First ever credit card - to build up credit

scotty12348_2

hi guys, I'd like to start by saying that I'm completely new to the world of credit so sorry for any ignorance on my part.

Im 25 and currently don't have any debt to my name. I was once given a credit card by my bank RBS when I opened up a student account but it was never used.

I'm wondering, would it be worth getting a credit card to put my car insurance on which is due this month. From what little i understand if i get a credit card and pay it off sensibly then that would positively affect my credit score? As companies know I am reliable rather than untested?

My insurance will be about £800. I have the means to pay it off in full so repayments will not be a problem. I have noticed that some of the cashback cards require 20k a year salary which I do not currently meet so they would be out of the question.

Is a card a good idea? Should I be going for the best 0% deal for me? Would I even be given a 0% card?

Thanks for any help.

Martinslovechild

There's no guarantee that you'd be given a credit card, it very much depends on your credit history.

You might want to look at some of the credit cards offering a 0% 'purchase intro' offer (i.e. 0% is available for an initial period of time, anything up to 15 months). Note: you must still make minimum payments during this time so my advice is to always arrange a direct debit to collect the minimum payment.

Don't forget to note the date that the 0% rate reverts to the much higher standard rate of the card. About a week before that date, make a manual payment for the full outstanding balance (not all credit card companies accept payments via Faster Payments, hence a week).

Companies offering 0% purchase intro offers currently include Halifax, Tesco & Barclaycard. The full list is available via comparison websites.

If your credit card application isn't accepted then be careful before considering multiple applications as each application adds a 'footprint' (i.e. search) to your credit history report. Multiple searches may indicate to a lender that you're in desperate need of cash.

scotty12348_2

Martinslovechild wrote: »

There's no guarantee that you'd be given a credit card, it very much depends on your credit history.

You might want to look at some of the credit cards offering a 0% 'purchase intro' offer (i.e. 0% is available for an initial period of time, anything up to 15 months). Note: you must still make minimum payments during this time so my advice is to always arrange a direct debit to collect the minimum payment.

Don't forget to note the date that the 0% rate reverts to the much higher standard rate of the card. About a week before that date, make a manual payment for the full outstanding balance (not all credit card companies accept payments via Faster Payments, hence a week).

Companies offering 0% purchase intro offers currently include Halifax, Tesco & Barclaycard. The full list is available via comparison websites.

If your credit card application isn't accepted then be careful before considering multiple applications as each application adds a 'footprint' (i.e. search) to your credit history report. Multiple searches may indicate to a lender that you're in desperate need of cash.

Thanks for that information.

So if I was to apply for the RBS card (I may be more likely to get it as it's my bank and I'm well out of my overdraft?) I could get 15 months 0% purchases.
Then I'd put the £800 on and set up a direct debit to pay it off for £100 a month for 8 months? Is that all I'd have to do? Then close the card and I'd hopefully have improved my credit score a little?

As a side note, I'm on the electoral roll, have had mobile phone contracts for years which I've never missed a payment on. If that would help me get the card at all.

Martinslovechild

Yes, you'd have to apply for the card offering the 0% intro period for 15 months (YourPoints World Mastercard).

You'd initially charge the £800 to it (assuming the credit limit is large enough), ask them to set up a direct debit to collect the minimum monthly payment (somewhere between 1%-2.25%) and keep your £800 where it is. After 14.5 months, withdraw it and pay off the balance (minus the 14 minimum monthly payments which you've already paid).

You could indeed pay £100 per month for 8 months, it's up to you. The minimum monthly payment will be far less - somewhere between £8 and £20.

Electoral roll - great! that's a minimum with credit card applications. Many mobile phone companies now report to the CRAs (they never used to) and your overdraft also counts (even if you never use it).

CLAPTON

You may or may not get a 0% card if you currently have no other credit agreements.

In general just accept any card; use it every month for ordinary purchases (say petrol, supermarket showing etc ) and pay in full each and every month.

This will show you to be capable of handling credit sensibly.

Closing the card will negate the whole point of the exercise as once closed there will be no further entries on your credit files to show how good you are with credit.

scotty12348_2

Thanks for the advice guys.

I'll get a 0% purchases card and start using it sensibly.

Anthorn

There is uncertainty over which card would be best for you coupled with the fact that you're limited to two applications which result in two credit searches. If those fail you'll be stuck for 6 months.

I'd say go to the credit card section of moneysupermarket.com and "Start Search" at the top. After you answer the questions it will search your CRA file and recommend credit cards you have a chance of getting. It's a soft search which doesn't impact your credit files. Probably not perfect but it will give you more of an idea than you have at present.

It worked for me today: It recommended, amongst others, the Aqua Advance card which I then applied for and was approved instantly online.

http://www.moneysupermarket.com/credit-cards/