Direct Debit or minimum repayment???

egyptiancotton

Martin's golden rule is to set up a DD to repay credit cards off in full each month.

But on his page for 'Credit Rating: How it works and how to improve it...', he says:

"Credit card companies may reject you for always repaying cards in full.

While you feel like a dream punter, for credit card companies you're a nightmare. If they spot this trend, you're likely to be rejected. The most profitable credit card customers are those perpetually in debt, never defaulting, but always meeting the minimum repayment."

Is it wise to stick to the DD or repay more than the minimum payment to up my credit score? Experian have rated me as 999 but Equifax rated me as 474. So before I go for a credit card, which rule should I stick to?

CLAPTON

That was always poor advise;
pay in full every month.
Most of us that do that also have excellent credit records and never get rejected for new CCs

Malky

If you can't pay in full every month, then set up a DD for the minimum amount plus an extra pound or two so you never have a late/missed payment. You can then make extra payments when you can afford it.

egyptiancotton

I've got a car on hire purchase which totals to about £7,300 at the moment and no other loans or credit cards. I'm a bit bewildered as to why the scores are completely different. I know that the formula they both use to score differs, but still....

I can afford to set up a DD easy peasy I'm planning on using the credit card to replace my debit card for normal spending to gain cashback

CLAPTON

without an existing CC you may find it difficult to get a cash back card... they often require you have at least one CC already.

Paul_Herring

lloydyyy wrote: »

[Martin] says:

"Credit card companies may reject you for always repaying cards in full.

While you feel like a dream punter, for credit card companies you're a nightmare. If they spot this trend, you're likely to be rejected. The most profitable credit card customers are those perpetually in debt, never defaulting, but always meeting the minimum repayment."

There's an awful lot of the use of weasel words like 'may' in that piece, and for a money saving site, encourages one of the worst ways of wasting your money - paying wholly unnecessary interest on loans.

Is it wise to stick to the DD or repay more than the minimum payment to up my credit score?

Pay in full every month if you can. You're just throwing money away on (paraphrasing Martin in that section) a "may be" otherwise.

Experian have rated me as 999 but Equifax rated me as 474. So before I go for a credit card, which rule should I stick to?

The one rule you should be sticking to is stop paying for credit scores, and ignore the numbers even if they're free. They're misleading at times, and downright wrong at others. Get your statutory reports, learn how to read them and form your own opinion.