Will this effect my Credit Rating?

AndyTownsend

Hi all,

I'm thinking about getting a new credit card that offers 0% on purchases for X months, still looking at the different ones that are out at the moment.

My plan was to put all of my spending onto the card so that I can place the majority of my wages into an e-saver I've got thats paying close to 3% currently, probably close to £2000 a month.

I'd plan to pay the minimum repayment each month on a direct debit and then pay off the entire debt before the 0% on purchases expires.

Is this a good idea or will it effect my credit rating? I plan to get a mortgage in a couple years time so I don't want to be hindering myself by doing this.

Cheers,

Andy

DocProc

Look at what it says about this on the MSE web site page header just above your post.

Oh, and 'Yes', althought the earnings won't be great, it does sound like an excellent idea, albeit that it does requre you to be extremely organised and disciplined with it. Watch out for the initial transfer charge, if any.

Order_of_the_Arrow

I'm not an 'expert' on these things but if memory serves me correctly, minimum payments will be shown on your credit file. It's best to always payback more than the minimum each month. Even if it's only £5 more. The 'minimum payment' marker will then not be applied.

I'll probably be slated by some 'expert' on these matters, but that's how I read it. Good luck!!

BugsyBrowne

Order_of_the_Arrow wrote: »

I'm not an 'expert' on these things but if memory serves me correctly, minimum payments will be shown on your credit file. It's best to always payback more than the minimum each month. Even if it's only £5 more. The 'minimum payment' marker will then not be applied.

I'll probably be slated by some 'expert' on these matters, but that's how I read it. Good luck!!

Yeah see what your saying, I think if the OP is taking this route he should maybe round it off every time ,so if mim payment is £53 pay £60 then the other creditors wouldn't suspect mim payments all the while.
Just a thought!

AndyTownsend

I'll have a good read through of those links above, cheers. And good point about the min payments. I'll make sure I do the min payment + 10% or so to try and avoid that.

Does anyone do this at the moment? I guess its really going to depend on the limit of the cards that I get and how long that'll last me living on it for the wages to earn enough interest in the e-saver...

BugsyBrowne

AndyTownsend wrote: »

I'll have a good read through of those links above, cheers. And good point about the min payments. I'll make sure I do the min payment + 10% or so to try and avoid that.

Does anyone do this at the moment? I guess its really going to depend on the limit of the cards that I get and how long that'll last me living on it for the wages to earn enough interest in the e-saver...

Honestly mate making just the min payments is not going to drop your credit score,at the end of the day you have borrowed the money and are paying it back may it be mim payments or more.

Missed/late/payments credit searches,using 80-90% of your credit limits these will drop your score.
It would be very harsh for a lender to drop credit scores for paying back what you borrowed if you get me drift!

AndyTownsend

The one thing I was worried about was whether they could see me as always in debt as I had planned to use the majority of the credit limit that they gave me. I guess as long as I keep it below the 80-90% you mention then I should be ok.

Cheers again

BugsyBrowne

AndyTownsend wrote: »

The one thing I was worried about was whether they could see me as always in debt as I had planned to use the majority of the credit limit that they gave me. I guess as long as I keep it below the 80-90% you mention then I should be ok.

Cheers again

80-90% is top end, lenders would generally prefer 50%-60% I would of thought 80-90% could show you may well be struggling a wee bit!

Svenena

If you pay it all off from the e-saver a few months before going for the mortgage anyway, you will be using 0% of your available credit, and hopefully also have a large deposit, so shouldn't be a worry to mortgage lenders.

I just got a 0% card from Tesco to do something similar to what you have planned.

izools

star-fire wrote: »

Honestly mate making just the min payments is not going to drop your credit score,at the end of the day you have borrowed the money and are paying it back may it be mim payments or more.

Missed/late/payments credit searches,using 80-90% of your credit limits these will drop your score.
It would be very harsh for a lender to drop credit scores for paying back what you borrowed if you get me drift!

I disagree.

The credit card account recording minimum payment for every month whilst also showing that the card is in a promotional offer for those months tells other creditors that either

The debtor is struggling to repay
The debtor is stoozing

Either can have a derogitory effect depending on the creditor's scoring model they apply with next.

All you need to do is pay £1 more than the minimum each month to remove the minimum payment flag. It's going to cost you almost no interest from your savings but certainly reduces the risk and potential to cause prospective new creditors reason to doubt your creditworthiness.

BugsyBrowne

izools wrote: »

I disagree.

The credit card account recording minimum payment for every month whilst also showing that the card is in a promotional offer for those months tells other creditors that either

The debtor is struggling to repay
The debtor is stoozing

Either can have a derogitory effect depending on the creditor's scoring model they apply with next.

All you need to do is pay £1 more than the minimum each month to remove the minimum payment flag. It's going to cost you almost no interest from your savings but certainly reduces the risk and potential to cause prospective new creditors reason to doubt your creditworthiness.

I thought you would,but I did say this on an above post to pay a tiny bit more and rounding it off.
I am saying lenders would look more towards missed/late payments then they would if your paying the minimum payments each month.

At the end of the day this is a forum and everything on here is going to be hear say anyhow, as none of us actually know unless we are all a programmed credit scoring computer which we are not.