Credit Builder Credit Cards

littly_kitty

I am in a unique position. I have a credit rating of 490 which is higher than the average. But I am self employed on a small erratic income, so I can't get a big name credit card.

I was thinking of getting a credit builder card.
1) Will this harm my credit rating? They are generally only used by people with bad credit histories, so will that reflect badly on me?

2) All the credit builder cards have lots of bad customer reviews. Should I be concerned about that?
For example, I was thinking of going for the Aqua Card as it doesn't charge a fee for purchases abroad (and I buy a lot of items online from the US). But it has bad reviews, including one about Phantom interest charges (but then again, so do all the other Credit Builder cards).

[Deleted User]

littly_kitty wrote: »

I have a credit rating of 490 which is higher than the average.

But equally as meaningless as the average.

Any credit card, if used correctly - ie use regularly and clear in full each month - will build a solid credit history.

There are no phantom charges - only charges that are explained in the t&cs.

littly_kitty

use regularly and clear in full each month

What happens if you have a card and pay it off in full each month, but don't use it on a regular basis?

I am not a big spender (as I am living with parents) and frequently have months where I don't have any spending at all. Will that hit my credit rating if I get a card? (When I do spend, I will pay it off in full each month).

The advice given on MSE isn't clear cut on this issue.

Dobbibill

If you use your card and pay off in full you shouldn't incur any interest charges.

Can you use it regularly to pay for fuel, travel costs, groceries. Something you would normally buy anyway. This will build up a good regular history.

[Deleted User]

The less you use it, the less evidence you give a lender you can handle credit.

Treat yourself to a packet of Hob Nobs* once a month if you can't think of anything else to buy.


*Other biscuits are available.

littly_kitty

1) So it doesn't matter if it is a small purchase (e.g. like a £0.30 In-App purchase) just as long as it's once a month.

2) I know not using won't build up a good history, but not using it won't result in any negative history will it?

@Dobbibill and @zx81, thanks for the help, I greatly appreciate it!

Dobbibill

It won't give you negative history as such.

A lender will want to see what type of risk you are.....the way they determine this (among other things) is to see you have sensibly used any credit facilities you have.

Using a CC and paying off in full is demonstrating how responsible you are with the CC limit, therefore if you need other lending (mortgage, loan etc) they can see you make all payments on time so are a low risk.

Not using demonstrates nothing as there's nothing to measure.