Should I get a credit card to improve my credit rating?

riddles2k

Hi all,

My mum's just told me that I should get a credit card to improve my credit rating. I currency have no need for a credit card - I have a debit card for my current account and manage not to get into debt.

Is it true that getting a credit card and paying it off every month will improve my credit rating? What's the best way of doing this? Is there a good credit card out there at the moment for this? Can I automatically set up a direct debit from my current account which will pay off exactly whatever I owe on the credit card, so I don't have to worry about forgetting to pay it off?

Thanks,

jason1231972

riddles2k wrote: »

Is it true that getting a credit card and paying it off every month will improve my credit rating?

It can do, yes. Provided that you do actually repay (and ideally, repay more than the required minimum payment per month, even if you don't pay the full balance in full).

What's the best way of doing this?

Apply for and get card...use it for low/moderate-value purchases that you are sure you can repay in full the next month (or at the least, can make a very good dent in). Be wary of spending large amounts in one month that you have no hope of repaying. Also, I don't know how useful it is to buy very small items (like your weekend papers) on credit and then repay. It's a tactic some credit-builders recommend, but I really can't see (from a non-expert viewpoint) how spending and repaying a sum like £5 helps towards building your credit-worthiness.

Is there a good credit card out there at the moment for this?

Yes, but depends what your current credit-worthiness is like (if any history at all). If you have no history, there's little point in applying for market-leading cards. Your best bet would be either your own bank, or a so-called sub-prime credit card. These type of cards come with potentially very high APRs, but you needn't pay any interest at all, if you manage it correctly.

Can I automatically set up a direct debit from my current account which will pay off exactly whatever I owe on the credit card, so I don't have to worry
about forgetting to pay it off?

There's loads of ways of repaying, including setting up a direct debit to automatically repay every penny you've spent. Or, you can opt to pay the minimum (or more) by DD, and pay the rest outstanding (if applicable) yourself via a variety of methods - at the bank, via cheque, debit card card, internet banking, etc.

CLAPTON

yes a CC will build your credit rating because if used properly it shows that you can handle credit well


probably best to get any CC from your bank as you already have a relationship with them

spend regularly on things you anyway buy and ALWAYS pay in full each month by DD


once you have had the CC for 6 months or more you may wish to look at CCs which bring benefits; some do cashback, some give discounts on products (e.g. tesco crdit card ); some are useful if you travel overseas as they don't charge fees for foreign spedning.

pippitypop

I use my Tesco Credit Card to pay for my food shopping. You could get a cashback credit card with a small limit and pay it back in full every month, or get a Tesco/Supermarket chain CC to get special points offers with them. Whatever you decide, just remember - pay it off every month, keep the limit on the card low - no matter how much credit they throw at you and make sure you set up a D/D to come out on the same day or shortly after you get paid. Good luck!

BugsyBrowne

pippitypop wrote: »

I use my Tesco Credit Card to pay for my food shopping. You could get a cashback credit card with a small limit and pay it back in full every month, or get a Tesco/Supermarket chain CC to get special points offers with them. Whatever you decide, just remember - pay it off every month, keep the limit on the card low - no matter how much credit they throw at you and make sure you set up a D/D to come out on the same day or shortly after you get paid. Good luck!

That's not going to happen for the OP for a while yet.

riddles2k

Thanks guys, you've been really helpful. I guess I'm just going to have to jump in and get a cc!

RayEthell13

A cc would add credit to your credit rating. Try to spend low every month. You can then pay it off every month so that your rating will improve. But keep in mind, you should have a check over using credit card to spend on other things.

Regards,
CreditCardsAustralia.com.au