What is the best way for me to build a good credit rating from scratch?

Katieprecious

I recently tried to purchase a repossession property (this fell through as offers went up a lot from what I was happy to pay) and when going through this process I really struggled to get a mortgage because of both mine and my partners lack of credit history. Neither of us have ever had credit or store cards so the majority of lenders wouldn't consider us for this reason. This left us with only the higher interest options for a mortgage.

We have both now applied for credit cards and are currently awaiting their arrival. I wondered if anyone can advise how best to use the credit card to give a good rating? Should I use my credit card how I would usually use my debit card, for fuel, general shopping ect and pay it off immediately?

Also does anyone have an idea of how long it takes to build a decent credit score? Thank you in advance for any responses.

questionabout

My Tips:

• Always pay more than the minimum payment (by DD if possible)
• Never pay late
• Use no more than 49% of your available credit
• Never go over your credit limit
• Try not to use to withdraw cash

Good Luck :money:

callum9999

questionabout wrote: »

My Tips:

• Always pay more than the minimum payment (by DD if possible)
• Never pay late
• Use no more than 49% of your available credit
• Never go over your credit limit
• Try not to use to withdraw cash

Good Luck :money:

Why 49%?

I agree with everything else though. It would be easier to just set up a direct debit to pay it in full every month. It doesn't cost any interest etc. and is less hassle than paying off things immediately (and there's no real point in doing so, unless you need the limit, as there is an interest free period).

CLAPTON

set up a DD for the full amount so you always pay on time and never waste money on interest

don't go too near your credit limit; its easy to make a mistake and using all you available credit is sometime seen as not the best financial behaviour

questionabout

callum9999 wrote: »

Why 49%?

Wish I could tell you its a secret number or something :rotfl: ...but its more boring an explanation - one of the major CC companies recently advised (on standard non-reward cards) to use less than half your available balance for auto credit increases. This in term would provide an even higher credit limit and likely better internal score anyway.

callum9999 wrote: »

It would be easier to just set up a direct debit to pay it in full every month.

I agree too :beer: If you can afford to, then pay in full everytime by DD...although slight word of warning. The CC companies are trying to make money from you and if they get nothing back ever they may reduce your limits way down in the future, especially if the aftermath of this recession continues. It costs them money to run your account which isn't fully covered by revenue from your transactions.

knightfox

I heard, might be wrong, that it was best to keep £1k - 1.5 depending on salary etc. On a cc therefore showing that you are good with credit. As I said i might be wrong.