New to Credit Cards

Ok I am brand new to Credit Cards, never had one before in my life, never been accepted for one either. I tried a couple times when I was younger and always got declined (even with Vanquis).

I can't truly understand why I've been accepted for one now (with Vanquis) , I was discharged from a DRO in August 2012. Yea I messed up back then, made a whole lot of mistakes moneywise but a CC was not one of them. (£2,000 overdraft and serveral £k's in Payday loans) and believe me I tried for CC's way before PDLs became an option.

I'm on the path to rebuilding my credit rating. Me and my partner literally just got accepted on an offer with Nationwide for a mortgage on a property in December 2014, I totally expected the bank to go "haha not a chance" and it'd have honestly been all because of my past, not hers.

So long story short, I've been given a second chance, not just for being accepted for a joint mortgage (bear in mind she put down the whole deposit), given my history, but I've just got a Vanquis Credit Card with a £500 limit.

My question is simply this (because nowadays I'm alot wiser and I even have ample savings):

Should I use my CC wherever possible as I normally would my debit card and transfer back immediately? i.e. paying my phone contract bill, store pruchases, online purchases etc,? Obviously I know cash withdrawals is a no no.


Thanks


Comments

  • Hi Madbags,

    Only if you KNOW that you can and will pay it back in full every month. You can set up your standing order to do this but obviously this only works if you have the funds.

    Only you can know the honest answer to that question, it is very easy to rack up significant debt in no time with a CC without even realising it. If you aren't sure that you can operate it in this way then DO NOT use it, consider cancelling it.

    Do you need to rebuild your credit rating? You have just got a mortgage, so it can't be in terrible shape.

    Just be careful mate. (what apr is the card out of curiosity?)
    £1000 Emergency fund No90 £1000/1000
    LBM 28/1/15 total debt - [STRIKE]£23,410[/STRIKE] 24/3/16 total debt - £7,298
    !
  • I'd start smaller. If you drive, maybe use it to put all your petrol on at first, paying back in full every month after the statement arrives. £500 is only a small limit, and with your first card better to go slow and get used to the habit of using credit safely, this will still start to build positives on your credit file.
  • Madbags
    Madbags Posts: 222 Forumite
    Thanks both for your answers..

    As I said I have savings since the DRO was discharged, honestly, I've never been in a better financial position in my entire life. Yes we got a mortgage but I have some weird feeling it was accepted on some "technicality" because I had to make a complaint due to how Nationwide handled it and how long it took (me and my partner checked with our CRAs and it seems Nationwide haven't even performed a credit check, at all. We got checked by our insurance provider!)

    I just want to get my credit rating to some acceptable level, should I ever need to use it in the future. The mortgage is 25 years so that's hardly going to fix things in the short term.

    The question is not how can I get myself into debt again, but what is the best way to use this credit to my advantage.
  • Your credit history will improve with time, as you build a track record of borrowing within your means and keeping up with repayments (always on time and ideally more than the minimum.)

    Putting more of your regular spending on credit won't particularly help, and you run the risk of accidentally going over your limit on a £500 card due to the low limit, which is a huge no no.

    Time is the biggest healer of credit, there aren't really any short term fixes.

    Good luck with it, it sounds like you're on the right path.
  • redpete
    redpete Posts: 4,684
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    Never go over the credit limit on the CC.
    Always pay the full balance each month.
    Use it regularly (every month).
    Never withdraw cash.
    Set up a Direct Debit for at least the minimum payments and, if you are sure the money will be in the bank every month, preferably for the full payment.
    loose does not rhyme with choose but lose does and is the word you meant to write.
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