Credit Card building - Explain to me like I'm 6

xDrone

Hi there,

Sorry if this has been posted a million times but I'm still really confused.
I'm looking to venture down the credit card road in order to build my credit, I'm looking to buy a house soon and I know a good score is paramount when applying for a mortgage, but I really don't understand what they best option is for me.

I'm 19, in a stable job earning 18k a year and will be going up very shortly, I am in no debt as well. I have monthly expenses and personal loans but only take up around 30% of my income with the rest being disposable. What sort of credit card do I need and when should I use it and why? I don't really understand credit scores as I always use a debit card, I'm looking for a simple card in which I don't pay money to use and won't get shafted. What key terms am I looking for? Sorry if I'm dumb but looking online is really hard and intimidating with percentages, fees and what not.

[Deleted User]

xDrone wrote: »

I'm looking to buy a house soon and I know a good score is paramount when applying for a mortgage, but I really don't understand what they best option is for me.

The first thing I tell all six years old is that the score is completely unparamount. Non paramount. Anti paramount.

It's made up, fictional, fake, and absolutely irrelevant to anything except for collecting random numbers.

No one sees it, no one cares about it, and if you believe in it, the credit score fairy will kill small puppies while you sleep.

What you need is a good credit history.

With that out of the way, any credit card will help build history. You spend on it, you get the statement, you pay it off in full. Repeat.

Make sure you're on the ER. Time will do the rest.

Oh. And ignore the scores. Don't know if I mentioned that.

Thrugelmir

Wish to purchase a property. Focus on the deposit. HTB ISa or LISA should be your first options.

xDrone

Hmm, okay I won't bother with the score, I think I got that from your message? :rotfl:

Just a quick question then, if I do this, will I ever get charged for this because I see these % fees, will that make a difference? Guessing APR doesn't matter if I always pay it back in full

Ta!

xDrone

Thrugelmir wrote: »

Wish to purchase a property. Focus on the deposit. HTB ISa or LISA should be your first options.

My HTB is at a healthy amount and should be around 10% of purchase price in a year, just looking for the credit score / credit history as said above. Getting thrown off by fees and balance transfers?

[Deleted User]

If you clear in full each month, you'll never pay a penny in interest.

Just don't withdraw cash on it and set up a DD for full repayments.

boo_star

You have personal loans at 19?

Why?

Honestly I!!!8217;d be surprised if you!!!8217;ll be able to afford anywhere with an income of 18k. People are usually offered 3 times income or thereabouts.

Even with a deposit I!!!8217;d say, 20k, that!!!8217;s not a lot of money.

fatbelly

You could get a card with some extra incentives, depending on where you shop

https://www.moneysavingexpert.com/credit-cards/best-credit-card-rewards

I'd avoid Amex unless you can live with it not being accepted everywhere.

As for your credit history and house buying, concentrate on clearing your loans and saving a deposit.

I am in no debt as well. I have monthly expenses and personal loans

Surely if you have personal loans you have debt.

xDrone

boo_star wrote: »

You have personal loans at 19?

Why?

Honestly I!!!8217;d be surprised if you!!!8217;ll be able to afford anywhere with an income of 18k. People are usually offered 3 times income or thereabouts.

Even with a deposit I!!!8217;d say, 20k, that!!!8217;s not a lot of money.

It was to afford DJ equipment, it was 0% over 2 years so I thought why not. finance is probably the better term. My car insurance is also done through with a finance scheme. And my wage is set to increase to 25k shortly and I live in a very low cost of living area (wakefield).

[Deleted User]

xDrone wrote: »

It was to afford DJ equipment, it was 0% over 2 years so I thought why not. finance is probably the better term. My car insurance is also done through with a finance scheme. And my wage is set to increase to 25k shortly and I live in a very low cost of living area (wakefield).

The DJ equipment is debt. Finance is just what people say who don't want to to admit to having debt.

It's not necessarily a bad thing as it is at 0%, but it will impact affordability for a mortgage.

Dobbibill

Check your credit reports free via CreditClub, Clearscore and Noddle.
Check all the data held about you is accurate. Make sure you are registered on the ER. Make sure there are no financial associates that shouldn't be there.

See if your finance for your DJ equipment is reporting - it should be, which will add to your history of borrowing and repaying on time and being responsible. At 0%, that's a good deal but you want it evidenced.

Try the eligibility checker for an idea on how likely you are to be accepted for a card (it's only a guideline though so don't take it as gospel).

https://www.moneysavingexpert.com/eligibility/credit-cards/

Pay in full and on time to prevent paying interest (excluding the TSB Advance card). Setting up a DD is probably a good idea so you don't forget about the due date.

Fund your HTB ISA as much as possible. Any additional funds get into a high interest account (you will need money for surveyors, solicitors fees, furniture for the house etc as well as the deposit).