Really confused

drjeangrey

I went through bankruptcy six years ago. I've finally started the process of re-building my credit file. I had a "good" credit rating with experian (it was 900 and something). Last month I applied and was accepted for a Barclaycard, one of those credit building ones with an eye watering APR. We are using it once a month to make a purchase and then clearing the balance immediately. My first statement is due on Thursday and I cleared the balance last week.

I logged into experian this morning to discover that my credit rating is now "poor" (700 and something) all because I have taken this card. I thought this was supposed to help? I don't actually need credit at the minute but I wanted to have the option in case I do the future. Has this done more harm than good or should the fact that I am clearing the balance each month eventually be reflected in my credit score?

Thanks.

Thrugelmir

Having a credit card doesn't increase your score. Why would it as doesn't provide evidence of anything.

drjeangrey

I didn't expect it to decrease my credit score. I expected to over time see regular payments and clearing of the balance to increase my credit score. I was just shocked to log into experian this morning and see my credit score take a nose dive just because i had opened a credit card account.

[Deleted User]

Your credit score really is nothing to do with anything. It changes with the wind and no one sees it.

Ignore it.

Sam112_2

drjeangrey wrote: »

I didn't expect it to decrease my credit score. I expected to over time see regular payments and clearing of the balance to increase my credit score. I was just shocked to log into experian this morning and see my credit score take a nose dive just because i had opened a credit card account.

Firstly it decreases your score temporarily because it's a new account, they can't say for certain how you'll run it yet.

Secondly it won't build up your rating if you pay it off before the statement is produced. When the statement is produced it will be reported that you owed X and paid full amount on time. If you pay off all before the statement it will show as if you weren't using the card because it will say you owed 0 and paid 0.

Thrugelmir

drjeangrey wrote: »

I didn't expect it to decrease my credit score. I expected to over time see regular payments and clearing of the balance to increase my credit score.

Taking out any form of credit will decrease your consumer credit score as presented by the CRA's.

Clearing a balance means nothing. Paying ones bills is the norm. With a credit card you are actually deferring payment to a later date. Which is where peoples problems start.

drjeangrey

sorry I meant the payment was due, not the statement. I am clearing the balance each month because I want to avoid interest charges. Thank you for the replies, i was just taken aback with what I saw on experian this morning as I am trying to be responsible with credit.

Nasqueron

Set up a direct debit to pay the full balance automatically, leave it a while of paying off in full on time and you'll be viewed as a better customer (lower risk) by lenders as you have shown you can manage your card

Thrugelmir

drjeangrey wrote: »

i was just taken aback with what I saw on experian this morning as I am trying to be responsible with credit.

I wouldn't even bother looking as doesn't mean anything. Lenders will appraise you according to their own criteria.