Did I get the right credit card?

Z321

Hi,
New to credit cards, I got my first one 2 months ago with Capital One with a £1,500 credit limit. I originally got it as a "credit builder" card as I was just following suggestions that I'd seen online but it feels like the wrong decision. There are no benefits on it whatsoever, no cashback or points etc. and the credit limit is a little low since I'm staying below the 30% threshold.

When I applied for the credit builder card my ClearScore credit score was about 450 (It was 650 until a car insurance loan account changed to closed status) and that had me thinking that I'd need to get a credit card to build it back up, and it has worked, I'm up to 573 as of today. Experian said my score was 910 (I heard ClearScore is harsher) and it's now at 861 after a hard search for the Capital One card.

So, my question is, should I apply for a new one with a higher credit limit and cashback? (I'm thinking Santander Edge presumed £4,600 limit, since I already bank with Santander, please do recommend any options).

Thanks in advance, do tell me if I'm being an idiot, new to this stuff!

Brie

The scores are meaningless.  It's your credit history that counts.  

I'd give it another couple of months at least, making sure you clear your C1 each month (set up a DD to clear in full if you can).  And then have a look to make sure this is registering on your credit history and then consider if you actually want another card.  Santander is an easy one to deal with on line generally but so are MNBA. 

Live with the low limit for a year and then ring up and say you have a big purchase if you want your limit increased.  

Jami74

Why do you care what your score is? No-one sees it but you. Building a good credit history by spending on credit card and paying off in full (after the statement is produced but before the due date) will over time make you seem more attractive to lenders. Also, not sure there's any evidence to support only spending 30% of your available credit is beneficial (unless you are not paying it off each month, maybe). Building history takes time. What is your ultimate goal?

Z321

Brie said:

The scores are meaningless.  It's your credit history that counts.  

I'd give it another couple of months at least, making sure you clear your C1 each month (set up a DD to clear in full if you can).  And then have a look to make sure this is registering on your credit history and then consider if you actually want another card.  Santander is an easy one to deal with on line generally but so are MNBA. 

Live with the low limit for a year and then ring up and say you have a big purchase if you want your limit increased.  

Okay thanks for your advice. 

Jami74 said:

Why do you care what your score is? No-one sees it but you. Building a good credit history by spending on credit card and paying off in full (after the statement is produced but before the due date) will over time make you seem more attractive to lenders. Also, not sure there's any evidence to support only spending 30% of your available credit is beneficial (unless you are not paying it off each month, maybe). Building history takes time. What is your ultimate goal?

I don't really know, from what I've seen your credit score is a factor in many loan related things, such as getting a mortgage in the future, is that not true?

The 30% thing is also something that I saw to help build credit score (which apparently isn't important anyway!), is that also wrong? I really just use the card like I use my debit card, I always pay it off in full each month, with that being said, I get my statement on the 8th and the direct debit is set up for the 1st of each month, latest payment date is the 5th of each month, so I always have to manually pay in which is very annoying. Am I just using it wrong?

Ultimate goal is a mortgage, I've got some money in a LISA, planning to continue putting into that, and try to build my credit history with a credit card in the meantime.

cymruchris

Z321 said:

is that not true?

No it's not.

The magic score is just a marketing gimmick. It makes you chase imaginary numbers. (As you're doing).

It can give a vague indication of position but can also be wildly wrong.

The key thing is HISTORY.

Spending - Payments - Punctuality - Patterns of positive behaviour.

The card you have may have no personal swanky benefits - but it has the benefit of building up your HISTORY to get better deals in future.

If the Santander eligibility check says you're likely eligible for a card at the limit you've mentioned - I'd happily go for it. Then keep spending a little on the Capital One and paying off in full - and then doing the same with the Santander - making sure you're only buying your essentials on both.

Then as the months pass your HISTORY will continue to look more positive.

As more time passes (another 6--12 months) you might be eligible for other cards.

Don't apply for more than 2 cards in a short space of time - leave at least 6 months between any applications after the Santander card.

Jami74

Z321 said:

I really just use the card like I use my debit card, I always pay it off in full each month, with that being said, I get my statement on the 8th and the direct debit is set up for the 1st of each month, latest payment date is the 5th of each month, so I always have to manually pay in which is very annoying. Am I just using it wrong?

Ultimate goal is a mortgage, I've got some money in a LISA, planning to continue putting into that, and try to build my credit history with a credit card in the meantime.

Why do you have to pay it off manually? If it's due by the 5th of the month and the direct debit takes on the 1st of the month then it gets paid a few days before it's due. That's also how mine work, just make sure the money is in the bank. Easier to let the direct debit take it. I think my first card offered to up the limit after a few months, then I got a second card about a year after the first that gave points on shopping. My ultimate goal was also a mortgage and I've just had one approved.

Z321

Jami74 said:

Z321 said:

I really just use the card like I use my debit card, I always pay it off in full each month, with that being said, I get my statement on the 8th and the direct debit is set up for the 1st of each month, latest payment date is the 5th of each month, so I always have to manually pay in which is very annoying. Am I just using it wrong?

Ultimate goal is a mortgage, I've got some money in a LISA, planning to continue putting into that, and try to build my credit history with a credit card in the meantime.

Why do you have to pay it off manually? If it's due by the 5th of the month and the direct debit takes on the 1st of the month then it gets paid a few days before it's due. That's also how mine work, just make sure the money is in the bank. Easier to let the direct debit take it. I think my first card offered to up the limit after a few months, then I got a second card about a year after the first that gave points on shopping. My ultimate goal was also a mortgage and I've just had one approved.

The direct debit amount taken at the end of the month is equal to my monthly statement, not the current full amount, there doesn't seem to be a way to change that either.

BoGoF

Z321 said:

Jami74 said:

Z321 said:

I really just use the card like I use my debit card, I always pay it off in full each month, with that being said, I get my statement on the 8th and the direct debit is set up for the 1st of each month, latest payment date is the 5th of each month, so I always have to manually pay in which is very annoying. Am I just using it wrong?

Ultimate goal is a mortgage, I've got some money in a LISA, planning to continue putting into that, and try to build my credit history with a credit card in the meantime.

Why do you have to pay it off manually? If it's due by the 5th of the month and the direct debit takes on the 1st of the month then it gets paid a few days before it's due. That's also how mine work, just make sure the money is in the bank. Easier to let the direct debit take it. I think my first card offered to up the limit after a few months, then I got a second card about a year after the first that gave points on shopping. My ultimate goal was also a mortgage and I've just had one approved.

The direct debit amount taken at the end of the month is equal to my monthly statement, not the current full amount, there doesn't seem to be a way to change that either.

Why do you want to pay anything over and above your statement balance though?

Z321

BoGoF said:

Z321 said:

Jami74 said:

Z321 said:

I really just use the card like I use my debit card, I always pay it off in full each month, with that being said, I get my statement on the 8th and the direct debit is set up for the 1st of each month, latest payment date is the 5th of each month, so I always have to manually pay in which is very annoying. Am I just using it wrong?

Ultimate goal is a mortgage, I've got some money in a LISA, planning to continue putting into that, and try to build my credit history with a credit card in the meantime.

Why do you have to pay it off manually? If it's due by the 5th of the month and the direct debit takes on the 1st of the month then it gets paid a few days before it's due. That's also how mine work, just make sure the money is in the bank. Easier to let the direct debit take it. I think my first card offered to up the limit after a few months, then I got a second card about a year after the first that gave points on shopping. My ultimate goal was also a mortgage and I've just had one approved.

The direct debit amount taken at the end of the month is equal to my monthly statement, not the current full amount, there doesn't seem to be a way to change that either.

Why do you want to pay anything over and above your statement balance though?

The statement balance is not equal to my total balance at the end of the month, am I just confused? Is the statement amount the amount that I need to pay on the 5th?

cymruchris

Z321 said:

BoGoF said:

Z321 said:

Jami74 said:

Z321 said:

I really just use the card like I use my debit card, I always pay it off in full each month, with that being said, I get my statement on the 8th and the direct debit is set up for the 1st of each month, latest payment date is the 5th of each month, so I always have to manually pay in which is very annoying. Am I just using it wrong?

Ultimate goal is a mortgage, I've got some money in a LISA, planning to continue putting into that, and try to build my credit history with a credit card in the meantime.

Why do you have to pay it off manually? If it's due by the 5th of the month and the direct debit takes on the 1st of the month then it gets paid a few days before it's due. That's also how mine work, just make sure the money is in the bank. Easier to let the direct debit take it. I think my first card offered to up the limit after a few months, then I got a second card about a year after the first that gave points on shopping. My ultimate goal was also a mortgage and I've just had one approved.

The direct debit amount taken at the end of the month is equal to my monthly statement, not the current full amount, there doesn't seem to be a way to change that either.

Why do you want to pay anything over and above your statement balance though?

The statement balance is not equal to my total balance at the end of the month, am I just confused? Is the statement amount the amount that I need to pay on the 5th?

You pay the statement balance every month by the due date. You'll then have no interest charges (assuming you've not had any cash transactions) - you don't have to make the balance zero every 5 minutes.

The card company reports to the credit reference agency like this:

Jan - Statement £500 - Paid £500

Feb - Statement £300 - Paid £300

Mar - Statement £299 - Paid £299

So that will show you paying properly. If you start trying to pay more - it'll confuse the figures - and although it'll all add up in the end, and be correct - it's better you just set up a direct debit for the full amount, let it do its thing, and just make sure there's enough money in the current account to pay it.

Nasqueron

The utilisation figure, as little as it really matters, is only an issue if you are carrying a balance that is not on a promo rate (like 0% BT). Just keep spending on your weekly stuff, don't be tempted to spend more than you need, pay off in full every month by DD and your credit history will just show an ocean of green ticks for when a future lender checks your file. 

As above, ignore the fake score and never pay the CRAs anything