Pay Credit Cards Early?

loalife222

Hey Peeps,

Just wondering when is best to pay my credit cards off; with relation to optimising my credit score?

I have two credit cards, of which I use to make most of my purchases. I try to spread the overall spending reasonably evenly between the two.

I have both set up to be 'paid in full' automatically on the corresponding billing dates by DD.

Is it best for my credit score to wait until this time, or will it help further to return the balance to zero at several points during the month? Or conversely, will taking this approach negate any potential increases to my score? Or does it make no difference? 🤔

Just a little unclear about this. If I buy something for £100, then settle my card the very next day, will it even be transparent to the referencing agencies that I'm even using my credit utilisation? Or will it just look like I have £5.6k available credit, but I don't use any of it..which could count against me?

Anybody know the facts about this?

TIA

[Deleted User]

Neither is best for your score.

But to demonstrate the best account management, pay off in full once the statement has been generated, and before the due date.

loalife222

Ah ok. So as soon as I receive an email notifying me that my bill has been generated, I should log in and clear it right?

[Deleted User]

Or better, let the full pay DD do the work.

msallen

Just leave it as you have it. That will be best for your credit history.

There'll be a few hundred people along shortly to tell you that your score is meaningless.

loalife222

That's what I'm set up to do. ��

Aother thought that has occurred to me is;

Whenever I view my score on the four Credit Referencing Agency sites I'm signed up to (CALLCREDIT/TRANSUNION via Noddle/Credit Karma, EQUIFAX via Clearscore, EXPERIAN via MSE Credit Club, and MSE CREDIT MONITOR), it shows me my credit limit for each account, and current balance.

Do I always want these balances to show £0, or is there an optimum percentage of your total utilisation that would be a good representative figure for these agencies to see?

Long story short; I've only recently amended my DD to 'pay in full', as I didn't realise I was able to. Was very naïve about that I must admit. If my balances are paid in full by DD each month, as previously discussed, will the balances shown on the 4 agencies always display as £0?

loalife222

Yeah I've read that a few times msallen. But just for clarity, if your score is meaningless, what are creditors looking for in order to grant you credit?

Ultimately, I am trying to set myself up as best as possible to start a mortgage in about 18 months/2 years time. I figured aiming to have each individual score as high as possible for when the time is right.

Surely if my scores were fair at this time, I would be less likely to secure a mortgage than if my scores were excellent, for example?

If I want to apply for a credit card, and each of my individual scores is 'poor', surely I'll be declined?

This has always baffled me. It would be interesting to know the real truth behind all this..

Thanks.

[Deleted User]

When a lender sees your file they will see the statement balance, followed by the payment received for that month - which will then take it down to zero.

Lenders do not look at the CRA generated score - they look at the raw data on your files and compile their own way of "scoring" you for the product that you have applied for and accept or decline you based on that.

People on here have "maximum" scores but are denied a £20 per month phone contract, but people with "average" or even "low" scores get £300-£400k mortgages.

dealer_wins

OP dont worry about credit scores, concentrate on saving and building up funds for lifes expenses, emergencies and luxuries.

Never borrow for anything except your house and you will have a happier and less expensive life than most!

loalife222

Ok, if an excellent score gives you access to the best rates and offers available, for example, how can it be meaningless?

Or is it something else that dictates exactly what rates you are likely to receive?

I understand that affordability plays a large part, as well as your payment history, and any black marks on your report.

But would it not be fair to say that an excellent score encompasses all these individual factors, and is representative of all the aforementioned being in good order?

For example, if you have;
• A clean history
• All payments are up to date
• You have no outstanding debt
• No CCJ's
• Are using a low percentage of your overall utilisation
• Have an excellent affordability rating

..would this not automatically (over time) exhibit an excellent credit score?

[Deleted User]

loalife222 wrote: »

Ok, if an excellent score gives you access to the best rates and offers available, for example, how can it be meaningless?

That's the point. It doesn't, because CRAs don't give loans.

Only the data on your files matter, not a made up number by someone who doesn't understand lending criteria.