What does this do to your credit rating?

daisiegg

Two questions -

If you have a 0% interest CC, and pay more than the minimum amount each month, and don't get behind on your payments or anything, does that affect your credit rating negatively?

If you have an overdraft that very recently changed from being an interest free graduate overdraft, to one that has interest, and you are just getting used to managing it and sometimes have to pay interest of less than £5 a month - what does that do to your credit rating? (never gone over the overdraft limit)

I have a relatively small amount of debt on a 0% CC, and I have gone slightly into my overdraft a couple of times over the summer by accident, which attracted interest of less than £4 each time. I may not completely pay the CC off before the 0% term ends but I will transfer the balance to another one and keep paying it off...

OH and I are on a fixed rate 2 year mortgage for another year but will want to switch to one with a much better interest rate as soon as that term has ended - and I'm panicking that my credit rating (which was very good when we got the mortgate last year) won't be any good anymore and we won't be able to get a good rate.....

Thanks in advance to all you knowledgeable people!

daisiegg

Sorry, having a closer look and not sure I've really posted this in the right place....just ignore me !

fracturedsun

Having a 0% credit card is fine, so long as you pay at least the minimum (aim for minimum +£1 is better). Probably better to not get too close to the credit limit.... (under 50% of the limit is what people tend to recommend for getting good credit). Having a credit card and using it responsibly is actually a plus it shows you are managing credit well.

Regarding the overdraft... whilst going into your overdraft isn't ideal it shouldn't be too big a factor. So long as you never go over the overdraft limit and it's an occasional thing. Lenders tend to look at whether you are constantly in your overdraft (so if every month you go into the overdraft) and whether the amount is gradually going up. This is a sign that your income is not matching your expenditure.

Having said all that, none of this is a precise science, each lender is a little different. Generally what they look at though is whether you have a lot of debt and whether it is growing or shrinking.