Best way to Improve

Silmaril

Hi,

I have a shot credit rating and have resorted to a Luma Credit Card... £200 introductory limit.

My income is high and my disposable is just as high, so i am wondering which is the best way to go about improving my credit rating

1) Keep under a certain % of the available limit and pay less than the full balance, giving them a little interest

2) Pay the balance in full

3) Over use the card, ie. max it, pay it, max it, pay it multiple times in a single month

I guess from a credit report perspective so long as i make on time payments and don't use all the available credit on the card this will look good but i also want to manage the card itself and increase the limit over time.

I'm also thinking i should go for the Aqua card too after a month or two of using this one and then after having the two for a couple of months apply for a more standard card

Any thoughts please?

Thanks,

~SiL

Stereo

Silmaril wrote: »

I guess from a credit report perspective so long as i make on time payments and don't use all the available credit on the card this will look good but i also want to manage the card itself and increase the limit over time.

Exactly. Luma interest is huge, you'd be better off paying in full every month. As long as you don't miss any payments or go over your limit, they may increase your limit in the future - although it could be after 12 months. YMMV.


You could also apply for a Capital One card in a few months and consolidate the two cards together (as Luma is managed by Capital One) giving you a higher credit limit on the card you choose to keep.


Good luck!

thebritishbloke

Set up a direct debit to pay the balance in full every month, you don't want to have to pay Luma's ridiculous interest rates. Paying in full will not harm your credit 'score', it will show that you can afford to live within your means, and will probably help you move onto mainstream cards more quickly.

I'm only just 20 and I already have a rewards BarclayCard with a £5000 limit, I started with a £250 Vanquis card and I've always paid in full. I've also been approved for a £15,000 loan, so lenders clearly trust me enough.

Anthorn

MSE has it's own advice page on how to improve a credit rating. According to that advice paying off a credit card in full every month could have a detrimental effect on future applications.
http://www.moneysavingexpert.com/loans/credit-rating-credit-score

To improve a credit rating just one credit card won't do it. You need to have a range of credit.

If your credit rating is shot as you say then you are looking at 2 - 3 years for it to be improved and 6 years until it is clean.

Silmaril

Hi,

Thanks for the link Anthorn ill check that out

I'm probably somewhere near the improving part of this, i have a CCJ due to drop off next October, a couple of (settled)defaults soon to drop off and a couple more to drop off in years to come.

Despite this a mortgage broker believes me and the Mrs (who's credit rating is great) have a good chance of getting a joint mortgage so this will likely help me some.

In addition to the Luma card i do have other agreements on there, mobile phone, catalogues etc with good history.

Have considered a joint application with the Mrs to improve my credit rating but don't want to hinder the chances of a second mortgage by doing something else just yet, so going to see where that goes after more talks with the mortgage broker first!

Thanks
~SiL