Improving my credit history

armyoftwo

Evening all,

I'm in the process of improving my credit history. I have a credit card which I use for my monthly spending and then clear off every month. My questions are does it matter if I spend £2 or let's say £200 on the card each month? Or is more about showing I can pay it back then the actual amount I spend?

Thanks in advance.

Xxx

Dobbibill

It's all about showing you can use credit responsibly.

Use it for any amount - fuel or groceries are normally a good consistent purchase each month.

Always pay off in full on time so you never pay interest and stay well away from your credit limit.

DCFC79

Whatever you do keep a track of what you have spent eg pen and paper or an excel spreadsheet, it obviously depends on your limit and how much you spend on petrol, groceries.

armyoftwo

Thanks for the quick replies. It's just I usually pay for groceries using my credit card and then pay in full each month. However, some months I pay for things using cash so my credit card would show mixed spending amounts.

Dobbibill

That's fine to have mixed amounts - use it where and when you want. If you always pay off in full you are already doing the right thing and your credit report will provide the evidence

Anthorn

Dobbibill wrote: »

Always pay off in full on time so you never pay interest and stay well away from your credit limit.

In this case you will be building a credit history which screams out to lenders that you avoid paying interest. Could be good or bad depending on which lender and which of their products you apply for. Not really all that good for CC lenders who want customers who pay interest.

Personally, when I was rebuilding my credit history I went for a mix: Sometimes I cleared the whole statement balance and sometimes I didn't and sometimes I only paid the minimum payment. In fact, the minimum payment flag shows that you are keeping to the credit agreement but again might not be good for those lenders who want their CC balances paid off quicker. Note that each account on your credit history has its own history. In addition I filled every credit section, credit cards, loans, mail order, mobile phone, landline, energy, etc.

StopIt

Anthorn wrote: »

In this case you will be building a credit history which screams out to lenders that you avoid paying interest. Could be good or bad depending on which lender and which of their products you apply for. Not really all that good for CC lenders who want customers who pay interest.

Personally, when I was rebuilding my credit history I went for a mix: Sometimes I cleared the whole statement balance and sometimes I didn't and sometimes I only paid the minimum payment. In fact, the minimum payment flag shows that you are keeping to the credit agreement but again might not be good for those lenders who want their CC balances paid off quicker. Note that each account on your credit history has its own history. In addition I filled every credit section, credit cards, loans, mail order, mobile phone, landline, energy, etc.

Bad advice.

Never pay interest to build a credit history. Not only does it not help, you're paying interest for the joy of not helping.


Minimum payments markers are a negative, not a positive too.

Anthorn

StopIt wrote: »

Bad advice.

Never pay interest to build a credit history. Not only does it not help, you're paying interest for the joy of not helping.


Minimum payments markers are a negative, not a positive too.

In what way does paying interest on a credit card balance not help and what exactly is it that it does not help with?

So which lenders view the minimum payment flag as a negative?

In fact the standpoint of paying off the full balance to improve a credit history is a corruption of MSE's advice to pay the full balance on high interest cards to avoid high interest and has nothing at all to do with building a credit history.

One wonders how it is that lots of people with credit balances as they report on MSE have excellent credit histories and qualify for similarly excellent balance transfer cards. One would think that if credit card balances are bad such people would have bad credit histories and wouldn't qualify for anything at all.

The standpoint of paying the full balance to improve a credit history doesn't stand up to scrutiny and is in fact pretty much ridiculous. The be all and end all is sticking to the credit agreement. Period.

StopIt

Anthorn wrote: »

In what way does paying interest on a credit card balance not help and what exactly is it that it does not help with?

So which lenders view the minimum payment flag as a negative?

In fact the standpoint of paying off the full balance to improve a credit history is a corruption of MSE's advice to pay the full balance on high interest cards to avoid high interest and has nothing at all to do with building a credit history.

One wonders how it is that lots of people with credit balances as they report on MSE have excellent credit histories and qualify for similarly excellent balance transfer cards. One would think that if credit card balances are bad such people would have bad credit histories and wouldn't qualify for anything at all.

The standpoint of paying the full balance to improve a credit history doesn't stand up to scrutiny and is in fact pretty much ridiculous. The be all and end all is sticking to the credit agreement. Period.

Look up the amount of people who then run out of their 0% deals despite an "excellent" credit score.


Constantly having a balance, on a 0% or no CC is not a positive. Paying interest to chase a credit history is not a positive when your mortgage broker tells you to clear your credit card balance before an AIP can be turned into an actual mortgage offer.


Who benefits from customers paying interest in the misguided view that doing so helps their credit files? Lenders. You even stated you took out "every category of credit" on your files, including loans. You literally have taken the view that a large credit file is good, despite the actual cost to yourself.


You may have an excellent credit profile, you however, paid to do it, and there's more than enough ways to get the credit history you need for items such as mortgages, without paying for it.


MSE will never, EVER advise people to take out interest paying debts to boost a credit file.


Edit: Minimum payment flags indicate to lenders that you're unable to pay more than the minimum required for servicing your debts. This is a negative flag.

bigadaj

We've been through this with Anthorn before, nothing is going to change his mind.

Anthorn

StopIt wrote: »

Look up the amount of people who then run out of their 0% deals despite an "excellent" credit score.


Constantly having a balance, on a 0% or no CC is not a positive. Paying interest to chase a credit history is not a positive when your mortgage broker tells you to clear your credit card balance before an AIP can be turned into an actual mortgage offer.


Who benefits from customers paying interest in the misguided view that doing so helps their credit files? Lenders. You even stated you took out "every category of credit" on your files, including loans. You literally have taken the view that a large credit file is good, despite the actual cost to yourself.


You may have an excellent credit profile, you however, paid to do it, and there's more than enough ways to get the credit history you need for items such as mortgages, without paying for it.


MSE will never, EVER advise people to take out interest paying debts to boost a credit file.


Edit: Minimum payment flags indicate to lenders that you're unable to pay more than the minimum required for servicing your debts. This is a negative flag.

In actual fact the minimum payment flag indicates that you are sticking to the credit agreement. Conversely, if you pay more than the minimum payment you don't get any minimum payment flag at all and that could mean that you didn't pay anything and missed the payment. That directs lenders to view the history of that account which they might otherwise skim over if the minimum payment flag is present.

In actual fact paying off the full balance every month indicates that you are not spending more than you can afford and therefore you don't need credit. It's keeping balances and making the payments in accordance with the credit agreement that demonstrates to lenders that you can handle credit.

Oh yes it's building the number of positive accounts that matters. The more the better!

@ bigadaj: The opposite is also true: Some people will never admit to the obvious because they are stuck in the fallacy!