Credit card to help repair bad credit profile

Hi'

So I know the usual advice to try and improve your credit profile after it's taken a battering from something like a DMP is:-

A.) Be patient
and
B.) Get a credit builder card and use it wisely paying off in full each month.

Now I'm doing both but I've just had a thought. Knowing what a balancing act these things can be - is use of a credit card monthly even if paid off in full every month not considered by future lenders to be a reliance on credit?

Luckily I am in a position to pick and choose when I use mine (I honestly just buy fuel on it and pay it back - purely for the good payment history) - so what I'm asking is should I use it monthly like I have been doing or just now and again?

Comments

  • Willing2Learn
    Willing2Learn Posts: 6,287
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    edited 22 April 2019 at 6:26PM
    When I was recovering from debt issues, I used to use my credit-building Capital One card for all my monthly groceries and travel expenses. Since both groceries and travel are categories within my monthly budget, I could safely use the card continually during every monthly cycle without risk of an overspend. I definitely believe that using the card regularly like this, and then paying the statemented balance in full every month, clearly demonstrate to lenders that you are able to successfully manage credit accounts. :)


    Hope the above helps you...
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    :smiley:
  • Thanks - yes that's exactly what I'm doing too. I'm just hoping it isn't sending the wrong signals to creditors that I depend on credit - as I really don't.

    Like you did I'm just using it for a budgeted item that I would otherwise just use my wage for (to be honest as soon as I use my card I transfer what I've spent from my current acc into a savings acc so it's accounted for and then just transfer it back when the DD is due) and just clearing it every month. Glad to hear it worked out well for you though so I shall continue what I'm doing :)
  • If you’re paying it back in full each month then this will show on your files under the payment history for the card.

    Taking loans and dipping into an overdraft shows that you’re reliant on credit
  • Cheers Gary - exactly what I wanted to hear.

    Seems crazy that the very payment method that I abused to get myself into the mess I just recovered from is also the solution to making it better over the long term!

    Guess I'm not alone in being wary/slightly scared of credit cards after a DMP?
  • phillw
    phillw Posts: 5,593
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    Seems crazy that the very payment method that I abused to get myself into the mess I just recovered from is also the solution to making it better over the long term!

    They want to see that your behaviour has changed, they can only tell that if you are behaving yourself with a credit card. I guess they assume that someone who is keeping within their credit limit and paying it back on time is at least trying, even though there is no guarantee that you aren't just relying on loans from family to keep up a pretence.
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