Credit Rating

gemmaphillips

It's sooo confusing!

I was told if i simply got a credit card my credit rating would increase, but someone else has told me that i have to actually use it to increase this?

Use it and pay it off or use it and use the credit i.e. let it charge me a little interest and then pay it off? So much conflicting advice online and no straight answer from my bank!

I'm sure this answer exists on here already, but i've been too busy viewing all the other threads for advice on money saving!

Thanks!

Tixy

To help build up a credit history you need to use the card.

If that is the only reason you got the card then use it for a couple of transactions a month and repay in full after the statement date.
That will generate a positive credit history without costing you any interest.

Herbalus

Your credit rating is based on how you use credit. If you use credit facilities sensibly and show that you can manage it, your credit rating will be higher.

Not using a credit card means you're not using any credit and you're not showing if you're sensible/responsible or not. The banks can't see if you can manage the credit if you don't use it. To build a positive picture, spend money on the card (doesn't have to be much, once or twice for a few pounds will do the trick), and then when you repay, your credit file will show that you have borrowed and paid back, which is good for your credit rating (ultimately, they want to know that you'll pay back!).

If you're unsure about credit cards, set up a direct debit to pay the balance off in full every month. In full is the important part. That way it won't cost you to use your credit card for purchases.