Is paying off your credit card bill bad for your credit rating?

TheLondoner

Hi everyone!

As per the subject, I was just wondering whether paying off a credit card bill in full at the end of every month is bad for ones' credit rating? I pay my bill off at the end of every month and someone told me that this can be bad for the credit rating because companies want to make money from you and if you don't pay them interest they don't see you as a profitable/good customer. Is there any truth to this?

Noodle says I have a good credit rating but when I tried opening a current account today the bank told my my result came back as "fair" and so they had to refer it to an underwriter and couldn't offer me the product there and then. I'm just trying to figure out why I got a result of fair when noddle says I have an excellent credit rating. Does having lots of current accounts and paying no interest on debt give you a bad credit score? Any tips/advise on how to improve credit score greatly appreciated!

redpete

Noodle uses one analysis of your financial history to work out the credit rating number they give you. Each lender will use their own analysis, different things will be more important to different lenders. A lender will have some information that Noodle doesn't (e.g your income).

For me, not paying off the full credit card balance, and hence incurring interest, in the hope that it improves someone's credit rating for me would be daft.

forgotmyname

Your fair score from the bank maybe they want someone thats lived at their current address for at least 20 years and had the same job for 20 years etc etc...

The credit agencies do not even know if your working.

Noddle give you an excellent rating, But they dont have bank accounts and wont lend you money.

My credit scoring system rates you in biscuits. Equally as useless as the credit agencies.

[Deleted User]

Always clear in full whenever you can.

TheLondoner

So basically credit ratings are bs? Is that the general consensus?

HappyMJ

TheLondoner wrote: »

So basically credit ratings are !!!!!!!!? Is that the general consensus?

Not necessarily. The "score" gives you an idea. Something to work with. If you're scoring very low then something is seriously wrong. On the other hand if you score 999 then it's unlikely you're using credit at all and therefore appear perfect. Every time I apply for a new bank account, new credit card, loan etc... my "score" drops for a few months therefore I never have a perfect score but I use credit so I don't expect to.

I'd just go with the suggestions that Noddle/Clearscore offers such as too many applications for credit, highest credit limit is low...etc... and try and improve them by not applying for credit quite so often (no more than every 3 months or so) and consolidating the available credit on to one or two cards. Having one card with a £1,000 limit is better than 5 cards with a £200 limit each.

bigadaj

TheLondoner wrote: »

So basically credit ratings are !!!!!!!!? Is that the general consensus?

Pretty much, your file is important but we've had people complaining on these boards that they have a 999 rating and can't get credit to then find they have defaults, recently bankrupt, CCJs etc

One thing that does confuse people is that the uk situation is very different to the US. In America your score is important and is transferable and applicable to your overall financial situation which isn't the case here.

bsms1147

redpete wrote: »

For me, not paying off the full credit card balance, and hence incurring interest, in the hope that it improves someone's credit rating for me would be daft.

This.

One person on this board would beg to differ. Though they would be wrong.

onthefencepost

Clearing the balance show you can afford to pay you bills on time and in full.
Personally this is always the best and cheapest option - i cannot see why a lender will see this as a bad thing.

I've used my Aqua card for the last 8 months and i have paid in full every time and I've had two sizable credit increases and i've just taken a second credit card out which went through immediately.

TheLondoner

I've paid off all my credit card bills on time since I got a credit card two years ago. I have cancelled one of my credit cards and kept the other two just for direct debits for my lloyds account. I reduced the £5k limit on one of the cards to £2k, but I now realise this was a mistake because it may lead the credit score to decrease as it may appear the lender reduced it, not myself in a bid to demonstrate my prudence haha!

Thanks for your reply everyone! Some great posts! I will continue paying my bills in full

Helvetica_Van_Buren

TheLondoner wrote: »

So basically credit ratings are bs? Is that the general consensus?

Credit ratings are definitely absolutely worthless - anybody that says otherwise is lying to you, or mistaken.

They do not give you an idea or an impression of how lenders see you. Lenders do not see your score and credit reference agencies do not make lending decisions.

Always pay off your credit cards in full (presuming they aren't 0%).