People who pay their credit card after each use

T-G-C

Katapolt wrote: »

I was always told this was the best way to have a credit card... how confusing! i was told it builds up a credit report and helps to show that you wont have balance outstanding for long and you're in a position to keep up with payments.

There is nothing wrong with having an outstanding balance, it would be seen as more abnormal to have £0 recorded each month, if cleared before the statement date.

Of course, it has a massive influence on the outcome of an affordability assessment, therefore if your overall credit utilization is high, it could deter the lender from putting you into a position of potentially taking on too much credit.

Some areas that lenders focus on:

• Your total credit utilization. To be on the safe side, it would be wise to keep under 25%.
• Late Payments or Missed Payments
• Evidence of Being Overlimit (Statement Balance Higher than Credit Limit)
• Cash Advance or Advance Against Income (Wonga or ATM Withdrawals on Sub-Prime)
• Minimum Payment Status (Some may see this as a positive, to make more interest out of you.)

BoGoF

Cash withdwawals are the exception to the rule.

And the comments about the reported balance are not incorrect......if its nil at the date the credit card company does its monthly run to the CRA then that is what will show on your report.

T-G-C

BoGoF wrote: »

Cash withdwawals are the exception to the rule.

And the comments about the reported balance are not incorrect......if its nil at the date the credit card company does its monthly run to the CRA then that is what will show on your report.

Agreed, some people make this mistake quite often.

The statement date is crucial for different areas of managing the account. For people who take out cash on a regular basis, their statement will never be £0 because of advance interest, but purchases won't do this for them.

20aday

Years ago I encountered financial difficulties so when I started to rebuild my credit history I'd make a purchase on my credit card, wait for it to post to my account, then clear the balance.

It wasn't until I started to use these very forums that I realised I wasn't helping myself at all; it looked like I was never using my card(s) to my lenders and, as such, never saw an increase in terms of credit limits etc.

T-G-C

20aday wrote: »

Years ago I encountered financial difficulties so when I started to rebuild my credit history I'd make a purchase on my credit card, wait for it to post to my account, then clear the balance.

It wasn't until I started to use these very forums that I realized I wasn't helping myself at all; it looked like I was never using my card(s) to my lenders and, as such, never saw an increase in terms of credit limits etc.

I suppose theoretically, the actual lender being used for your mentioned practice, could log and analyse expenditure pattern etc. to determine whether to grant a limit increase. This is irrespective of the statement, as the lender has a transparent view of your account usage.

Other lenders can only see what is reported, which would be null, so it is a different story when applying for credit elsewhere for example.

However, if you never have a statement balance and aren't making them any interest either, I can't see them bothering to increase your credit limit.

I'm not saying that lenders would never increase someone who does this, but someone who does have a statement balance, makes full use of their credit limit and overall demonstrates a decent appreciation of the credit facility would be favored.

datlex

I do a mixture. I don't like my card balance to be too high. I pay the balance off in full each month. However a large payment I will pay off as soon as I can- partly so I know that money has gone.

Craig1981

Ever Since my IVA started 7 years ago, i have done the same thing. started with high rate APR cards to rebuild. When IVA finished and 6 years passed, was accepted for "normal cards" - only got ones with bonuses to get rewards. 99% of the time zero balance at statement date. I have 6 cards now totalling over £20k credit, all with zero balance. most recent card was for air miles as this seems to be the best reward card for me without annual charges (club card card reduced point spending, cashback card now only at 0.5% etc) this started at £4300 limit. My Experian score remains at 949...
have not paid any interest on credit cards now for 7 years
I want to cancel some of the older cards as don't need all of them, but difference in opinions when it comes to closing off old accounts, so reluctant to do so

PixelPound

stevenhp1987 wrote: »

I wouldn't recommend doing this.

If you, your statement balance would be £0 each month which would be reported to the credit agencies. It will look like you're not using the card at all.

Just pay it off in full when the statement is generated. Even better if you setup a Direct Debit to pay it off in full.

It wouldn't be the same as not using it, I assume you have a credit card and have actually looked at that part of credit reports? In addition to statement balances they also report amount paid. This is important to show if using, e.g. if your statement balances show £2000, £1900, £1800 ... and payments to balance show £100 then its clear that its just being paid off and not used. If statement balances are zero but amounts paid vary all the time, then its clear its being used but paid before the statement. A card not being used would also have payments to account as zero.

PixelPound

Craig1981 wrote: »

Ever Since my IVA started 7 years ago, i have done the same thing. started with high rate APR cards to rebuild. When IVA finished and 6 years passed, was accepted for "normal cards" - only got ones with bonuses to get rewards. 99% of the time zero balance at statement date. I have 6 cards now totalling over £20k credit, all with zero balance. most recent card was for air miles as this seems to be the best reward card for me without annual charges (club card card reduced point spending, cashback card now only at 0.5% etc) this started at £4300 limit. My Experian score remains at 949...
have not paid any interest on credit cards now for 7 years
I want to cancel some of the older cards as don't need all of them, but difference in opinions when it comes to closing off old accounts, so reluctant to do so

Is that because you are concerned about your score? 6 cards totaling £20k isn't excessive available credit if all zero (well depends if your wage is less than this or not). Are you using them every few months to stop dormancy clauses being triggered? People have different views on old unused accounts, but I'm sure you have heard them so won't rehash them :rotfl:

System

stevenhp1987 wrote: »

I wouldn't recommend doing this.

If you, your statement balance would be £0 each month which would be reported to the credit agencies. It will look like you're not using the card at all.

Just pay it off in full when the statement is generated. Even better if you setup a Direct Debit to pay it off in full.

This is utter tosh.

The credit report shows the amount that gets transacted each month - even if the statement balance is in credit or zero.

Why would a third party care if you spend £0 or £5000?