Zero interest period and credit utilisation

pyrex

Hello. I'm currently renovating a house and got a credit card with an initial zero interest period to pay for appliances.

If I maxed out the card to take advantage of the interest free period, but made minimum payments each month and paid everything off in full when the zero interest period ended, would that negatively affect my credit rating?

Thanks.

MallyGirl

not that your rating means anything but anyway the answer is no it wouldn't

stevenhp1987

Don't pay the minimum.

Pay the minimum plus £1.

Lenders have to say the payment was a minimum payment or not when reporting it to the credit agencies. Paying £1 more means that the minimum payment flag won't be added and it'll appear more favourable in the future.

PRAISETHESUN

Ignore anything related to your "score" or "rating" as these numbers generated by the CRAs are only visible to you and are not seen by lenders when you submit an application. What matters most is your credit history.

There is nothing wrong with doing as you propose - 0% cards are often used in this way. You need to keep in mind however some stats that are reported to your credit files. Having a high credit utilisation is generally seen as a negative by lenders as it may suggest you are over-reliant on credit to make ends meet. They usually look at your total utilisation as a % used over all cards as well as the per card utilisation. If you have other high limit cards then this is less of an issue since your total overall utilisation is lower (assuming you have no balance on these cards) but if this is your only card then it might be more of an issue. I wouldn't worry however, as it's only one of a multitude of factors that are considered by lenders.

pyrex

Thank you for the advice. I will be sure to pay a bit more than the minimum.

I have a few other cards with very low utilisation rates and pay them in full every month. This looks like it won't be an issue and I can take full advantage of the offer.

Thanks again!

MallyGirl

I have never bothered with 'bit extra' method. At my 'stoozing' height I had over £80k on 0% cards just paying the minimum and I have never had an issue getting cards. I have wound it down now as the great no-fee deals are rarely being offered any more.
The card will be marked as being on a promotional rate so they won't look down on the minimum payments.
Still it is not a huge amount of effort to pay a bit more I suppose - I always just set the DD to minimum payment and forgot about it until the deal was approaching its end date