18 and looking to build credit?

Stockko

Hi all,

I’m 18 and looking to get my first credit card to build credit. Slightly confused as I just checked my credit score on Experian expecting it to be low as I have next to no credit history, however it’s has a top rating of excellent… So that leads me to my next question what’s the point of getting a credit card to build credit if my rating is already high?

I’m looking to get the Capital One, Classic Platinum card. Once I have the card what’s the best way to go about spending on the card? Is spending say 10% of the allowance each month and paying in full the best way to build credit?

Any tips / advice would be appreciated, very new to all this!

Ebe_Scrooge

Your "score" is totally meaningless, only you and the CRA can see it. What lenders will be looking for is to see a history of responsible borrowing and repayment.


The simplest way to achieve this is use a credit card for your everyday spending - groceries, petrol, etc. ( don't be tempted to spend more than you normally would ! ). Set up a direct debit to pay the card in full every month.


As a first card you may be limited to a sub-prime card with high interest rates, but this doesn't matter as you'll be paying in full every month, so no interest to pay.


Aside from this, being on the electoral roll is important as it verifies to the lenders that you are who you say you are. Also, any other form of credit such as a mobile phone contract will help build your credit history.


The bottom line is - show potential lenders that you are responsible at borrowing money, not overstretching yourself and always paying in full on time without fail. This will then stand you in good stead when you want to obtain further credit in the future.


<edit> Just to add - there's no need to limit yourself to 10% of the card limit, just spend as much as you like up to the limit ( well, not "as much as you like", but you know what I mean !! ). The really important thing is to pay in full, on time, every month, without fail.

[Deleted User]

Stockko wrote: »

I just checked my credit score on Experian expecting it to be low as I have next to no credit history, however it’s has a top rating of excellent

Strange, isn't it?

It's almost as if the scoring system is a complete pile of unadulterated horse poop with no grounding in reality...

really?

The score in itself is mostly meaningless outside whichever credit check provider you used. it can provide an indicator of credit worthiness but nothing says credit worthy as well as actually using credit responsibly over 2-3 years +.
You're right to get/ use a credit card.
regarding use: you should set up up a direct debit for minimum payment, aim to clear your balance after the statement date and also keep spending under 30% of your limit.

HappyMJ

Stockko wrote: »

Hi all,

I’m 18 and looking to get my first credit card to build credit. Slightly confused as I just checked my credit score on Experian expecting it to be low as I have next to no credit history, however it’s has a top rating of excellent… So that leads me to my next question what’s the point of getting a credit card to build credit if my rating is already high?

I’m looking to get the Capital One, Classic Platinum card. Once I have the card what’s the best way to go about spending on the card? Is spending say 10% of the allowance each month and paying in full the best way to build credit?

Any tips / advice would be appreciated, very new to all this!

I wouldn't spend more than 45% of the limit each month.

Assuming the limit is £200 if you were to make a purchase of £195 today you would have to wait up to 6 weeks for the direct debit to pay it off before you could use it again. If you spent £90 today you could spend that each month without risking getting too close to the credit limit at any point in the month. You would have £180 outstanding until the £90 was paid off.

That's probably all the limit you'll get for a first card. When you get credit limits of £5,000 then spending 45% of the credit limit isn't a concern any more as you probably wouldn't earn enough to clear it in full each month so you just spend only on what you need or want without worrying about getting too close to the credit limit.