Amex Preferred Rewards Gold Card for building a credit rating

superkam

Hi there,

I am currently looking at getting my first ever credit card to build up a credit rating / history to make it easier to get my first mortgage in a year or so.

I actually don't care for credit at all- I will use it purely as a debit card (set up direct debit to pay all costs on time) and so I figured I would be best getting a cashback card.

I took the cashback eligibility card test and the card I am most likely eligible for is the Amex Preferred Rewards Gold Card (I wanted to post a link to the card but I cannot since I am a new user).

However, since this is a 'charge' card, not a 'credit' card, I was wondering if it will still give me the credit history that a 'normal' credit card would give me in the context of helping me get a mortgage.

Thanks in advance for any advice on the matter:money:

syncline

Have you requested your credit records from the major agencies?

The answer to all questions about "how do credit reference agencies work in detail" tends to be "they won't say" - but: if I were wanting to build up a credit record for a mortgage, I'd surely want to get a card that allows me to obtain credit, rather than one that does not.

When I was doing a similar thing to you, I actually didn't pay back the whole sum owed every month, just to make sure that there was some actual borrowing on my record. Of course, I always paid at least the minimum repayment! There is some advice out there that that is advisable. My advice is to accept that you won't find out the internal rules these agencies operate in detail, then decide on your priorities: greater confidence that you're building up a sufficiently good credit record, or saving a few quid right now on cashback and interest payments on relatively small sums.

PeacefulWaters

syncline wrote: »

When I was doing a similar thing to you, I actually didn't pay back the whole sum owed every month, just to make sure that there was some actual borrowing on my record. Of course, I always paid at least the minimum repayment! There is some advice out there that that is advisable.

But in truth, it's insane. Get card. Spend on it. Receive statement. Pay in full. Avoid interest. Repeat.

It's madness to pay unnecessary interest to enhance your credit file.

PROLIANT

You are in default of the terms of the agreement if you don't pay an AMEX charge card in full each statement - you will be fined plus charged interest and they will probably close your account.

It will show on your credit record as a zero balance (which it should its a charge card) and the limit will vary what you can spend each month based on data feeds from Experian, how you manage your account and you spending habits - don't be fooled into thinking a charge card has no spending limit as it does.

I use my AMEX gold rewards card for day to day spending but I leave the money in my current account so I can settle the balance when the statement is due, that way I get all the benefit of using as a debit card - only spend what you can afford to pay back, it will help your credit rating by way of showing a zero balance, other lenders will see that you have a charge card and are managing it correctly so this will help you.

20aday

Wouldn't American Express be one of the harder cards to obtain if it's your very first credit card?

I'm perhaps wrong but looking at one of the sub-prime lenders i.e. Aqua/Capital One and making a purchase on it each month e.g. food/fuel then repaying the balance in full when it's due would go towards reporting positives on your credit files?

superkam

syncline wrote: »

Have you requested your credit records from the major agencies?

The answer to all questions about "how do credit reference agencies work in detail" tends to be "they won't say" - but: if I were wanting to build up a credit record for a mortgage, I'd surely want to get a card that allows me to obtain credit, rather than one that does not.

When I was doing a similar thing to you, I actually didn't pay back the whole sum owed every month, just to make sure that there was some actual borrowing on my record. Of course, I always paid at least the minimum repayment! There is some advice out there that that is advisable. My advice is to accept that you won't find out the internal rules these agencies operate in detail, then decide on your priorities: greater confidence that you're building up a sufficiently good credit record, or saving a few quid right now on cashback and interest payments on relatively small sums.

Thank you for your reply.

Based on your response, I'm guessing you think it's better that I get a 0% interest (for a given period) card rather than a cashback card?

I know very little about this sort of thing, but I am surprised that you say that you purposely didn't pay back the full amount each month. I would have assumed that for things such as a mortgage, that the lenders want to see that you make your payments on time?
Although I can see how having some history of not paying the full amount would entice a mortgage lender, as it ultimately may mean they can make more money out of you from prolonging the payback period.

I tried obtaining my credit record from the 'big three' (as advertised on one of the MSE pages) from the MSE credit club, noddle and ClearScore.
Only the latter one worked: my records are completely clean, the only thing it advised me to do was to get a credit history, which is why I'm looking at getting a credit card (or in this case a 'charge' card).

superkam

20aday wrote: »

Wouldn't American Express be one of the harder cards to obtain if it's your very first credit card?

I'm perhaps wrong but looking at one of the sub-prime lenders i.e. Aqua/Capital One and making a purchase on it each month e.g. food/fuel then repaying the balance in full when it's due would go towards reporting positives on your credit files?

Yep I did the MSE cashback credit card eligibility check and this card was joint highest with 95% (the other being an Aqua card, but I've never heard of them before).

I'm not sure I'm eligible for many credit cards, as I am a PhD student (soon to finish) and so my only sources of income are my government scholarship and the part-time teaching I do, meaning my income is less than £20k per year.

PeacefulWaters

superkam wrote: »

I know very little about this sort of thing, but I am surprised that you say that you purposely didn't pay back the full amount each month. I would have assumed that for things such as a mortgage, that the lenders want to see that you make your payments on time?

Minimum payment in accordance with the terms and conditions is on time. Not that paying interest is a good idea.

Although I can see how having some history of not paying the full amount would entice a mortgage lender, as it ultimately may mean they can make more money out of you from prolonging the payback period.

This makes no sense. They've got you for a few years anyway with a mortgage.

syncline

superkam wrote: »

Thank you for your reply.

Based on your response, I'm guessing you think it's better that I get a 0% interest (for a given period) card rather than a cashback card?

Yes, on the basis that maybe some agencies class the card you mentioned as non-credit (I don't know if they do, and suspect nobody else here does for sure either). 'Everybody' seems to agree that having had credit counts towards you if you want to get more credit. Ditto for paying it off in a timely way.

I know very little about this sort of thing, but I am surprised that you say that you purposely didn't pay back the full amount each month. I would have assumed that for things such as a mortgage, that the lenders want to see that you make your payments on time?

My thought process at the time:

• I don't know what system they operate in detail
• I also don't expect the rules to make total sense (I imagine many people here may claim that's preposterous - it isn't, because financial services like anything else are not perfectly rational systems - not that such a thing even exists)
• Some apparently knowledgeable people said it helps to have not paid off the entire balance every month, and made vaguely sensible arguments why that makes sense
• Other apparently knowledgeable people said it helps to just pay it off every month, or that you may as well because it makes no difference, and made vaguely sensible arguments why that makes sense

I was already paying off the entire balance every month, and had several credit cards. So I paid off my main card in full every month, and spent a bit on the other cards that I didn't pay off each month (but obviously paid the minimum amount - which it sounds like is zero in the case of the card you mention).

I got the mortgage without trouble.

That's all I know.

The argument I heard for not paying in full is that they want to see you holding credit for a period, and that, in some sense, paying it off every month may be counted by some agencies as not holding credit. (this is not my argument, please everybody consider it as merely part of the wisdom of the crowd ;-)

Although I can see how having some history of not paying the full amount would entice a mortgage lender, as it ultimately may mean they can make more money out of you from prolonging the payback period.

I have not heard that argument advanced by anybody else.

I tried obtaining my credit record from the 'big three' (as advertised on one of the MSE pages) from the MSE credit club, noddle and ClearScore.
Only the latter one worked: my records are completely clean, the only thing it advised me to do was to get a credit history, which is why I'm looking at getting a credit card (or in this case a 'charge' card).

What do you mean by "worked"?

The major players for mortgages are Experian and Equifax I believe.

superkam

syncline wrote: »

Yes, on the basis that maybe some agencies class the card you mentioned as non-credit (I don't know if they do, and suspect nobody else here does for sure either). 'Everybody' seems to agree that having had credit counts towards you if you want to get more credit. Ditto for paying it off in a timely way.

My thought process at the time:

• I don't know what system they operate in detail
• I also don't expect the rules to make total sense (I imagine many people here may claim that's preposterous - it isn't, because financial services like anything else are not perfectly rational systems - not that such a thing even exists)
• Some apparently knowledgeable people said it helps to have not paid off the entire balance every month, and made vaguely sensible arguments why that makes sense
• Other apparently knowledgeable people said it helps to just pay it off every month, or that you may as well because it makes no difference, and made vaguely sensible arguments why that makes sense

I was already paying off the entire balance every month, and had several credit cards. So I paid off my main card in full every month, and spent a bit on the other cards that I didn't pay off each month (but obviously paid the minimum amount - which it sounds like is zero in the case of the card you mention).

I got the mortgage without trouble.

That's all I know.

The argument I heard for not paying in full is that they want to see you holding credit for a period, and that, in some sense, paying it off every month may be counted by some agencies as not holding credit. (this is not my argument, please everybody consider it as merely part of the wisdom of the crowd ;-)

I have not heard that argument advanced by anybody else.

What do you mean by "worked"?

The major players for mortgages are Experian and Equifax I believe.

MSE credit club (which gives you the Experian report), Noddle (CallCredit's report) failed to display my credit record when I gave them all my information. Only ClearScore (Equifax's report) successfully retrieved my records. I'm not sure if this is because I'm still a student and I don't really have much history in terms of any type of payments (utility bills, loans etc.).

dresdendave

The correct way to use a credit card to boost your credit history, without it costing even a penny in interest was explained by PW as far back as post #3.

There is no need to overthink/overcomplicate it.