Paying credit cards & credit ratings

the_hounds

Hi just a quick question, when a credit is paid in full does it give your credit rating a lift or is best to carry on using it and pay the balance off every month?

bottleofred

Hi,

It depends on a lot of variables really, such as how long have you had the card, how long did it take you to pay off the balance, how much of your credit allocation you have used etc. The credit allocation relates to say you have 3 credit cards with a total credit limit of £10000. If you have balances totalling £8800 over the 3 cards, then you have used 88% of your credit allocationl You also need to have not made excessive credit applications recently etc and it also helps if you are on the electoral role of where you live. I hope this has not confused you further.

the_hounds

Thanks for your reply, i've checked my credit report with equifax and my score is still low, i am a homeowner (about £15k equity), i've been on the electoral role for six years at by current address, one credit search in the last six months (april) for my BT landline, i have 10 settled accounts and 3 active my credit card, my mobile and my mortgage. I posted on here the other day that i had received a bonus at work and settled my Blackhorse loan, today i have been told that i can expect another bonus next month (recent promotion) and i intend to settle my credit card which means the credit card i've had for 4 years with 1 late payment in 2007 will be settled in two large payments however i will keep the account open as it could come in useful. I have a number of previous late payments showing on my credit report but all of my accounts are now up to date. We would like to relocate closer to my work over the next 12 months and i'm worried that i may not get another mortgage. Is there anything else that i could do to boost my credit or is it a waiting game now? I'm concerned that when i apply for a mortgage that i will get automatically declined even though i have managed (struggled) to get out of the mess i was in, i don't want to upsize in property i just want to relocate which will cut travelling time and allow me to spend more time with my family.

Thanks once again in advance, this credit rating system is a minefield!

bottleofred

Hi,

Are the 10 settled accounts all still open, because if so, this can be a bad thing believe it or not as lenders can get nervous when you have access to too much credit (crazy I know!). I don' envisage late payments causing you a problem with a mortgage application. Even a default on credit file can often mean the applicant gets a mortgage, but invariably ends up paying more money in charges/interest etc. If any or all of the 10 settled accounts are still open, consider closing those you don't use, but bear in mind it takes about 6 weeks for the information to change on your credit file.

Good luck in getting sorted and hopefully someone with more knowledge/advice than me will be along soon.