Multiple Credit Cards and your Credit Rating

jasonwatkins

I wasn't planning on applying for another Credit Card so soon but I did, and I was approved so I now somehow have 4 - Aqua, Wave, Bip and now Marbles.

Is there any kind of school of thought on how to maximise the use of this situation to really improve my credit rating ?.   I know for many it's "just a number" but I'm assuming my number has improved to the point where I've been able to gain these 4 cards (although Bip, to be fair, is app-only).

I've read a few times that one way is to use the card(s) for small purchases and pay off the balance in full each month, but then I've also read that it's also worth making the odd "big" purchase and then paying that off over a couple of months as well.

Or could it be a bit of both ?.  

Any thoughts would be most welcome, thankyou

AntoMac

Things like long time at current address, being registered to vote, paying bills on time, having plenty of unused credit available, having no defaults or CCJs and having long established accounts will count in your favour. I monitor mine not for the score, but just to check there’s nothing funny or dodgy going on in my name. I have just over 3,200 pounds worth of 0 per cent Balance Transfers outstanding on mine, which doesn’t seem to be viewed as a problem.

sourcrates

Way overthinking things here, use the card as you wish, or don`t use the card, makes no difference to the price of fish, paying off in full every month ensures you won`t pay any interest, otherwise, don`t delve too deeply into things, the "credit rating" you refer to, is a number only you see, and isn`t used by any lender.

The post above is good common sense advice, also, your somewhat blaise attitude towards creditcards needs to be tempered somehow, applying for credit on a whim can lead to all kinds of debt problems, just be watchful.

eskbanker

jasonwatkins said:

I now somehow have 4 - Aqua, Wave, Bip and now Marbles

If you use them sensibly (as described above) then you may eventually qualify for grown-up cards that don't sound like the cast list of a CBeebies show....

Or, to be a bit less facetious, what do you anticipate doing with your improved 'credit rating', i.e. what's the end game?

jasonwatkins

eskbanker said:

jasonwatkins said:

I now somehow have 4 - Aqua, Wave, Bip and now Marbles

If you use them sensibly (as described above) then you may eventually qualify for grown-up cards that don't sound like the cast list of a CBeebies show....

Or, to be a bit less facetious, what do you anticipate doing with your improved 'credit rating', i.e. what's the end game?

That genuinely made me laugh out loud .  I can almost hear the theme tune and see the brightly coloured costumes ..

You ask an excellent question though, one which I'm not really sure I have an answer for.   I've had defaults, at least one CCJ and a debt relief order over the past 20 years so my credit history and overall approach to money over the years has been pretty poor, but there are reasons behind that that I'm not about to share.

That situation has greatly improved over the past 5-10 years though and my overall money management nowadays is pretty good so I think I'd maybe like to ultimately qualify for one of the 'grown up' cards in the end with a more reasonable APR.

Sandtree

As you've said, the number is meaningless but instead they look at the history. Are you trusted by other banks? Can you manage having credit? Do you pay debts back?

There is one balancing point though... could you still afford everything if life took a bad turn for a month or two?

Showing you have the cards, use them and pay things off is all good. The fact that APRs may be in the sub-prime space may count a little against you, lenders would clearly prefer to see that prime lenders are trusting you not just those with eyewatering interest etc

jasonwatkins

Sandtree said:

As you've said, the number is meaningless but instead they look at the history. Are you trusted by other banks? Can you manage having credit? Do you pay debts back?

There is one balancing point though... could you still afford everything if life took a bad turn for a month or two?

Showing you have the cards, use them and pay things off is all good. The fact that APRs may be in the sub-prime space may count a little against you, lenders would clearly prefer to see that prime lenders are trusting you not just those with eyewatering interest etc

For a long time, saving was my one major weakness but at the moment I do actually have enough saved up so that any curveballs life might want to throw could be dealt with for a few months at least.

I'm someone who actively switches providers on a regular basis to keep my overall monthly costs down as well.   Obviously like many at the moment, the energy bills are the main problem.   If I was paying the rates that I was a few years ago, my total monthly outlay for phones, internet and the streaming services I use would be around the £80 mark.

I might look at one of the "proper" cards sometime in the next year or two maybe.   If I can work out a plan to utilise each of these cards sensibly then it might put me in a better position to apply for one.

Sandtree

jasonwatkins said:
For a long time, saving was my one major weakness but at the moment I do actually have enough saved up so that any curveballs life might want to throw could be dealt with for a few months at least.

Savings don't get reported to CRAs and therefore what they will be thinking about is more if you had to max out some of your cards, could you still afford to service that debt plus whatever lending they are considering give you.

cymruchris

Unless there's an emergency, and you can't, always pay in full each and every month forever. That builds a positive credit history. Paying for things over a few months incurring interest says 'I haven't quite got enough money to pay for everything' - or that's how the data could be interpreted. Use your cards for your daily usual purchases - pay in full every month. Simple  

jasonwatkins

cymruchris said:

Unless there's an emergency, and you can't, always pay in full each and every month forever. That builds a positive credit history. Paying for things over a few months incurring interest says 'I haven't quite got enough money to pay for everything' - or that's how the data could be interpreted. Use your cards for your daily usual purchases - pay in full every month. Simple  

Thankyou.   This is certainly what I'm thinking about doing.   

To be fair, I don't yet know what my limit will be with this Marbles card but if it's more than either of my two lower limit cards then I could even close one of those I suppose.

It's a silly first world problem I guess I never thought I'd have

Ebe_Scrooge

jasonwatkins said:

I've read a few times that one way is to use the card(s) for small purchases and pay off the balance in full each month

Correct - this is the simplest way of building up a solid credit history, and will cost you nothing (assuming you're using a "standard" card that doesn't charge an annual fee).

jasonwatkins said:

but then I've also read that it's also worth making the odd "big" purchase and then paying that off over a couple of months as well.

Wrong - very wrong.  Wherever you read that, I'd stop taking their advice from now on.  As noted by the previous poster, you should never intentionally carry a balance on a credit card.  First, it'll cost you in terms of the interest you'll be charged.  Second, it can easily be interpreted as a sign that you've borrowed more than you can afford.  OK, if it's an occasional occurrence, it probably won't do that much harm to your credit history - but it's definitely a negative mark (albeit a small one) rather than a positive.

Yes, there may be times when it can be handy.  Say for instance your washing machine goes kaput and you need a new one ASAP.  You can afford to get one and pay it off over 2 months, but it's too much to afford in one lump sum.  In that case, it makes sense to use a credit card and take the hit on the interest.  Very occasional "use of the credit facility", as it were, such as this is OK.  As long as it it very occasional, and it's planned and budgeted for, and you know it really is only going to be for a month or two.

But in terms of doing it deliberately with the intention of somehow improving your history - no.