Credit card and credit file question

rintyrad

I have a vanquis credit card with a £150 credit limit which i use for around 60 pounds between 1st of each month and then the 25th of each month to show i am using it. i then pay this off on pay day which is the 25th. this means there is never anything for me to pay when the statement comes through.

I've recently got an MBNA card with a £1500 limit as my credit worthiness has improved. i was going to do the same as the above.

my question is - am i using these cards correctly. should i be paying them before the statement so that my credit file always show them as having a 0 balance. or should i be waiting for the statement to happen?

Ebe_Scrooge

If you're trying to create a good credit history then you need to wait until the statement arrives then pay it off in full before the "payment due" date (you won't pay any interest if you always pay in full before the due date). If you pay the balance off before the statement is produced, it will appear to the CRAs that you're not using the card. This is no problem in itself, but you're not building up a history of responsible borrowing and repayment, which future lenders like to see.

[Deleted User]

You need to pay it after getting the statement otherwise it looks as though you are not using - in which case you might as well not have it.

rintyrad

ok so spend less than 25 % await the statement - pay it off in full, and then it will be reported as a balance that i owe each month on my credit report?

[Deleted User]

rintyrad wrote: »

ok so spend less than 25 % await the statement - pay it off in full,

Or more than 25%.

It doesn't matter on a low limit card, especially where you're clearing in full.

[Deleted User]

Spend as much as you want or need to so long as it can be repaid in full each month

I'm assuming you're getting "25%" from the "advice" the CRA's give about credit utilisation?

SlovakianGuy

!!! wrote: »

Spend as much as you want or need to so long as it can be repaid in full each month

I'm assuming you're getting "25%" from the "advice" the CRA's give about credit utilisation?

This advice actually appears almost everywhere, on various blogs and youtube "credit gurus".

I just typed "credit utilisation ratio myth" into my search engine. I'm going to read some articles on it.

[Deleted User]

Yes.

Because these blogs and “guru’s” get it from the CRA sites or are paid/advised by the CRA’s to use such terms.

System

Credit utilisation is a real thing and lenders will look at it. However at £250 it won't make a bit of difference. Where it does matter is if you have say 70k of available credit and are sitting with around 68k of useage. That's a real problem because it looks like you are applying for more credit to feed the beast of your debt. So, as a rule of thumb lower is better. It's not a myth.

[Deleted User]

If you’re paying in full each month then it matters not.
And will be reflected on your reports