron:j

That word doesn't get used often enough quite frankly:D