Credit card usage for building credit history and improving credit score

almanak

I am finding different information regarding the best usage of credit card regarding the above. Is below 10 % better or below 30%?Credit limit of £450.So below 10% it will be only £40-45.Probably it is too small? Any advice?Once I get this limit higher I will not have these doubts.

[Deleted User]

If you're clearing in full, it doesn't matter as long as you don't exceed the limit.

Remember only your history matters, not the score.

almanak

Deleted_User said:

If you're clearing in full, it doesn't matter as long as you don't exceed the limit.

Remember only your history matters, not the score.

I set up the Direct Debit to clear the statement balance each month but why am I finding the info the utilization IS important?

[Deleted User]

Because people confuse a revolving balance with one which is cleared in full.

almanak

Deleted_User said:

Because people confuse a revolving balance with one which is cleared in full.

From
https://www.experian.co.uk/consumer/guides/building-credit.html#:~:text=Only use a small percentage,than £125 on it.

Only use a small percentage of your credit limit. If possible, try to use no more than 25% of your available credit, as a higher balance may reduce your score. So, if you have a credit card limit of £500, try not to spend more than £125 on it.

[Deleted User]

That's from Experian and is about changing your score.

Therefore not relevant to building a good credit history. You need to focus on how lenders view you.

almanak

Deleted_User said:

That's from Experian and is about changing your score.

Therefore not relevant to building a good credit history. You need to focus on how lenders view you.

on both I guess.Do you have any reference so I can verify it that the score is NOT important for getting better and better financial products and after it a mortgage? And the common sense tells me that the way I use credit card, so percentage of usage is part of my credit history as well.

[Deleted User]

If you have a look at the 'What your credit score really means' thread, you'll get the gist.

In a nutshell, because it's made up by the CRA, doesn't reflect risk and isn't seen or used by lenders, it can disregarded.

Your common sense is correct - so follow that instead of the score. Your percentage of usage matters if you can't clear it. If you pay in full, you show lenders that affordability and reliance on credit isn't an issue.

If you limit your usage because if an incorrect concern for your score, you show lenders that you'll cost them too much to service, as they'll earn so little from your transactions.

Choose between impressing a CRA or impressing lenders. But only one group will lend you money.  

almanak

Deleted_User said:

If you have a look at the 'What your credit score really means' thread, you'll get the gist.

In a nutshell, because it's made up by the CRA, doesn't reflect risk and isn't seen or used by lenders, it can disregarded.

Your common sense is correct - so follow that instead of the score. Your percentage of usage matters if you can't clear it. If you pay in full, you show lenders that affordability and reliance on credit isn't an issue.

If you limit your usage because if an incorrect concern for your score, you show lenders that you'll cost them too much to service, as they'll earn so little from your transactions.

Choose between impressing a CRA or impressing lenders. But only one group will lend you money.  

what you write definitely makes sense and this is how I was thinking. But I do not have any proof it works this way and there are a lot of absurdities around us.

mcpitman

Bankrupt people can get a score of 999.

There you go - proof the numbers game with CRA's is nonsense.

MalMonroe

There's a lot of helpful info in the link from this very site here - 

https://www.moneysavingexpert.com/credit-cards/how-do-credit-cards-work/

(You have to click on all the relevant links and it gives you a really good idea of what lenders look for and how to use credit cards wisely).