Credit Building Myth

MystArch89

Hey there,

I know there might be a thread that debunk my myth but i cant seem to find it out there. I just wanted to clear something that a friend of mine told me and to see whether is it worth risking it.

I've no debts and constantly been repaying my credit card in full each month. But i was told that is not the most prospect-able case for me. I'm trying to improve my credit rating/score to a better one so i can obtain higher credits and better acceptance. Is it worth risking spending just a bit on the credit card, and instead of repaying the full amount each month to avoid paying interest, i should make only the minimum repayment and let the C.Card company charge me some interest for say 1 or 2 months then completely clear the balance. It seems that i was told this would improve or boost the credit scoring faster and you look more appealing to credit lender as they might think you are more profitable than the ones that pay off in full each month.

Just wanna find out whether is this true?

Thrugelmir

Card companies also earn fees from the amount spent on the card. Not purely the debt owed.

DCFC79

Forget what the score as its irrelevant, lenders and credit card companies don't see it nor do the banks.

MystArch89

DCFC79 wrote: »

Forget what the score as its irrelevant, lenders and credit card companies don't see it nor do the banks.

True to that. But even so, Its hard trying to get some credit when the score is poor. Thus i'm trying to find out a way to boost it quicker instead of hoping that it builds up slowly by paying off my pitiful non rewarding credit card in full each month.


So does it mean that it does not help letting the C.Card company charge me interest for a month or two on say a small amount of 10 quid which = maybe 1 or 2 quid interest then just pay it off in full. ?

YorkshireBoy

MystArch89 wrote: »

So does it mean that it does not help letting the C.Card company charge me interest for a month or two on say a small amount of 10 quid which = maybe 1 or 2 quid interest then just pay it off in full. ?

Yes.......

redux

I can't see the point of deliberately incurring interest in order to try to improve a rating in order to obtain more credit, when you apparently don't need more credit.

MystArch89

I need the extra credit to put into an upcoming investment planning but that will require much higher credit than i can afford to at the moment. So if i were to be able to obtain much more credit sooner than later, i will be able to opt into the plan much sooner if i can obtain a higher credit thus giving me more cash flow options.

@YorkshireBoy, is it a yes to yes it does help? Or yes it does not help? Sorry slightly confused.

YorkshireBoy

MystArch89 wrote: »

@YorkshireBoy, is it a yes to yes it does help? Or yes it does not help? Sorry slightly confused.

The question was "So does it mean that it does not help"


The answer to that question is "yes (it does mean that it does not help)".

Nasqueron

I had a credit card since I was a student, it was paid in full every month, never paid a penny in interest - never had an overdraft or loan.

I decided to get the Nectar American Express card for the bonus points - applied, accepted, good limit, no problems, paid that in full every month too.

They wanted to charge for that, so I cancelled it and got the Sainsbury's one instead, again, paid in full every month, no problem, no interest paid.

While running with 2 cards, I wanted to make a couple of big purchases, applied for a BT card with Barclays - again, got accepted no problems.

Even with a BT debt on 0% I then was able to get car finance (0%) fine.

Pay off in full every month, be a responsible borrower and you should have no issues getting credit (so long as you're not going OTT on available credit vs your salary)

SuperHan

I've never paid a penny in interest, and got my first CC at 18 with a £500 limit.

7 years later, I now have a total CC limit of c. £10k over 4 cards, a mortgage, and about £2.5k worth of overdrafts (which I purposely keep low) over about 10 current accounts.

I've had laptops, beds and a camera on finance since then, all without any issues, and I got my mortgage at 22 with a lender who (apparently) isn't big on lending to first time buyers.

In my experience, paying interest has little to no bearing on your ability to obtain future credit.