Credit card and rating?

MHOWARD_2

Hi, I recently got my first ever credit card as never really wanted one before. I actually only got one to build my credit rating as was turned down for a mobile contract. I signed up for Equifax and it's not that I had bad credit I infact had no credit. Never wanted it or needed it really. I eventually got a contract with Vodafone and a credit card with capital one(£200 limit). I got a contract for my son for Christmas and a credit card as it just felt slightly ridiculous as I work and am in no debt but yet I could not get basic credit, especially as I know people who are in debt up to their eyeballs but can get credit. I have spent £196 of my available £200 as I thought the more I paid back the more trust it would generate, but reading on here I think that may have been a mistake? I will definitely always pay off in full but is that a bad idea to go close to the limit?.
Another reason for wanting a credit card is I buy a lot of stuff online and wanted the extra protection.
Any advice on building and keeping credit would be greatly appreciated. Thanks.

Just to add, I now have about ten credit searches as needed that amount just to get basic credit. As I said I'm new at this.

[Deleted User]

Keep away from the limit and clear in full each month.

DCFC79

Don't forget to manage your money in your current account too.

AliceBanned

Did you check eligibility for cards through a soft search (such as Noddle or MSE credit club) before applying? It may just be that you are new to credit but using the Cap One and paying it off every month over a few months should improve the situation.




If you have done too many applications in a short space of time this would have a slight negative impact on your credit score but after a few months it should pick up.

Stigy

It's a good idea to pay it off in full each month. You'll be offered a credit limit increase by spending close to your limit which will benefit you in the future as you can hen keep the spending low, percentage wise (good from a lender's point of view), and have more credit available should an emergency arise (car repairs etc). The way it tends to be looked at favourably, is that the higher the credit available, the better, but the less you use it the better tooo, as long as you DO regularly use it. For example, I have 3,000GBP available over two cards, but am only using 8% a month on average. You're currently using almost 100% of what's available, which could be viewed more negatively. To be honest, as long as you pay it off on time, it's obviously a good thing.

Dobbibill

No credit is just as bad as bad credit, lenders will view your file and have no indication at all of how much of a risk you are because you've got no evidence to support it.

Using your CC and paying off in full is the right thing to do.

Be careful using so much of your limit - that's awfully close and the last thing you want to do is exceed the limit.

Try to put no more than 40% of your limit on the CC each month. That way, by the payment due date (which is approx 3 weeks into the following month) you'll have more transactions on there but still won't be too close to exceed the limit.

MHOWARD_2

Dobbibill wrote: »

Try to put no more than 40% of your limit on the CC each month. That way, by the payment due date (which is approx 3 weeks into the following month) you'll have more transactions on there but still won't be too close to exceed the limit.

This is the but I do not really understand, why only forty per cent and what do you mean by more transactions? Why would I out more transactions on if I am near to the balance.
Sorry for all the questions, having never had a credit card before I'm really not sure about the blasted things. Thanks

Dobbibill

MHOWARD wrote: »

This is the but I do not really understand, why only forty per cent and what do you mean by more transactions? Why would I out more transactions on if I am near to the balance.
Sorry for all the questions, having never had a credit card before I'm really not sure about the blasted things. Thanks

Each month you use your CC you will receive a statement. As an example we will say your statement is produced on the 1st of the month, your due date will then be approx the 23rd and the credit limit is £100 and spending is £40 a month.
Set up a DD to take the payment automatically then you will never miss a payment.

You spend on your CC in December.
Statement produced 1st Jan. (this is all transactions done in Dec)
Due date 23rd Jan - DD takes payment.

Using your card in Jan will now be on your CC but not on your statement.

All Jan transactions will show on your 1st Feb statement. By the time the due date comes around you will have £40 from Dec and approx £30 from Jan. (£70 balance in total/70% of your Credit limit) Once the DD takes the payment on the 23rd, you are back down to £30 balance and then you continue to use the CC for the rest of the month and so the routine repeats again for the next month.

If you max the card then pay off manually you will need to check the CRAs as depending on the time of month they report it may constantly show a 0 balance.

nic_c

You don't need to spend to your limit to get an increase, keeping it in constant use but below half will show you are able to be trusted with credit and you'll often get an increase after an initial period. You can also request a credit limit increase yourself, you don't have to wait to be offered, but you may need to check T&C of your card. It might only after you have had it 6 months or a year, and often limited to 1 increase per year.

MHOWARD_2

AliceBanned wrote: »

Did you check eligibility for cards through a soft search (such as Noddle or MSE credit club) before applying? It may just be that you are new to credit but using the Cap One and paying it off every month over a few months should improve the situation.

I did actually try both of those checker's, mse showed me a card that said 70% acceptance chance and Noddle an 80% chance. I was rejected for both.

MHOWARD_2

Dobbibill wrote: »

Each month you use your CC you will receive a statement. As an example we will say your statement is produced on the 1st of the month, your due date will then be approx the 23rd and the credit limit is £100 and spending is £40 a month.
Set up a DD to take the payment automatically then you will never miss a payment.

You spend on your CC in December.
Statement produced 1st Jan. (this is all transactions done in Dec)
Due date 23rd Jan - DD takes payment.

Using your card in Jan will now be on your CC but not on your statement.

All Jan transactions will show on your 1st Feb statement. By the time the due date comes around you will have £40 from Dec and approx £30 from Jan. (£70 balance in total/70% of your Credit limit) Once the DD takes the payment on the 23rd, you are back down to £30 balance and then you continue to use the CC for the rest of the month and so the routine repeats again for the next month.

If you max the card then pay off manually you will need to check the CRAs as depending on the time of month they report it may constantly show a 0 balance.

Thank you very much for the explanation, that makes a lot more sense to me now. As my balance is basically my limit now, would you advise paying it off so I can spend on it this month? Or wait for my statement to be produced near the end of the month?
Many Thanks