We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

Best way to pay

Options
Hi,

So I want to use my credit card to build better credit. I was thinking about getting a credit card setting a budget of a small manageable amount, say like £200 used it for everything and then clearing the balance every month. 

However, I told someone this plan and they seemed to think that this wasn’t a good idea and it was good to run a small balance on the card month to month to improve my credit utilisation ratio. 

So my question is, which is the best way? My plan or carrying a small budget over month to month, bearing in my mind my goal is just to improve my credit score.

Comments

  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    Just put your regular spend on it and clear in full each month. 

    Don't worry about either utilisation or credit scores.
  • Never pay a penny in interest if you can avoid it.
    Doing what zx81 said will be the best way forward.
  • penners324
    penners324 Posts: 3,511 Forumite
    Sixth Anniversary 1,000 Posts Name Dropper
    Whoever told you to keep a balance on a credit card is a fool. They're paying unnecessary interest to the credit card company 
  • MinuteNoodles
    MinuteNoodles Posts: 1,176 Forumite
    1,000 Posts Name Dropper
    dopo112 said:
    However, I told someone this plan and they seemed to think that this wasn’t a good idea and it was good to run a small balance on the card month to month to improve my credit utilisation ratio. 

    So my question is, which is the best way? My plan or carrying a small budget over month to month, bearing in my mind my goal is just to improve my credit score.
    They don't know what they're talking about, don't listen to them.
    Do some normal monthly spending on it, set up the direct debit to clear the balance in full every month. That way you'll build up some credit history without having to pay interest. If you'd listened to that someone you'd end up paying interest you don't have to for no additional benefit.

  • RobM99
    RobM99 Posts: 2,706 Forumite
    Eighth Anniversary 1,000 Posts Photogenic Name Dropper
    Whoever told you to keep a balance on a credit card is a fool. They're paying unnecessary interest to the credit card company 
    Exactly this. Be a customer CC companies don't like!
    Now a gainfully employed bassist again - WooHoo!
  • PRAISETHESUN
    PRAISETHESUN Posts: 4,864 Forumite
    Sixth Anniversary 1,000 Posts Photogenic Name Dropper
    There's absolutely no need to pay to build credit history - be it through credit building products or paying a balance on a high interest credit card. Do as discussed above - get a card and use it to make some of your regular, budgeted spending each month and pay it off in full (set up a DD so you can't forget) once the statement has been generated. 

    And as above - ignore your score or utilisation ratios. The main focus is to demonstrate that you can manage credit responsibly.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 350.9K Banking & Borrowing
  • 253.1K Reduce Debt & Boost Income
  • 453.5K Spending & Discounts
  • 243.9K Work, Benefits & Business
  • 598.8K Mortgages, Homes & Bills
  • 176.9K Life & Family
  • 257.2K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.