Building Credit

bri90bri

So I have just recently applied for and been successful in getting a credit card. The credit limit is £500. Now my whole point in this card is to build my credit over the next few years in the hope of a mortgage application sometime in 2022.
I am looking for any advice and tips on using the card. I know from Martins shows that I should be using the card for purchases I would be buying anyway such as food and household items and then pay the card off IN FULL. My question is when do I pay it in full. I have never had a credit card before so I am unsure how it all works.

[Deleted User]

You pay the full statement balance once you get the statement, before the due date.

PRAISETHESUN

Just make a few purchases every month on the card, typically things you'd buy anyway, and pay off the balance in full once the statement is generated - no interest is paid if you do this. Set up a DD payment so you don't forget. Try to keep your credit utilisation between 0-30% if possible (I know this is difficult with such a low limit - my first card was £200 so I know the pain). If you do this for a few months, slowly but surely your credit file will start to indicate that you manage credit well, and you should start to get credit limit increases and better offers for cards and loans, including your future mortgage.

Anthorn

bri90bri wrote: »

So I have just recently applied for and been successful in getting a credit card. The credit limit is £500. Now my whole point in this card is to build my credit over the next few years in the hope of a mortgage application sometime in 2022.
I am looking for any advice and tips on using the card. I know from Martins shows that I should be using the card for purchases I would be buying anyway such as food and household items and then pay the card off IN FULL. My question is when do I pay it in full. I have never had a credit card before so I am unsure how it all works.

If you read that advice carefully you will find that paying in full every month is related to high interest cards to avoid paying that high interest. Whether that applies to you I don't know because you don't say.

The problem with paying in full depending on the date of your payment and the date the lender reports to the CRA it can appear that you are not using the card because there is never a balance. If you leave a small balance you will pay interest but not a lot and your credit history will look better and show that you are managing your credit.

I don't think a single credit account will build a credit history good enough to get a mortgage. You should look at other forms of credit such as catalogue (JD Williams) and a mobile SIM only rolling monthly contract (iD Mobile). You could already have credit accounts such as water, energy, telephone, etc. Sign up for MSE Credit Club and Clearscore to get your credit reports.

Good luck.

[Deleted User]

Anthorn wrote: »

The problem with paying in full depending on the date of your payment and the date the lender reports to the CRA it can appear that you are not using the card because there is never a balance. If you leave a small balance you will pay interest but not a lot and your credit history will look better and show that you are managing your credit.

As long as you wait for the statement, it will show that you are using the card.

Paying interest on a non promo balance demonstrates that you are struggling if you cannot clear even small amounts.

GibbsRule_No3

I got a low Capital One card a few months ago, I wanted contact less and applied, before finding out I could put the Cashminder card on Apple Pay via my phone, and set up a DD to pay off in full. I just buy something every month. My score (that no doubt I will be told is irrelevant!) has improved. I'd like the card to go higher in future so I can put flights and holidays on it, still paying off IN-Full, CC gives peace of mind that just paying using my Debit card does not.

Don80

bri90bri wrote: »

So I have just recently applied for and been successful in getting a credit card. The credit limit is £500. Now my whole point in this card is to build my credit over the next few years in the hope of a mortgage application sometime in 2022.
I am looking for any advice and tips on using the card. I know from Martins shows that I should be using the card for purchases I would be buying anyway such as food and household items and then pay the card off IN FULL. My question is when do I pay it in full. I have never had a credit card before so I am unsure how it all works.

Hi

You need to wait for a statement before you pay it (this is what gets reported to CRAs). If you set up a direct debit to collect the full amount each month, this should be reported each month. You don't need to do anything. I use a separate account for bills, so when I am paid I transfer money into it for my direct debits so I don't need to worry about leaving enough money in my main account - what's left is mine to spend :-)

In 6 months you may be offered a higher limit, which would be good as £500 isn't a lot for a card. You may also be able to apply for a better card (use MSE Credit Club) which might also give you something back for your spending as well.

:j

Anthorn

Deleted_User wrote: »

As long as you wait for the statement, it will show that you are using the card.

Paying interest on a non promo balance demonstrates that you are struggling if you cannot clear even small amounts.

Not necessarily. As I stated it depends on the date of the payment and the date the lender reports to the CRA: If the lender is reporting as it should it will report on the day that payment is due or a few days after that. Therefore if the balance is paid in full the lender reports a nil balance and continues to report a nil balance for every period after that when the full balance is cleared. In turn, a lender viewing that credit history is likely to conclude that the card is not used and therefore there is no credit to manage.

I don't agree with your second statement: A credit card is believe it or not intended to be used to get credit so any lender should not be surprised if the credit card is used for that purpose.