Building Credit History with No Spending

Gnid

I have just received my very first credit card from my local bank. Does my credit history start building even if I don't want to use the credit card?

Reason why I don't want to use this card is because it doesn't have cashback and I already have a supplementary card linked to another person (i.e. not my card) and I can get points on that already...

any help greatly appreciated!

dylanuk

Hi,

The fact that you've been given a credit card will be recorded on your credit report.

However, your credit history is just that, a history of how well - or badly - you use the credit you've been given. So if you don't use the credit card you aren't building any history of how well you use the credit.

It's this history of credit limits / amounts and repayments that lenders look at - and then score appropriately - when they access your credit history if you apply for any financial products.

So while they'll see that your bank did give you a credit card, there won't be any record of how well you used it.

However, if you're happy to stick with the additional card for it's reward scheme, then don't worry too much.

There are many other ways to build a credit history. Some of these things include getting registered on the electoral roll (this is actually a much bigger deal than you might think), paying council tax and utility bills on time, paying mobile phone service contracts on time, keeping within any bank overdraft facility and making any repayments if necessary.

If you are wanting to build up your credit history, then it wouldn't be a bad idea to use the credit card once or twice a month and then repay the balance in full each month. You won't lose out too much on your rewards for just the odd purchase, but you'll be showing future lenders that you did use the credit you were given well.

CLAPTON

best to spend a little on it every month and pay in full.
set up a DD for the full amount so you dont forget to pay.
This will show on your credit record favourably.
After a while you will then be able to apply for your own cashback card
Usually council tax and utilities don't show on your credit report

carpetbelly

dylanuk wrote: »

There are many other ways to build a credit history. Some of these things include getting registered on the electoral roll (this is actually a much bigger deal than you might think), paying council tax and utility bills on time, paying mobile phone service contracts on time, keeping within any bank overdraft facility and making any repayments if necessary.

Electoral Roll really isn't as big a deal as people think it is. It's normally only used as a check for you being at the address you say it is and with money laundering rules you generally have to provide proof of address as it is.

As said above, utilities and council tax are not on your credit file. These are not credit products so do no affect it. Though mobiles yes and the advice on regular payments is absolutely spot on.

dylanuk wrote: »

If you are wanting to build up your credit history, then it wouldn't be a bad idea to use the credit card once or twice a month and then repay the balance in full each month. You won't lose out too much on your rewards for just the odd purchase, but you'll be showing future lenders that you did use the credit you were given well.

Perfect advice to help build up a good rating. :beer:

PBA

If you're not using the card then it shows on your credit file that you're not using it, which could be worse than not even having the card (companies can get sceptical about why you're applying for credit when you're already approved for credit you're not using). You do need to spend on it every month (and pay it off) to show you're using it, but the credit file doesn't show how much you're spending. One transaction for a quid or so a month isn't going to dent the amount of cashback too much!