How should I use my credit card to improve my credit rating?

purple.sarah

I recently checked my credit rating with Experian and it is poor. I am working on improving it.

Two of the negative factors which are affecting my Credit Score are: The usage of my available credit indicates a higher risk and I have no successfully settled credit accounts.

I am now in a position to pay off my Capital One credit card. Should I then close the account so it shows as a successfully settled credit account or keep it open and use it responsibly, spending small amounts and paying them off in full each month, as I've heard that can also improve your credit rating?

leeroy2009

the unsettled thing is not a big worry, I have this too, but have had 2 mobile phone contracts for 8 years with no intention of ever leaving provider, so these will never show as settled.

an no don't close your credit card, use it responsibly pay in full each month if you can, or set direct debit to min payment if you sometimes carry a balance from month to month.

aslong as its paid in full or min payment you will get a green mark (good) and improve your score, some say making min payment hurts your score but I don't really buy this as I pay min payment and top up the payment as and when and this has never negatively affected me.

your guaranteed a green tick if you pay min or in full.

the usage thing basically means your always using the full amount of credit avalabible to you I belive

leeroy2009

what is your apr?, how long you had this card? do you often carry a balance from month to month? have you applied for any credit recently?

just thinking if you are on a high rate apr card with cap one, it may be worth applying for another credit card with much better "rewards" lower apr etc, that would then allow you to close the cap one card - maybe something to think about, or is your credit file really trashed ccjs defaults etc?

purple.sarah

leeroy2009 wrote: »

what is your apr?, how long you had this card? do you often carry a balance from month to month? have you applied for any credit recently?

just thinking if you are on a high rate apr card with cap one, it may be worth applying for another credit card with much better "rewards" lower apr etc, that would then allow you to close the cap one card - maybe something to think about, or is your credit file really trashed ccjs defaults etc?

The APR is 34.9%. I have had the card for a couple of years. I don't have any CCJs or defaults but my credit rating is poor. I will consider applying for another card but I didn't want to run the risk of being rejected or make my credit rating look worse with recent applications.

CKhalvashi

I'd leave the card open, and put a tank of diesel on it each month, before paying off in full.

You'll still be getting your green ticks, and also not paying interest for this.

CK

leeroy2009

your credit report may not be poor, the score means nothing, and one or 2 searches wont really hurt, do you leave a balance on that card? if you have no late payment markers you may get a nice surprise and find your self accepted when you apply for another card.

just a possibility that you may save some money by doing a balance transfer and getting a card with a lower apr, however you should not spend on the new card if you was to go down that route, you could then use the capital one card for small purchases and pay that off in full each month - something to consider.