Improving my credit history

StopIt

Anthorn wrote: »

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!

The sheer number of things wrong here is staggering.


I already stated why a minimum payment flag is a negative. Sticking to the T&Cs, barely, sure, but it is not a good sign for further lending. If you're paying the minimum now, how can you afford to pay another creditor more? Think about the logic here, that logic is what the computers that do credit checks will be applying.


Paying off a balance in full every month does not mean you do not need credit. it means you're using the credit you're using now responsibly. Just because I have a credit card I pay off every month doesn't mean I wont need to buy an item on finance ever again, or a house, or car, or anything really. To suggest otherwise is frankly absurd. In fact, not paying simple credit card debts in full suggests a risk that you aren't going to service a loan or larger credit facility in full as you're not capable of settling revolving credit.


No, there is no "high score" for having more accounts. If you borrow loads and pay loads back in interest, you'll be more likely to face difficulties in the case of a financial shock such as losing your job, or long term illness. A credit check will look at someone juggling many accounts and factor that in. You may have an amazing credit score, but if you've already borrowed to your maximum to boost your score, you're not going to be getting further credit in the case of actual need.

Anthorn

StopIt wrote: »

The sheer number of things wrong here is staggering.


I already stated why a minimum payment flag is a negative. Sticking to the T&Cs, barely, sure, but it is not a good sign for further lending. If you're paying the minimum now, how can you afford to pay another creditor more? Think about the logic here, that logic is what the computers that do credit checks will be applying.

You stated it but you didn't demonstrate it.

If the whole of my credit history over the past 6 years demonstrates that all my accounts have been in good order for the whole of that time why is that not a good sign for further lending? Why don't you think about the logic: That is what the credit history is there for!

StopIt wrote: »

Paying off a balance in full every month does not mean you do not need credit. it means you're using the credit you're using now responsibly. Just because I have a credit card I pay off every month doesn't mean I wont need to buy an item on finance ever again, or a house, or car, or anything really. To suggest otherwise is frankly absurd. In fact, not paying simple credit card debts in full suggests a risk that you aren't going to service a loan or larger credit facility in full as you're not capable of settling revolving credit.

So therefore by your own logic when you take out that finance you will be shooting your credit history to pieces. Again why don't you think about the logic: If you can pay the whole of the balance every month you actually don't need credit!

StopIt wrote: »

No, there is no "high score" for having more accounts. If you borrow loads and pay loads back in interest, you'll be more likely to face difficulties in the case of a financial shock such as losing your job, or long term illness. A credit check will look at someone juggling many accounts and factor that in. You may have an amazing credit score, but if you've already borrowed to your maximum to boost your score, you're not going to be getting further credit in the case of actual need.

No, a credit check will show the history of your credit accounts. That's why it's called a credit history. The more accounts you have or have had the better provided all those accounts are or have been in good order.

But now I'm starting to repeat myself. Let's wrap this up: Avoiding paying interest is a good money saver. Well of course it is. That's why it's on Money Saving Expert. But it doesn't build a great credit history because if you haven't had any credit you cannot demonstrate your ability to handle credit. You might just as well ignore credit cards and use a bank debit card.

Nebulous2

Anthorn wrote: »

But now I'm starting to repeat myself. Let's wrap this up: Avoiding paying interest is a good money saver. Well of course it is. That's why it's on Money Saving Expert. But it doesn't build a great credit history because if you haven't had any credit you cannot demonstrate your ability to handle credit. You might just as well ignore credit cards and use a bank debit card.

Lots of people, myself included, have substantial balances on credit cards without paying any interest. In fact I'm earning over £100 a month on money I got for next to nothing (Less than 1% fees for 39 months)

Your credit history is a tool to use to your advantage. When you begin to pay money either in interest or fees to a CRA to improve it it is using you - the classic tail wagging the dog.

Get on the Electoral Roll, pay on time every time, spend less than you earn and credit is likely to be there when you need it.

eskbanker

bigadaj wrote: »

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

Yes, I remember some of those entertaining threads where he digs himself into ever deeper holes on this - out of idle curiosity I did a forum search for threads with the words 'full', 'balance' and Anthorn posts, and it brings back no less than 80 threads!

More amusing still:

Anthorn wrote: »

To rebuild your credit rating just use the card, stay within the credit limit and make the payments on time. It makes no difference to credit building if you pay the full statement balance or the minimum payment. But it makes sense to only spend what you can afford to pay back and clear the full statement balance every month to avoid the very high interest.

Anthorn

eskbanker wrote: »

Yes, I remember some of those entertaining threads where he digs himself into ever deeper holes on this - out of idle curiosity I did a forum search for threads with the words 'full', 'balance' and Anthorn posts, and it brings back no less than 80 threads!

More amusing still:

Off topic with regard to this thread which also makes it misquoted but at least you are staying within the parameters of your previous posts with regard to my posts.

Here's your quote of my post to refresh your memory:

To rebuild your credit rating just use the card, stay within the credit limit and make the payments on time. It makes no difference to credit building if you pay the full statement balance or the minimum payment. But it makes sense to only spend what you can afford to pay back and clear the full statement balance every month to avoid the very high interest.

I don't see any difference at all with what I have posted in this very thread. i.e. "It makes no difference to credit building if you pay the full statement balance or the minimum payment." but in the case of high interest (sub-prime) cards, "clear the full statement balance every month to avoid the very high interest". That latter statement regarding high interest is the position taken by MSE and also myself.

Is it me digging holes or you yourself eskbanker?

eskbanker

Anthorn wrote: »

I don't see any difference at all with what I have posted in this very thread. i.e. "It makes no difference to credit building if you pay the full statement balance or the minimum payment." but in the case of high interest (sub-prime) cards, "clear the full statement balance every month to avoid the very high interest". That latter statement regarding high interest is the position taken by MSE and also myself.

Is it me digging holes or you yourself eskbanker?

Perhaps those with a somewhat, er, fluid approach to logic can't spot the difference but I imagine most can see the inconsistency with:

Anthorn wrote: »

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.

Anthorn

eskbanker wrote: »

Perhaps those with a somewhat, er, fluid approach to logic can't spot the difference but I imagine most can see the inconsistency with:

Probably a waste of time replying to you but I don't see any inconsistency nor any contradiction with my previous posts in this thread.

Is it that you just have an active imagination or more seriously just clueless?

Fireflyaway

I've learned the main pointers are to, try not to use more than 60% of your available credit. Don't withdraw cash on a credit card then the obvious ones, don't go over limit, don't pay late! Other than that I'm not aware of any magical formula ! Good luck.

takman

Anthorn wrote: »

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.

This statement is so wrong it really needs to be pointed out to you. Your credit report shows how much you have paid off each month and what the balance is. If there is no minimum payment flag it will not mean that lenders look for closely at the account.

All credit checks are done by computers and the algorithm uses every piece of information in you credit report and none is "skimmed over".

You seem to be forgetting one of the biggest things lenders want to know and that is whether or not will repay the money you borrow. So someone who is paying interest and only paying the minimum suggests they are struggling with payments and are more likely to be unable to pay the money back.

Anthorn wrote: »

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.

If you spend money on a card each month and pay it off in full this shows responsible use of credit. This is also what lenders like to see because they are making money from fees paid when the card is used and they get the money back each month, so they see you as a low risk of not paying it back.

But if you did want to carry a balance the most sensible way to do this would be to have a it on a 0% deal so that you pay no interest. So there is no need at all to pay interest and it certainly doesn't show you can handle credit correctly.

Like others on here i have almost completely avoided paying interest on all my cards (expect a few penny's on Clarity Foreign Currency Withdrawals) and i have no trouble getting 0% offer cards with big limits.