Building a credit rating- best way to make payments?

nienta

Hiya,

I want to build up a credit rating- I've had no debts or loans before and only recently realised that that's a bad thing, credit rating wise :P I've just got a Lloyds TSB advance mastercard that has 0% interest for six months. What's best for my credit rating- to pay off the balance each month in full, or, to make minimum payments only and then pay off the rest once the six months is up?

Thank you!
Lindsay

p.s. apologies if this info is already out there, I hunted around but had no luck!

izools

As long as you pay well over the minimum and keep the card under a third of it's credit limit balance wise, you'll be improving your credit score all the while.

It's only when having a credit card that you run close to the limit or only pay the minimum on that you can potentially harm your score.

And well done! That's a damn nice first card to have. Do you have it in hand? I'm told it's a nice looking card

nienta

Thanks for the info and quick reply! I hadn't known that about keeping it under a third so that's particularly helpful.

I have to admit I just went for that one because I already have an account with them and of their selection it had the lowest interest I'm curious, what makes it a nice first card? But it is nice to look at- very green and naturey- I was getting tired of the horse

I've only had it a couple of weeks and haven't sussed billing yet either- can you make a payment at any time or do you have to wait for a bill to come through first?

Thanks muchly!

izools

It's a nice first card because of the APR (11.9%). More often that not us mere mortals need to build up a credit history with a sub prime card with an APR of over 30% before high street lenders trust is with a low APR like the Advance card has.

You can make a payment before the statement turns up, but there's no point. Leave it in your current account earning interest and as long as you pay the full statement balance before the due date every month you won't pay any interest. Only when you pay less than the full balance to you get charged interest

nienta

Heh nice to get a low APR without trying- got lucky there! I've been with the bank for around 10 years so presumably that might have helped me get approved...

Good point about leaving the money to earn interest... thanks again for your help, I do appreciate it

Jboy

Well done Nienta.

I bought my first car with my first credit card... and didn't pay it off. Now YEARS and at least 7 credit cards later I'm slowly chipping away at my £500 in interest a month bills. Don't do what I did!

MFWannabe

Set up a direct debit to make payments that way you'll always pay on time and never get charged for making a late payment.

Also i believe that Martin Lewis would say pay off the full amount each month. Experts please correct me if i'm wrong

firsttimestudent

Do remember though after 6 months, your Lloyds TSB Advance card does not have a 56-day interest free period. I do suggest that you switch to one that does have, e.g. their Airmiles Duo - otherwise it can be expensive, as literally you'll be accruing interest once the payment goes to your statement.

nienta

Ouch Jboy, thanks for the warning, that sounds quite a weight Well done for getting it tackled....

Freez, thanks for the tip on direct debit- if you have that set up to pay the minimum, can you also make a further payment on top of that?
I'd also be interested in hearing if others would advise to pay the full amount instead...

Thanks for that info firsttimestudent, I had no idea about that... Just to make sure I understand, does that mean if I buy something on the card, it's charging interest up until the point that I get the bill and pay it off? That sounds pretty unfair :P
But I'm also wondering that as long as I'm only using the card to build credit, if I could buy and pay things off on the same day and avoid interest (assuming that doing that would still be helping my rating- and assuming I can work out how to transfer them a payment from my current account...)

I'm a little shy about posting but am very glad I did, thanks all for the help!

nienta

Just a wee bump... Particularly keen to know if if it still helps my credit rating if I buy and pay something off right away rather than waiting for the monthly bill (for once my 0% interest is over).

Thanks!

CannyJock

nienta wrote: »

Just a wee bump... Particularly keen to know if if it still helps my credit rating if I buy and pay something off right away rather than waiting for the monthly bill (for once my 0% interest is over).

Thanks!

Makes no difference when you pay so long as you pay in full before the due date.