Building credit score - best way

motinter

Is there a best way to use a credit card to improve your credit score?  In terms of:

1. Credit utilisation 
2. Paying it off - pay it off in full every month?  What happens if you leave say £50 on there per month?
3. Is it wise to have two credit cards set up - with low credit utilsation?

[Deleted User]

There's a best way to use it to build credit history.  It will lower your score, but that's ok. 

Use the card and clear in full each month. Repeat.

If you leave £50 on there each month, you tell lenders you live beyond your means and should not be offered any more credit.

[Deleted User]

Leaving a balance on your card means you pay interest for no reason (on the whole balance, not just the £50) and indicates you can't afford to pay it off in full every month

jbrassy

The best thing you can do is pay off your balance in full every month. 

I wouldn't worry too much about credit utilisation to begin with. You'll probably get a low limit, but if you keep paying off in full then:
a) The limit with your current provider will likely go up;
b) Your credit history will improve allowing you to apply for better cards with much higher limits. 

My first credit card was a Capital One which had a £1000 limit. I spent close to that every month, but they increased my limit after 6 months to £1500. Then after 12-18 months I applied for an American Express which had a limit of £7500 which has subsequently increased over time. Therefore, while my credit utilisation rate was very high to begin with, as my credit history improved, lenders looked at me more favourably and I was able to bring it down. 

PRAISETHESUN

There's absolutely no need to pay to improve your credit history. Just use your CC to make a few monthly purchases, allow a statement to be generated and then pay the balance off in full. Do this for 6-12 months and you will slowly notice that you become eligible for more mainstream products. Utilisation is mostly relevant if you pay your balance in full every month - it only really matters if you don't pay off in full every month.