Is it better to stay in credit or pay off in full to improve credit score? (0% card)

My credit score is currently above 700. 

I recently took out a credit card for my groceries with a limit of £500 (0% for 12 months) Each time I spend on the card, I move money from my debit account to an easy access savings.

To improve my credit score in the long term should I:

a) Pay off in full each month 
b) Pay minimum repayment each month

Also, would there be a difference if I held £500 credit for 12 months and paid in full at the end compared to maxing out at £500 each month and paying in full each month?


Main goal is to increase score

Comments

  • simax
    simax Posts: 1,944
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    edited 3 January at 10:49AM
    Best thing to do is put the money aside in the highest interest paying instant access account you can find, then once the credit card statement is produced - AND NOT BEFORE, pay off the balance in full from the savings pot. That’s the best way to improve your score, but it may not change for many months, but keep at it.
    I spent 25 years in the mobile industry, from 1994 to 2019. Worked for indies as well as the big networks, in their stores also in contact centres. I also hold a degree in telecoms engineering so I like to think I know what I’m talking about 😂
  • Mark_d
    Mark_d Posts: 262
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    My credit score is currently above 700. 

    I recently took out a credit card for my groceries with a limit of £500 (0% for 12 months) Each time I spend on the card, I move money from my debit account to an easy access savings.

    To improve my credit score in the long term should I:

    a) Pay off in full each month 
    b) Pay minimum repayment each month

    Also, would there be a difference if I held £500 credit for 12 months and paid in full at the end compared to maxing out at £500 each month and paying in full each month?


    Main goal is to increase score

    Your credit card is certainly 0% for purchases rather than 0% for balance transfers?
    Assuming the former, the best way to build your credit record is to pay the minimum each month.  It is important that you don't miss a single payment, so I'd suggest a direct debit is the way to go.
    The reason for paying the minimum rather than the full balance each month is because lenders will see that there's the potential to make money out of you when you're not on a 0% deal.

  • Mark_d said:
    My credit score is currently above 700. 

    I recently took out a credit card for my groceries with a limit of £500 (0% for 12 months) Each time I spend on the card, I move money from my debit account to an easy access savings.

    To improve my credit score in the long term should I:

    a) Pay off in full each month 
    b) Pay minimum repayment each month

    Also, would there be a difference if I held £500 credit for 12 months and paid in full at the end compared to maxing out at £500 each month and paying in full each month?


    Main goal is to increase score

    Your credit card is certainly 0% for purchases rather than 0% for balance transfers?
    Assuming the former, the best way to build your credit record is to pay the minimum each month.  It is important that you don't miss a single payment, so I'd suggest a direct debit is the way to go.
    The reason for paying the minimum rather than the full balance each month is because lenders will see that there's the potential to make money out of you when you're not on a 0% deal.


    Yeah it's 0% purchases for 12 months 

    I'll do DD minimum payments then and stooze the £500 until December :) 
    thanks.
  • Desmond_Hume
    Desmond_Hume Posts: 69
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    It’s not a goal I’d be focussing on.  Just pay off in full each month. 

    There is plenty content on this site that explains why the credit score itself is meaningless. 
  • Nasqueron
    Nasqueron Posts: 8,311
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    The credit score is a gimmick, please ignore it

    You need to build a history of good credit management - a 0% card has some benefit but it's on a promo rate so it's a bit different - paying it monthly on time is a good idea (always do more than the minimum) as it will help your record but the best way to build credit is a credit card paid in full monthly (in addition to the BT card), a monthly phone contract, being on the electoral register etc

    Again though, the score is a waste of time, no lender ever sees it and it's never a factor in decisions on lending 
  • WillPS
    WillPS Posts: 3,026
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    simax said:
    Best thing to do is put the money aside in the highest interest paying instant access account you can find, then once the credit card statement is produced - AND NOT BEFORE, pay off the balance in full from the savings pot. That’s the best way to improve your score, but it may not change for many months, but keep at it.

    If you pay your balance off very soon after a statement is produced there's a non-zero chance that the balance reported to credit reference agencies will not include the statement balance. Better in my view to pay in full either by DD or min payment by DD (for safety) + manual payment a few days before.
  • born_again
    born_again Posts: 13,565
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    My credit score is currently above 700. 

    I recently took out a credit card for my groceries with a limit of £500 (0% for 12 months) Each time I spend on the card, I move money from my debit account to an easy access savings.

    To improve my credit score in the long term should I:

    a) Pay off in full each month 
    b) Pay minimum repayment each month

    Also, would there be a difference if I held £500 credit for 12 months and paid in full at the end compared to maxing out at £500 each month and paying in full each month?


    Main goal is to increase score
    Stop wasting time thinking about that made up score. No lender see's it. They look at credit history & other factors.

    Paying min each month ( set up DD) would give you the greatest return on interest given you are putting spending into a savings account.
    Although with a £500 limit you will soon reach it (at a guess) & have to pay more to be able to spend.

    Just remember to pay it off before the 0% deal ends, or you will wipe out any profit from interest.


    Life in the slow lane
  • MEM62
    MEM62 Posts: 4,664
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    There is no sense in trying influence what is basically a number produced for entertainment purposes only.   
    To improve my credit score in the long term should I:

    a) Pay off in full each month 
    b) Pay minimum repayment each month

    Pay in full once you have received your monthly statement to avoid interest.  The impact on the number that a CRA is trying to convince you is your 'score' is irrelevant.      
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