Using Credit Card to create/improve credit 'rating'

chubsta

Daughter recently tried to get a car loan as hers unexpectedly broke (just after we had paid £800 for other repairs!) - the APR she was offered was high and we didn't go ahead with it following the initial 'soft quote'. Guessing it was high because aside from the a sim (£10) she has never had any other form of 'credit' or outgoings to base her ability to repay it on.

Thought it may be a good idea to get a credit card and start using it (sensibly of course) to show to any future potential lenders - specifically for when she needs a mortgage - she can handle such things. She now has one with a £3500 limit.

I use a credit card for all my purchases, I find it a lot easier to spend in different places throughout the day on this and then at the end of the day record the whole days outgoings as one item on my spreadsheet, I then pay the card off from my bank account. I never ever have anything left on the card the following morning so every statement I ever get shows a balance of £0. 

Daughter will only be using the credit card for her petrol - approximately 2 x £50 per month. Is she better off paying it off as I do as soon as she has used the card, or would it be better to wait until the statement comes in and then pay it thereby showing a balance on the statement that is immediately paid off.

Does it matter that she won't be using the card for much at all or should she put other things on it too to show even more 'responsible' usage?

Or is fannying around like this a waste of time anyway? As stated she has no other debt at all, has plenty of savings and has a very good attitude to debt so is very unlikely to fall into the trap of using the cc irresponsibly (famous last words I know) but it seems to me that not having credit available/being used could impact negatively in future years.

flaneurs_lobster

The only reason I can see for not waiting until the payment date on the CC statement and settling the bill in one transaction is if you need the full amount of your credit limit mid-month for an expensive spend.

Don't think that paying the card off daily (is that what you do?) will have any effect on the reported credit-worthiness, might even be flagged as rather anomalous behavior. Probably better to let a "normal" level of credit build for a month then settle in full.

If there's a particular personal reason for running your daily spending this way then fair enough. Others might think that the cash used for credit card settlement could be in a savings account earning interest for 4-6 weeks before using to settle the CC bill.

Nasqueron

chubsta said:

Daughter recently tried to get a car loan as hers unexpectedly broke (just after we had paid £800 for other repairs!) - the APR she was offered was high and we didn't go ahead with it following the initial 'soft quote'. Guessing it was high because aside from the a sim (£10) she has never had any other form of 'credit' or outgoings to base her ability to repay it on.

Thought it may be a good idea to get a credit card and start using it (sensibly of course) to show to any future potential lenders - specifically for when she needs a mortgage - she can handle such things. She now has one with a £3500 limit.

I use a credit card for all my purchases, I find it a lot easier to spend in different places throughout the day on this and then at the end of the day record the whole days outgoings as one item on my spreadsheet, I then pay the card off from my bank account. I never ever have anything left on the card the following morning so every statement I ever get shows a balance of £0. 

Daughter will only be using the credit card for her petrol - approximately 2 x £50 per month. Is she better off paying it off as I do as soon as she has used the card, or would it be better to wait until the statement comes in and then pay it thereby showing a balance on the statement that is immediately paid off.

Does it matter that she won't be using the card for much at all or should she put other things on it too to show even more 'responsible' usage?

Or is fannying around like this a waste of time anyway? As stated she has no other debt at all, has plenty of savings and has a very good attitude to debt so is very unlikely to fall into the trap of using the cc irresponsibly (famous last words I know) but it seems to me that not having credit available/being used could impact negatively in future years.

If you pay off the card as soon as the amount hits the card then your card is not doing anything to help credit history and is really a pointless endeavour. Unless you are buying something important where you need S75 cover then you might as well use a debit card and get better cashback - when it's something like fuel. As your statement is reported to the agency as £0, it appears you are not using it so you are not gaining any credit history. Pay on card, direct debit to pay in full every month, leave it like that for a year or two and her credit record will look good. 

born_again

chubsta said:

Daughter recently tried to get a car loan as hers unexpectedly broke (just after we had paid £800 for other repairs!) - the APR she was offered was high and we didn't go ahead with it following the initial 'soft quote'. Guessing it was high because aside from the a sim (£10) she has never had any other form of 'credit' or outgoings to base her ability to repay it on.

Thought it may be a good idea to get a credit card and start using it (sensibly of course) to show to any future potential lenders - specifically for when she needs a mortgage - she can handle such things. She now has one with a £3500 limit.

I use a credit card for all my purchases, I find it a lot easier to spend in different places throughout the day on this and then at the end of the day record the whole days outgoings as one item on my spreadsheet, I then pay the card off from my bank account. I never ever have anything left on the card the following morning so every statement I ever get shows a balance of £0. 

Daughter will only be using the credit card for her petrol - approximately 2 x £50 per month. Is she better off paying it off as I do as soon as she has used the card, or would it be better to wait until the statement comes in and then pay it thereby showing a balance on the statement that is immediately paid off.

Does it matter that she won't be using the card for much at all or should she put other things on it too to show even more 'responsible' usage?

Or is fannying around like this a waste of time anyway? As stated she has no other debt at all, has plenty of savings and has a very good attitude to debt so is very unlikely to fall into the trap of using the cc irresponsibly (famous last words I know) but it seems to me that not having credit available/being used could impact negatively in future years.

Wait till you get the statement. Set up full DD & wait till it is taken.
It is pointless having a CC & paying the transaction back as soon as they have debited. 🤷‍♀️

Olinda99

From the point of building a credit history it would be better to wait until the statement comes in and then pay it off in full

The way you do it, the statement simply shows at zero

chubsta

Thanks for the replies, will reassess!