Afraid to stooze too much

ST-User

Hi guys,

I'd like to ask for your opinions, what would be the best thing to do in my case.
My wife and me, both applied for a credit card and got it with a 4500 pounds limit and 0% on purchases for 13 months. We don't really need any loan, got some savings that is sitting in 4% and 5% current accounts. But I'd like to build up some credit history and also stooze with the free money if it is possible.

But what is the good strategy that has the best effect on my future applications (some credit cards in 1-2 years, maybe even a mortgage in 3-5 years). I'm afraid that the optimal strategy depends on the desired type of loan (cc vs. mortgagae), too... We don't buy any big things just use the cards for everyday's spending. But what to do now?

A) Pay back the full balance every month (= demonstrating that we can pay it off easily)?
Pay only the minimum repayment and enjoy the free money up to the 30% of the credit limit, then repay in full and start over in the next months (= demonstrating that we don't need the credit so much and can make huge repayments from time to time)?
C) Spend almost up to the limit and let stooze with the 8800 pounds free money, do only minimum repayments and then repay in full before the 0% period ends (earning more interest but being in a huge debt)?

Well, I suspect that C) does not look too good on our credit files, but A) or seems to be equally reasonable for me. What is your advise, which strategy would be better? Or something else that I forgot to think of?

Thank you in advance!

HappyMJ

C...but don't apply for a mortgage with this outstanding at the time of application but you do say 3-5 years until you consider that so you'll be fine.

and..keep on applying for those cards every 6 months or so ... so you can keep on saving interest.

ST-User

Do you really think that C) has the best effect on our credit history?

HappyMJ

ST-User wrote: »

Do you really think that C) has the best effect on our credit history?

Not in the short term no but you said you won't be considering a mortgage for 3-5 years which is why I advised you not to apply for a mortgage whilst having credit card debt and don't apply for credit oo often...i.e no more than every 6 months. When you apply for your mortgage you need to not have applied for credit for the last 6 months.

So money saving beats credit report effect for the short term. Long term it makes no difference they only look at the last 12 months.

ST-User

I see your point. I checked my credit files and indeed, applications are shown only for the last 12 months but my credit balances (e.g. a bank overdraft) are there for the last 6 years, so they can see my credit card debt for years back. Or maybe this is a good point if I apply for a new credit card? :-)

sterlingstash

I think promotional rates are flagged up on credit report (eg 0% credit card) so lenders might look differently at high balances kept on these by comparison with high balance on a standard rate (c. 18%) credit card.
I've found I maintained an excellent credit rating despite high balances, until recently where I have maxed out too many cards by comparison to my salary (>50% of salary), which has meant I have had to be a bit more selective when applying for new cards.