How to use credit cards to boost credit score

johnweir123

Hi there, 

It's probably been asked a million times before but here's my situation. 

As a married couple we're basically debt free aside from our mortgage. 

HOWEVER.. our credit rating is low for both me and my wife.  We have access to the TransUnion credit rating system. 

On my personal credit rating it says I am not borrowing enough and that is a critical factor keeping my credit score lower than it could be. 

So upon seeing this I ordered a couple of new credit cards which I intend to use to boost my credit score. 

What is the correct way to use credit cards when this is your reason and is it a good idea or should I left them in a drawer and do something different instead. 


The questions I have: 

1. How much should you spend (presumably this is measured in terms of percentage of your limit?)
2. How quickly should you pay it off - every month or spread it over 2 or 3? 
3. How many months can you go without using them before your credit score will drop again? 
3a. Can you do this once or do you have to keep using them to keep your credit score up? 

cymruchris

It has been asked a million times - and the answer is the same a million times over - the score and the rating aren’t important. They are a marketing gimmick. What’s important is your history, and it seems like you don’t have so much of that to work with. 

So please ignore the score. It’s a vague guideline at best, and at worst is truly inaccurate. 

In order to build a positive history - with the new credit cards - you use them to buy your usual
spend essentials month in, month out. You then set a direct debit to pay in full. 

So each month you spend - then pay in full - spend - pay in full - rinse and repeat for a year. 

This will demonstrate a positive credit history. 

Your scores might move around wildly / but ignore them. 

johnweir123

Thanks... mostly. 

I'm a bit confused by your issue with the score. 

I have seen when I first started accessing TransUnion that I had a lower score than I do today.  

When I looked at the status of past credit accounts I found one for M&S credit card which had a red flag on it.  I might have actually discussed this account on here a few years ago.  In the end it was all settled and M&S agreed to return my credit history to its original state before we had our dispute. 

TransUnion were still flagging it as an issue so I disputed this and they agreed there was no reason to be highlighting an issue so they cleared the flag and set it back to green status. 

Now I have absolutely nothing wrong with my credit history and that caused my score to increase.  i.e. bad thing lowered score, fixed bad thing = score went up? 

As I understand it the score affects your ability to access credit and the terms on which you may do so. 

Are you simply saying that different credit reference agencies use different numbers and gauges to tell you how good your score is and for that reason the numbers themselves should be ignored? 

On the TransUnion system I am about 1/3 on their dial and it says my score needs work.  It's not 'red' but for my actual status in real life (i.e. not really doing anything wrong) it is lower than I think it should be.  

cymruchris

Your understanding is not correct - nobody sees your score except you. 

It’s a marketing gimmick, and you’re falling for it. 

As I said in my reply - it’s the history that’s important. Nothing more, nothing less. 

Build a history that’s positive and you’ll get access to better offers and deals. 

The historical issue you had would definitely have impacted a positive history - so would mean that new deals wouldn’t be easily available.

The score that only you see can be a vague indication of creditworthiness - but is often wrong. 

Focus on the history - not the score. 

johnweir123

I get what you're saying, focus on the history - but higher score = better history?  So higher score = better?  Is this wrong? 

oldagetraveller1

"Are you simply saying that different credit reference agencies use different numbers and gauges to tell you how good your score is and for that reason the numbers themselves should be ignored? "

e.g. Lloyds Bank, using TransUnion, give my "score" as 662/710. However, Clearscore, no longer use them, gave 900+/1000.

A bit of pointless inconsistency there.

Yes, ignore them. As already advised, it's your financial history that's important.

lr1277

You can also improve your credit file if you have the following (assuming you don't already have them):

pay monthly mobile phone contract

A water company from my previous address was listed on my credit report.

However you may need to sign up to more than one CRA to see this.

I am a member of MSE Credit Club which used to use Experian. This showed my O2 mobile phone contract and my water company agreement. However I was on Virgin mobile which later became O2. Experian/Credit club did not show the Virgin account at any point.

MSE Credit club is now trialling or gets its data from Transunion, but I think it is still being tested. This does not show the current O2 contract nor the credit cards closed by the card providers. However Experian did show the closed cards but that could be when they were open, Experian showed them and then continued to show them after the cards were closed.

cymruchris

johnweir123 said:

I get what you're saying, focus on the history - but higher score = better history?  So higher score = better?  Is this wrong? 

I’m not sure you are getting what I’m saying (and what others will also say) - the score is made up. Only you see it. And this is the key - yes it might be vaguely accurate for you / but in general it can also be very inaccurate. If you start trusting the magic made up number as gospel truth - then you’ll end up obsessing about it and going down rabbit holes trying to make the magic made up number better. 

Focus on building the positive history - don’t focus on the number. 

Desmond_Hume

johnweir123 said:

I get what you're saying, focus on the history - but higher score = better history?  So higher score = better?  Is this wrong? 

Pretend the score doesn’t exist. At all. I could make up a score for you and it would mean just as much as theirs does. 

MattMattMattUK

johnweir123 said:

I get what you're saying, focus on the history - but higher score = better history?  So higher score = better?  Is this wrong? 

You are not getting what people are saying. Your assumption is wrong.

Credit score = meaningless number made up for marketing purposes, you are the only one who sees this.
Credit history = what lenders see when credit checking you, they make a decision based on this.

Bankrupts can and do have maximum scores, millionaires can have bad scores. The credit score/rating is a marketing gimmick designed to draw in suckers so that the CRA can sell them a product that they earn commission on. They set out how to "improve" one's made up score so that they can earn commission on those product applications. If you take out a financial product via a link on one CRA your score with that CRA will go up, but it will go down with others.

Your credit score/rating is not something you should care about, ever!

johnweir123

Well maybe this is where some of the confusion comes from?  I access my credit score for free using the TransUnion service which is given FOC to Lloyds Bank customers.  I don't pay to see it and they don't have product links for me to buy products they would get commission on.  I completely understand that potential creditors cannot see my 'magic number' and only look at this history - what I don't get is why people are trying to make the case that the 'magic number' is not a representation of good or bad credit rating given that I have seen it vary by fixing real problems on my credit file.