How to use credit card properly to improve credit score

Brie

what the official credit reports show to creditors who bother to look at them is how much credit you have available (so £600), how much you owe after making whatever payment(s) (so pay it all and it will show a zero balance, aka nothing is owed)

And there will be a nice little traffic light type thing showing that the card is green (great as paid in full or at least the minimum), yellow (might have missed a month) or red (oops, we got a problem!!).  You want your card to always be green.  And that if you are carrying a balance one month to the next that it is going down rather than up.  If your's was showing at green and you always had £30 balance carried forward each month they might question this. 

So best to have the card, use it for a couple of small purchases and have it set up to be paid in full by direct debit each month.

Froggy8

Just had another read on my credit card details, it say interest free for the first 56 days so anything after that will incur interest. I will pay all in one month but if I have any issue at all then I could pay the rest on the second month provided it won't go past the 56 days.

MorningcoffeeIV

Froggy8 said:

Just had another read on my credit card details, it say interest free for the first 56 days so anything after that will incur interest. I will pay all in one month but if I have any issue at all then I could pay the rest on the second month provided it won't go past the 56 days.

No 

You need to pay the statement balance in full to avoid interest.

The 56 days is the absolute maximum possible time - ie from purchase to payment date.

It would be worth reading the terms in full to really get your head around how it works and ask questions of you don't understand anything. I fear you're going to come unstuck if you don't.

Martico

Yep - it's up to 56 days. 
Imagine your statement date is always on the 17th of the month, and repayment date is always on the 12th.
If you buy something on the 18th June, it will appear on the statement on the 17th July, and you'll have until 12th August to pay it.
If you buy something on the 16th June, it will appear on the statement on the 17th June, and you'll have until 12th July to pay it.

km1500

if you don't pay the statement balance off in full then they will charge you interest on the whole amount from the date you spent it

so for example if your statement balance is £150 and you pay off £149 you will then be charged interest on the full £150 worth of spending and not on only £1 worth of spending as you might expect

This is why you must pay in full each month

th081

Froggy8 said:

Just had another read on my credit card details, it say interest free for the first 56 days so anything after that will incur interest. I will pay all in one month but if I have any issue at all then I could pay the rest on the second month provided it won't go past the 56 days.

Froggy8, 

I would suggest staying away from credit cards completely - they are for people who don't need them - it sounds like you will struggle and will soon be paying interest which is a terrible spiral. 

Imagine you are thinking of lending money not from a credit card company but a loan shark from down your road, who will cause you physical pain if you can't pay him back.

 Credit card companies are legal loan sharks (although some on here play them well).

 Just as you would do everything to avoid the loan shark do everything to avoid credit card companies because while they will not get physical they are just as ruthless as the loan shark.

Stay away if at all possible and if not approach with the trepidation you would with the loan shark. 

th081

And as to your question how to build your credit profile:

Save money
Buy things after you have saved for them
Have some savings
Get a better paying job to do the above better and more

You will then find credit card companies will throw cards at you to try to get you into debt and take your money bit by bit through interest 

MrFrugalFever

To keep things simple for someone who appears inexperienced or new to credit card usage;

- spend only what you can afford
- when the statement comes in, pay it in full via bank transfer
- set up a Direct debit to pay in full if you think there’s any chance you may miss a payment if you can’t adhere to the above point

If the above can’t be done, close the credit card account until such point as your financial situation improves or you have grasped the concept of them.

Unfortunately, like a lot of people on here, I learnt the hard way! I carried huge balances and paid eye watering amounts of interest that in hindsight literally makes me shudder at the thought of how much money I’ve lost to interest payments over the years! In fact, it got so bad at one point that I was paying credit with credit until the point came where finally I had to just hold my hands up and say ‘I can’t do this anymore’ and I then entered in to an IVA which is a form of bankruptcy. 

Good luck with whatever you decide to do.

lr1277

This might be stating the obvious but here goes. Many people have said only spend what you can afford. How do you know what you can afford?

Well you could/should create a budget. Examples can be found on the Reducing Debt and increasing income board. On there is a Debt Free wannabe sub-board. On there are people who have got into unpayable debt and are encouraged to create a Statement Of Affairs (SOA). This is like a budget. There are many examples on that sub-board.

Create an SOA/budget that ensures you spend less than you earn. Then use those figures to decide if you can afford something before deciding whether to pay by credit card or another method.
HTH