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Basic Credit Card to build my credit.
moneyworrier2021
Posts: 119 Forumite
in Credit cards
Hi All, I have recently had a bank loan default fall off my credit file and my score has raised slightly as a result. I am incredibly responsible now with money but my credit score reports recommends taking out a credit card to help raise my score further. Down the line I would Like an Amex for the Avios but I know I am not going to get approved for one of them right now by their checker.
Clearscore has recorded some pre-approved and wondered whether it's worth me just going for it. Hopefully have a low limit so I have better utilisation?
I guess there's no harm and as long as I spend and pay off the balances each month, it should help raise my score? If I don't spend on it, does that look bad?
Clearscore has recorded some pre-approved and wondered whether it's worth me just going for it. Hopefully have a low limit so I have better utilisation?
I guess there's no harm and as long as I spend and pay off the balances each month, it should help raise my score? If I don't spend on it, does that look bad?
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Comments
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It'll lower your score. But your score is fictional so it's all good.
Get a card and clear in full. It'll help build history and lenders will view you more positively, even if the CRAs hate you for it.0 -
So long as you manage your spending and pay in full each month your plan seems sound. Some of the more specialist poor history cards used to charge annual fees, avoid any that do (mainstream providers like Lloyds tend not to unless its part of a rewards package deal). Not spending on a card isn’t the end of the world but the provider may close it down/reduce your limit, also it can be perceived as a risk when applying for other credit (in whatever form) as you will have that credit sitting there at your disposal. I have one card that has had zero balance for several years, doesn’t seem to cause me any problems though my credit history is good (I keep it because it lowers my overall credit utilisation).0
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I will pay it off in full each month, but I assume that if its a card with 0% on purchases for 17 months that it's not required to be paid in full?0
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It's not required from an interest point of view, but it is from a credit building point of view.
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MorningcoffeeIV said:It's not required from an interest point of view, but it is from a credit building point of view.
That's not definitive - different lenders will have differing appetites for customers who carry a balance month to month. This is one reason why the whole 'score' business is meaningless.
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To be fair it doesn’t matter which actual credit card you get to build a positive credit history - it’s how you use it and manage it that counts. Your score isn’t important. Your limits initially might be lower if it’s your first card - but some providers give indicated limits on their eligibility checkers. Try the checkers directly on the card websites - not on comparison pages.Some that spring to mind that offer indicated limits are:
lloyds
mbna
halifax
nationwide
john Lewis
Asda
There are others too.Whichever offers the higher indicated limit - and they say you’re likely to get it - go for it. (But only go for 1)The final limit may be different to the indicated limit - but likely won’t be far off.If none of those that give indicative limits say yes on the eligibility checkers - move on to the eligibility checkers of vanquis, Aqua and capital one - the traditional credit builder cards. The interest rates will be extortionate - but as you’ll be paying in full every month - you won’t pay interest.Then once you’ve got it - don’t spend more than 25 percent of the limit each month - and pay off in full by direct debit.0 -
moneyworrier2021 said:I will pay it off in full each month, but I assume that if its a card with 0% on purchases for 17 months that it's not required to be paid in full?
Pay a little more than minimum payments and you'll be fine.moneyworrier2021 said:Hopefully have a low limit so I have better utilisation????The lower the limit, the higher (worse) the utilisation.That said, (available credit)/(income) ratio is another important factor, and higher credit limit makes it worse. However, the limit has to be really high for this to happen.
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