quick question about credit cards...

Brodel

Hi,

I'm 26, never had a credit card until today. I was in the bank sorting out my ISA and thought it would be good to get one and start my credit rating. Also because I'm going away soon and I wont be charged commission using it abroad. The lady at the bank said that I could just have the card and continue using my debit card like I normally do and my credit score would improve without touching my credit card.

I just wanted to double check that was right? I was under the impression that I would need to be using my card for big purchases to improve my rating, not just leave it doing nothing?

I've searched online but everything is about improving credit rating by paying of debts etc, not about just doing nothing.

I could just use it like my debit card because I set it up so that all my credit card bills would be taken via direct debit from my debit card. I don't actually want to or need to use any credit/overdraft.

lisyloo

Each month the credit card companies report to the CRAs whether you are late or not.
If you have a string of 0s (which means 0 months late) then it will have showed that you've had credit without make late payments or defaulting.

However these days some card report extended informatio which shows how much you've spent and paid off each month.
It would still mean you've got some good history without late payments but it would actually show you've spent nothing.

Could you put your food/petrol on it?

Brodel

Thanks for the info. I could use it for food/petrol, I could just use it for everything as if it's my debit card I suppose, seeing as it's linked via direct debit and will be paid off using my flex account savings anyway.

Dabooka

Experian reports back with "Zzzz" for inactive accounts (at least to me as a consumer) I'm assuming it'd do the same for other agencies?

I'd go as lisyloo suggests, whack your petrol on it and pay off in full each month.

izools

Ah yes that is indeed correct, Credit Reference Agencies can report if the account is left dormant with a "D" on Experian or "Zzz" on Equifax showing the account hasn't been used.

As you rightly say Brodel, just use it for things you'd otherwise put on your debit card and let the Direct Debit take care of paying it off in full each month.

Be careful though - make sure a) the Direct Debit is actually set up, b) it's for the Full amount not the Minimum, and c) that the first bill will be taken by DD.

Sometimes banks get it wrong and don't set up the DD, sometimes they set it up for minimum instead of full, and most don't take the first statement balance by DD only subsequent ones so watch out

Happy credit building! :beer:

Brodel

Thanks again for the replies.

I will be sure to check it is set up properly. I said that I wanted the full amount taken when she was setting up the DD, I will double check when it arrives and also regarding the first bill.

lisyloo

Experian reports back with "Zzzz" for inactive accounts

I've just checked a recent Experian report.
MBNA have a U and Halifax have blank.
So you are correct that dormancy and lack of use can show (in one way or another).