Increasing my score via paying card off in full - question re this

Legacy_user

So essentially, I should set up a direct debit for the full amount and just spend my outgoings (ie petrol, food) then clear the full amount via direct debit.

I know it sounds simple, but my question is: if they report before the repayment date, won’t my credit show as an outstanding balance therefore decrease not increase? Or to fix that, is it better to pay the balance off in the middle of the month (ie the 15th?)

Willing2Learn

The statement balance is reported to the CRA as well as the payment history. DD the full balance each month demonstrates to lenders an ability to manage your credit.

Don't worry about your score, as lenders neither see it nor use it. Just focus on building a solid history of successful credit account management. And make sure you are on the ER.

System

Perfect, I will do that starting tomorrow with petrol then

sleepyjones

Just out of curiosity ... does it look better if you have a Direct Debit over manual payments?

Generally I don't like Direct Debits because I'm self employed, so there's always a chance of not having the free cash on Direct Debit day. So I just setup the minimum payment on Direct Debit and always pay off the balance before that date. So, I probably could just change the DD to be the full amount, but I'd rather not unless there's a benefit to doing that?

Paid in full is paid in full, it doesn't matter how that payment was made?
You don't get bonus kudos for having a Full Amount direct debit over a minimum payment if it's being paid in full anyway?

boo_star

sleepyjones wrote: »

Just out of curiosity ... does it look better if you have a Direct Debit over manual payments?

Generally I don't like Direct Debits because I'm self employed, so there's always a chance of not having the free cash on Direct Debit day. So I just setup the minimum payment on Direct Debit and always pay off the balance before that date. So, I probably could just change the DD to be the full amount, but I'd rather not unless there's a benefit to doing that?

Paid in full is paid in full, it doesn't matter how that payment was made?
You don't get bonus kudos for having a Full Amount direct debit over a minimum payment if it's being paid in full anyway?

How you pay isn't reported to the CRAs so it makes no difference.

DCFC79

sleepyjones wrote: »

Just out of curiosity ... does it look better if you have a Direct Debit over manual payments?

Generally I don't like Direct Debits because I'm self employed, so there's always a chance of not having the free cash on Direct Debit day. So I just setup the minimum payment on Direct Debit and always pay off the balance before that date. So, I probably could just change the DD to be the full amount, but I'd rather not unless there's a benefit to doing that?

Paid in full is paid in full, it doesn't matter how that payment was made?
You don't get bonus kudos for having a Full Amount direct debit over a minimum payment if it's being paid in full anyway?

Maybe you should have an amount to cover any direct debits if your self employed pay is late or not enough.

OR

A second account for DD's and you transfer x amount across to cover the DD's.

sleepyjones

Yeah but the issue is I won't always have the cash to transfer over.

It's going pretty good at the moment so isn't really a problem, but in the first couple of years I could go months with no income so there's always a concern that, for whatever reason, I don't get any work for a few months.
I'm trying to get a "nest-egg" to cover for these periods and get some savings again, so that would be an option, but for the last few years everything pretty much goes back into the business.

boo_star

sleepyjones wrote: »

Yeah but the issue is I won't always have the cash to transfer over.

It's going pretty good at the moment so isn't really a problem, but in the first couple of years I could go months with no income so there's always a concern that, for whatever reason, I don't get any work for a few months.
I'm trying to get a "nest-egg" to cover for these periods and get some savings again, so that would be an option, but for the last few years everything pretty much goes back into the business.

How you pay is irrelevant.

CakeCrusader

It depends on when your credit card company reports to the CRA to be honest. I tried this with Barclaycard, they report just before I clear the card off so it constantly looks as though I haven't cleared it off (it does stay in the payment bit though).

phillw

sleepyjones wrote: »

Just out of curiosity ... does it look better if you have a Direct Debit over manual payments?

The DD is better because if it fails to go through then it's up to the banks to sort it out. If you forget to pay on time, or there is a bank failure which means your manual payment doesn't go through then it'll be harder to argue. Using debit cards, especially when there is a bank holiday, can easily end up missing the payment by accident (although it might be slightly better now than when I used to do it).

sleepyjones wrote: »

You don't get bonus kudos for having a Full Amount direct debit over a minimum payment if it's being paid in full anyway?

Other than potentially longer earning interest in your account (aa credit card takes the direct debit a week later than the payment is actually due) and no chance of paying exorbitant interest no.