Beginner credit history builder

loud90

Hey guys,

i'm 23 with little or no credit history and have just got a credit card a few months ago (kind of worrying they gave me a good one with a lack of credit history). It's a Tesco credit card with 18 months interest free and a £2,250 limit, the only reason i've got it is to try and work up a good credit history so that one day when i need finance for a car or a mortgage etc, I hopefully won't have too much trouble and will be able to get a good deal..

I just wanted to check i'm doing the right thing as i'm getting mixed reviews when looking at certain sites... The way i'm working it is by buying pretty much everything on my credit card, then paying it all off straight away. So petrol, food shopping and nights out etc all on the credit card, paying it off straight away from my normal account.

I'm not actually using money i don't have just adding a "middle man" (credit card). Is this an affective way to get a good credit history?

Would appreciate any feedback!

reclusive46

You want to pay it in full via direct debit. Paying it off straight away will make it look like you don't use your credit card at all on your credit report (It reports the balance you have on your statement).

Other than that, having a credit card and repaying in full time is a good way to build your credit history and with the Tesco card, you get rewarded for it with clubcard points, so you might as well use it for everything.

Tixy

Hi

You need to wait until when the statement is generated - and then pay it off in full.
If your statements show no balance then it won't help build up an active credit history.

loud90

Thanks for the advice guys, really appreciate it!

So if I set up a direct debit on my Tesco online thing and set it to pay off full balance then it'll automatically pay off the balance when it's due and I won't have to worry about it being late?

I was just very paranoid about going over due and getting a bad credit rating which is why maybe i jumped the gun a little by paying it all off straight away..

Tixy

it'll automatically pay off the balance when it's due and I won't have to worry about it being late?

Yes (assuming there are funds in your bank account).

One word of warning regarding the first payment after you set up the DD. Depending on where in the monthly statement cycle you are it may not set up in time for the next statement. Check your credit card statement says it will be collected by DD. If not you may still need to make a manual payment.

Simon11

Why?

I got a mortgage at the age of 23 and at the age of 24, still never had a credit card.

All this trying to build up a credit rating, its more important to have a good size deposit!

You-kip

Simon11 wrote: »

Why?

I got a mortgage at the age of 23 and at the age of 24, still never had a credit card.

All this trying to build up a credit rating, its more important to have a good size deposit!

Ahh you're the student who saved 40k and didn't have a Job.

loud90

Simon11 wrote: »

Why?

I got a mortgage at the age of 23 and at the age of 24, still never had a credit card.

All this trying to build up a credit rating, its more important to have a good size deposit!

Well as I said, it's for getting a good credit rating not just getting a mortgage... You make getting a large deposit sound very easy though.

Angelinaxoxo

You are doing the right thing and the wrong thing (paying it back straight away!). I am in the same position and I plan to buy my house (get a mortgage) in 2017, four long years away but I decided to start repairing it from now.

1. Don't pay it off straight away, set up your direct debit and pay in full every month. I did that and now I use my credit cards for every day spending but have the money coming out of my debit account in full monthly. It works well for me.

That's all you need to do to be honest.

Good Luck.

Angelinaxoxo

Simon11 wrote: »

Why?

I got a mortgage at the age of 23 and at the age of 24, still never had a credit card.

All this trying to build up a credit rating, its more important to have a good size deposit!

This is absolutely terrible advice! Maybe 20 years ago but certainly not in 2013!!!

reclusive46

Angelinaxoxo wrote: »

This is absolutely terrible advice! Maybe 20 years ago but certainly not in 2013!!!

Agreed. Credit history is very important.