Credit card use.

Waeee

Hi. I pay off my credit card each month and it always shows a 0 balance on my credit report. Is a lender able to tell that I am using it if my balance always shows as 0 onmy credit report? Thank you.

cymruchris

Waeee said:

Hi. I pay off my credit card each month and it always shows a 0 balance on my credit report. Is a lender able to tell that I am using it if my balance always shows as 0 onmy credit report? Thank you.

How do you pay it? Do you get the statement, then let the direct debit take the payment in full? Or are you paying off anything as soon as you've spent it?

The best way if you're paying in full is to allow the card to issue it's statement - then settle that amount by direct debit - and no manual payments.

Then the CRA will see:

Month 1 Statement: £500 Paid: £500

Month 2 Statement £1000 Paid £1000

Month 3 Statement £150 Paid £150

And so on....

If you're paying it off as soon as you spend it - then the £0 balance will show on the CRA's and although the underlying data will show use and payments - the top line will show £0 £0 £0 and look like you're not using it.

Waeee

@cymruchris Thank you for your response. At the moment I wait to accumulate spending from the point the previous statement was generated until a few days before the next statement is generated and then manually pay it in full with my credit card. I thought this was good for my credit score as it was always showing 0 balance. However I've been reading that it's good to show some use. 
In your reply, you said the underlying data will show some use and payments, is that not enough for the lender to see that I am using the card?

Waeee

@cymruchris I meant to say 'pay it in full with my debit card'. Not my credit card. Thanks.

BarelySentientAI

It depends how deep they dig.

Why don't you wait until a few days after the next statement is generated instead?

Cloth_of_Gold

BarelySentientAI said:

It depends how deep they dig.

Why don't you wait until a few days after the next statement is generated instead?

Wouldn't you have missed the interest-free date though? I do as the OP does. My statement is generated on the 23rd and my due date is the 17/18th of the following month. Like the OP I pay it in full by debit card a few days before, on the 13th or 14th.

Tony5896

My spending is reported .. if I spend 500 but pay it off before the statement cut off date it shows as 500 spent and balance 0 

Phoenix72

Cloth_of_Gold said:

BarelySentientAI said:

It depends how deep they dig.

Why don't you wait until a few days after the next statement is generated instead?

Wouldn't you have missed the interest-free date though? I do as the OP does. My statement is generated on the 23rd and my due date is the 17/18th of the following month. Like the OP I pay it in full by debit card a few days before, on the 13th or 14th.

OP seems to be paying off before the statement is issued. Pointless in terms of building a credit history if thats what they are trying to do

BarelySentientAI

Cloth_of_Gold said:

BarelySentientAI said:

It depends how deep they dig.

Why don't you wait until a few days after the next statement is generated instead?

Wouldn't you have missed the interest-free date though? I do as the OP does. My statement is generated on the 23rd and my due date is the 17/18th of the following month. Like the OP I pay it in full by debit card a few days before, on the 13th or 14th.

Unless my credit card is particularly unusual, there's no interest for paying after the statement date, only after the due date.

OP seems to be saying that they go in and have a look at what their statement is going to say a few days early (20th perhaps in your example), then paying it off before the statement is generated - effectively making sure that the statement always says zero.

You are doing the same as most people do.  See the balance on the statement and pay it by the due date.  OP doesn't mention due dates at all.

pjs493

I have a direct debit set up to take the full balance out of my current account when payment is due. I pay off the balance each month but use my card for almost all purchases in order to benefit from the cash back rewards associated with the card. I keep my current account balance higher than what my credit card statement balance is and any excess is transferred to savings accounts (although I do leave a decent buffer to avoid inadvertently going into my overdraft and to account for instances when I accidentally pick the wrong card out of my wallet, or select the wrong card in my phone, to pay for something). 

This technique appears to have done wonders for my credit score over the last few years. Having racked up an overdraft and debt as a student, I paid it all off and vowed never to have debt again (other than a mortgage) because I hated being in debt. It then became apparent a few years ago that my debt free policy was having a negative impact on my credit score (after it had recovered from the student days). I opened a credit card with my bank and made occasional purchases with it, always paying in full.

Then opened a rewards card to do what I currently do to earn cash back rewards. I still have the ‘old’ card open and use it occasionally as it provides me with free overseas transactions which can be handy to have. Plus as my oldest open line of credit it shows good management on my credit file. 

I only ever use a small percentage of the credit available to me and if I make a large purchase, eg if I paid for a holiday, I make additional payments in advance of the direct debit to keep the percentage of credit used low. 

Brie

What I do, and I have a fairly good credit history, is as follows....

I spend £250 on my card.  Get my statement that shows I spent £250, continue to spend on my card, maybe another £200.  On the due date my DD clears the total on the last statement so £250 leaving the £200 I've spent in the current month.  Statement comes showing I spent £200 and when the due date come my DD will again clear the total on my last statement in full leaving anything that has been spent since then.  All shiny and green on my credit report. 

The only time I pay manually in advance of a due date is when I know that I'm going to taking money out of an ATM (usually on holiday) and so I set it up to pay say £200 a couple of days after I know I'll be taking out E200 when I'm in Germany or somewhere.  That way the interest I'm charged on the ATM transaction in minimal.  I know taking money out on a CC from an ATM is a no-no but frankly I've discovered that the difference between the interest charged and what I might save going to currency exchange place in the fluster before going on holiday simply isn't worth the bother.