Getting First Credit Card w/ No Prev. Debt

Robin_TBW

Hi all,


Just looking for a little guidance from you all who know more than me, my family, etc.


I've never had a credit card before, it's something that honestly, kind of scares me a bit because I've never needed one.


I've never used my overdraft, never defaulted any payments, only ever rented, paid for my previous cars in full and upfront, just never needed it.


Now I apparently HAVE TO have one because they're great for credit ratings blah blah blah etc. etc. etc. [EDIT// want to buy a property in 2020]


When I get one I'd just use it for every day purchases which will be travel and food and nothing else really. I'd like to get home at the end of the day and pay the balance right back off again on the same day.


Any guidance would be great.

Ben8282

If you have never had credit and have no wish to obtain credit, the please explain why you are concerned about credit ratings blah blah blah etc. etc. etc.

Robin_TBW wrote: »

. I'd like to get home at the end of the day and pay the balance right back off again on the same day.
.

In that case there really would be very little point in having a credit card. Just carry on as you are.

Robin_TBW

Ben8282 wrote: »

If you have never had credit and have no wish to obtain credit, the please explain why you are concerned about credit ratings blah blah blah etc. etc. etc.


In that case there really would be very little point in having a credit card. Just carry on as you are.

I'd like to purchase a house/flat.

BoGoF

It is your credit history you want to improve not a credit rating.

However if you were to get a credit card then paying what you have spent when you get home isn't going to do that. You need to wait till the statement is produced then pay it off.

If you don't trust yourself to do that then don't get a card.

Willing2Learn

Robin_TBW wrote: »

I've never had a credit card before, it's something that honestly, kind of scares me a bit because I've never needed one.

Apply for a card from the bank you have your salary paid into. Then use the card for things that are in your monthly budget (groceries, travel etc) and then pay off the statemented balance in full each month. That way a potential mortgage lender will be able to see that you can manage credit successfully.

Don't use your overdraft though as it can look as though you are living beyond your means.

Robin_TBW

BoGoF wrote: »

It is your credit history you want to improve not a credit rating.

However if you were to get a credit card then paying what you have spent when you get home isn't going to do that. You need to wait till the statement is produced then pay it off.

If you don't trust yourself to do that then don't get a card.

It's not that I don't trust myself, I just don't like the idea of borrowing money and something going wrong, a statement not turning up, etc. etc.

Interesting to hear that you need to wait for the statement to be produced first though, that's something I didn't realise.

What other things can help a credit history, as opposed to credit rating then? New house buyers tend to hear from people that they always need a good rating but what's the difference?

Willing2Learn wrote: »

Apply for a card from the bank you have your salary paid into. Then use the card for things that are in your monthly budget (groceries, travel etc) and then pay off the statemented balance in full each month. That way a potential mortgage lender will be able to see that you can manage credit successfully.

Don't use your overdraft though as it can look as though you are living beyond your means.

I have thought about getting it with the same bank just so they're both on the same application on my phone/laptop. Within this does a credit card show you what you've spent quickly like a regular bank account though or does it not show you what you've spent until the balance is due?

No worries on the overdraft though. Never used it and never plan to. It's always just led there unused.

Ben8282

Ah yes. The usual reason.
Presumably you do have some sort of credit, something on your credit files. A contract mobile phone. Utility bills. Certainly if your bank account has an overdraft facility it will be being reported.
You state that you have never defaulted any payments so this implies that in the past you have actually been making payments, so I am guessing you must have had some credit of some kind.
Having a credit card is by no means obligatory in order to apply for a mortgage.
Personally, I have used credit/charge cards all my adult life and appreciate their benefits. Of course, in the days when I obtained my first credit card most people had never even heard of credit reports etc so that was not a factor in my decision to start using them.
if you want to obtain a credit card, then you could possibly start with the bank where you maintain the current account with the overdraft facility that you never use and into which your income is presumably paid.
Alternatively, you could apply to one of the issuers of poor credit/credit builder cards. Vanquis is supposedly very easy to get.
When you get the credit card, use it sensibly. Don't get into debt. use it for your day to day spending, set up a direct debit to repay in full every month, keep the money that you would otherwise have spent in the bank to help maintain a healthy balance and hopefully earn you a little bit of interest. Keep a proper record of your spending.
The suggestion of repaying immediately is foolish. Treat it as any other account for which you receive a monthly bill. For example, assuming you don't have a prepay electricity meter, you wouldn't estimate your daily electricity use and make a payment to cover it to the electricity company on a daily basis. You would wait until you got your monthly bill which you would then pay. Do the same with the credit card.

Willing2Learn

Robin_TBW wrote: »

... I have thought about getting it with the same bank just so they're both on the same application on my phone/laptop. Within this does a credit card show you what you've spent quickly like a regular bank account though or does it not show you what you've spent until the balance is due?

Transactions usually appear as pending on the same day or the following day. It is up to you to keep track of your credit card spending. That was why I said about monthly groceries and monthly travel costs. By only spending on those things, it should mitigate the possibility of an overspend on credit.

Ben8282

Robin_TBW wrote: »

I something going wrong, a statement not turning up, etc. etc.

Not a worry these days now that we have internet banking and online statements. Anyway, if you set up a direct debit to pay each month then even the remote possibility of your somehow not seeing the statement will not be a problem so long as you have money in your bank account.

Willing2Learn

Since you are asking about your credit score, then you need to be aware that most typical lenders never see and never use your 'credit score'. For instance, a potential mortgage lender, (from let's say a high street bank), scores you against their independent criteria and policies, using the data held in your credit file(s), added to the data you submit in your credit application, added to the data they may already hold on you as an existing or returning customer.


I think you get my drift. It is all about the data and nothing to do with your 'credit score'.

Robin_TBW

Ben8282 wrote: »

Presumably you do have some sort of credit, something on your credit files. A contract mobile phone. Utility bills. Certainly if your bank account has an overdraft facility it will be being reported. You state that you have never defaulted any payments so this implies that in the past you have actually been making payments, so I am guessing you must have had some credit of some kind.

The suggestion of repaying immediately is foolish. Treat it as any other account for which you receive a monthly bill. For example, assuming you don't have a prepay electricity meter, you wouldn't estimate your daily electricity use and make a payment to cover it to the electricity company on a daily basis. You would wait until you got your monthly bill which you would then pay. Do the same with the credit card.

In regards to utility bills, would any of these payments be effected by the fact that they're in joint names at all? I was previously sharing a property with a friend and some of these were in joint names.

I guess that ultimately, I'm used to the idea of using a service and paying for that service at the end of a certain period but just not at all used to outright borrowing money for daily purchases so it's something I'm more uncomfortable with.