repaying early/adding credit before payment is taken

fireflybookworn

Hi there, I have a credit card which I use to buy a few things each month and then pay them off right away when they appear on my bill. I am doing this to try and boost my credit score. I was wondering if it would not have the credit boosting effect if I payed the bill before the money was shown to leave on my credit card statement? So I would be adding a balance to my credit card essentially after paying for an item; my limit is 500, so say I bought something for £50, after purchasing the item and transfering the funds then my available balance would be £550 (as the payments on the credit do not process right away for some reason).
Hope that makes sense!
FFBW x

SuperHan

Nope, that would not be better. The credit card reports your balance at the statement date on your credit file, so it would look like you were not using the credit card at all.

In addition, it's often against the T&Cs to put your credit card in to credit, so if you are doing it regularly then you may find your card cancelled.

The only benefit to doing what you suggest is if you are close to your credit limit and want to purchase something that exceeds the limit you have left. An interim payment will free up your limit again for the additional purchase.

The best way to go is as you are, with a direct debit set up to pay in full each month.


**edit**

If the reason you're doing this is to better manage your money - I have a separate bank account set up so that when I buy on my CC I transfer the money to the separate account. They a couple of days before the payment is due I move all the money back to my main account. That way I can see what money I have and what money is 'spent' on my credit card.

The_Boss

You don't have a credit score.

In order for "up to date" data to be recorded on your credit file you just need to meet the required minimum payment received by the statement date. If you are buying stuff and then paying off straight away then your monthly statement will show a zero balance.

fireflybookworn

Thanks for the replies the reason was money management, I normally put what I spend on the card in a savings account but I suppose I was just being impatient so I could have it done immediately lol! I may look at opening another account though, it would be useful to have my credit card money separate from my savings.

Sorry if I sound stupid, but just to clarify, is it better to wait for a monthly statement and then pay off in full? Rather paying off items as they appear on the credit card account?

The_Boss

Yes, wait for the monthly statement and then pay off. As mentioned above, setting up a direct debit is best for this but remember to make the first payment or two manually until the statement confirms it will be collected by DD.

I'm a bit confused though as you said in your first post you were doing it to improve your "credit score" but now you're saying it is for money management?

redpete

fireflybookworn wrote: »

Sorry if I sound stupid, but just to clarify, is it better to wait for a monthly statement and then pay off in full? Rather paying off items as they appear on the credit card account?

If you pay off a purchase before it appears on the monthly statement it might be totally invisible to any credit record so achieving nothing. I would wait until the monthly statement is produced then make sure you pay the full amount before the payment date.

fireflybookworn

Thanks for the advice everyone!

@TheBoss - sorry - what I meant was improving credit score was the reason for getting the credit card initially. Repaying early was about money management

The_Boss

Gotcha. If you want to improve your credit worthiness further then I suggest having two cards on the go at once and doing as above so you are effectively doubling the amount of positive data recorded about you. But bear in mind things like mobile phone contracts are reported too so that is a source of data on your report too.

fireflybookworn

Ah great idea, thank you! My OH and I are looking into getting a mortgage in the next few months, if I got another card now could the bank view this as a negative thing at all? I ask because my friend has recently got a mortgage but they had a small setback when her fiance got a new car on finance...I know a credit card wouldn't be anywhere near the amount of a new car but I suppose I just want to play it safe

The_Boss

When you get a mortgage, it is a huge change to your personal circumstances so I can understand any lender rejecting applications for at least the first 6 months until the applicant has shown that they can adjust to having the mortgage to pay off along with other commitments. I imagine that's why your friend's fiance was rejected.

If you are applying for a mortgage in a few months you should definitely get hold of your £2 statutory reports from Experian and Equifax (or do the free one month online trial, but remember to cancel at the end) and check what data is recorded on there and more importantly that it is accurate. Depending on what other searches you have recorded, I'd suggest against any further credit searches ahead of the mortgage if you are applying in the next 1 to 9 months.