How do I use my credit card?

Ady87

Hello all - apologies for the rambling.

Having a hard time trying to improve my credit score. I’ve been at 0% utilisation on 2 credit cards for 2 years and my credit score seemingly doesn’t thank me for it. I decided to start trying to use them.

10th November - Spent £1,199
23rd November Statement Date - Paid it in full
25th - 28th November - Spent £96

As of today all 3 credit reference agencies show a £96 balance. Does this mean I’ve essentially had no brownie points for clearing the £1,199 purchase because it didn’t get chance to report to the credit reference agencies?

Interestingly, having heard nothing from Halifax for 2 years, I got a letter 5 days after paying the £1,199 to say they were putting my limit up by £1500. I now have £10k that I don’t use, but I’m trying to put daily spend on it. £96 is <1% utilisation so will that even register on the radar? I spent more after the £96 and another £400 in December since in an attempt to improve things.

My anxiety makes me want to pay it on 23rd December but if this goes against me because it won’t be reported to the agencies then I can pay early January?

Isthisforreal99

Forget trying to build some fictional score, you want to build a history of payments.

It's not clear if you paid the £1199 before your statement was actually produced but wait till the statement is produced then pay in full (set up a direct debit). Generally speaking it is the statement balance that gets reported to the agencies so if you clear it before the statement it looks like you haven't used it.

Edit to add, ignore the utilisation, unless you are pretty close to your limit it's relatively meaningless

MyRealNameToo

No one sees your credit score, it's a made up number by the credit agencies marketing team. Lenders get your credit history and apply their own logic to it to decide if they want to lend to you or not. 

For consumers you see a single snapshot of your current status, traditionally this was updated once a month and often notably in arrears. Some these days are updating a little more regularly but again this is different to what lenders see. 

As long as the statement was produced and paid off after it was produced it will be viewable by lenders, in principle it should still be seeable but maybe look different if you paid it off before it was statemented. 

Ultimately each lender makes their own choices of what behaviours they like to see which is why you can apply for two cards in one day and one accept you with a very high limit and the other reject you or offer you a tiny limit.  Really the trick is to avoid paying interest and gain whatever rewards you can from paying by CC rather than DC/Cash. 

safe_hands2

Just keep using it for your weekly spend (as long as you know you won't overspend), and pay the full statement balance off every month when you get the statement. Over time, you will build up a good record of using credit and paying it off.

Ady87

FWIW, I got a message from Halifax to say the statement had been raised and I paid it straight away but the statement had definitely been raised. I appreciate regardless of what the credit agency interface my show me that lenders will be able to see that I’ve cleared statements in full after they’ve been produced so I’ll just continue to do that.

Understood on the impact of utilisation.  I’m not fixated on the score or anything, I just use it as a general barometer for lender sentiment. While I’ve not needed credit for anything besides the car for several years I appreciate I may need to play the game for a bit in case one day I do and I’ll want options available to me then. Can see me dropping the ball due to poor organisation and using credit for the sake of it and getting a missed payment or something.

Desmond_Hume

Your first sentence is about trying to fix your score. So I’d say you are fixated on it. 

Set your direct debit to pay in full. Then, make sure you have money in the account to pay this when it’s taken. It’s that simple. 

Forget scores. Forget utilisation. It’s a barometer for absolutely nothing. Life will be much simpler when you do that. 

born_again

Ady87 said:

FWIW, I got a message from Halifax to say the statement had been raised and I paid it straight away but the statement had definitely been raised. I appreciate regardless of what the credit agency interface my show me that lenders will be able to see that I’ve cleared statements in full after they’ve been produced so I’ll just continue to do that.

Understood on the impact of utilisation.  I’m not fixated on the score or anything, I just use it as a general barometer for lender sentiment. While I’ve not needed credit for anything besides the car for several years I appreciate I may need to play the game for a bit in case one day I do and I’ll want options available to me then. Can see me dropping the ball due to poor organisation and using credit for the sake of it and getting a missed payment or something.

Don't pay statement straight away. You are missing out on the interest the amount will make in a savings account.
Set up DD & let them take the payment when required.

There is no such thing as  "lender sentiment" all lenders are interested in is making sure that you are paying bills on time & that when applying for credit your income to available credit is within their affordability range. Which varies depending on their appetite to take on more debt

Ady87

Barometer - something which reflects changes in circumstances or opinions.

Sentiment - a view or opinion.

To suggest lenders don’t have a ‘view or opinion’ (not all underwriters are robots and it’s often subjective) and that credit scores don’t reflect changes in circumstance is bizarre.

Ady87

Desmond_Hume said:

Your first sentence is about trying to fix your score. So I’d say you are fixated on it. 

Set your direct debit to pay in full. Then, make sure you have money in the account to pay this when it’s taken. It’s that simple. 

Forget scores. Forget utilisation. It’s a barometer for absolutely nothing. Life will be much simpler when you do that. 

My life is simple, which appears to be part of the issue. I get paid, I spend on my debit card. It doesn’t get simpler. Spending on a separate card when I don’t need to and setting up a direct debit (not too soon though!) to be able to demonstrate I can repay credit is literally adding complexity to my life.

I am simply trying to, in the simplest way, change my behaviours to improve a lenders view of me. Referencing the credit score just felt like the easiest way to say I’m engaging with and monitoring my credit report with a view to improving the picture that lenders might consider.

Desmond_Hume

If setting up a direct debit is adding major complexity then I don’t think credit cards are for you. The debit card sounds like it’s working fine. So stick with it. 

surreysaver

Ady87 said:

Desmond_Hume said:

Your first sentence is about trying to fix your score. So I’d say you are fixated on it. 

Set your direct debit to pay in full. Then, make sure you have money in the account to pay this when it’s taken. It’s that simple. 

Forget scores. Forget utilisation. It’s a barometer for absolutely nothing. Life will be much simpler when you do that. 

My life is simple, which appears to be part of the issue. I get paid, I spend on my debit card. It doesn’t get simpler. Spending on a separate card when I don’t need to and setting up a direct debit (not too soon though!) to be able to demonstrate I can repay credit is literally adding complexity to my life.

I am simply trying to, in the simplest way, change my behaviours to improve a lenders view of me. Referencing the credit score just felt like the easiest way to say I’m engaging with and monitoring my credit report with a view to improving the picture that lenders might consider.

What do you mean not too soon? The credit card company will take the direct debit on the due date (the exception to this is American Express).
All you need to do is ensure there is enough money in your current account (or the overdraft is enough to cover) the direct debit the night before the direct debit is due.