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How to use a CC best to rebuild credit rating?

(13 Posts)
LibidinousSwine Fri 09-Oct-15 19:11:01

I have just been accepted for a credit card which, given my dubious financial history is something of a miracle. Granted it does have a high interest rate, but I was well aware my options were limited as to who would accept me.
So today it arrived, £500 limit and good to go. The sole intention of this was to use it for groceries, fuel, haircuts etc and pay it off immediately as I have absolutely no desire to get into debt again. It's just impossible to do things like hire a car abroad without a CC that would make it so useful to have.
The thing I cannot work out is how to quickest improve my credit. If I put £50 of diesel in my car, should I pay it off immediately (I have an app that would allow me to do it within minutes) or should I leave it and pay it off a few days later? Because if I pay it off immediately that surely suggests that I had the cash in the first place. If I pay it off in a few days then I have taken advantage of the credit facility and proved that I am responsible and will pay my debts on time.
I'm absolutely tying myself in knots over this one hmm

Unescorted Sun 11-Oct-15 08:45:30

So long as you pay between the moment of purchase and a few days before it is due it will show as an on time payment for that month.

I would question why you feel the need to get a cc if you have the funds there to pay of it - you can build a credit history by paying for energy on a dd, phone contract, or spread car insurance over a year etc. so if you already do these things cut the cc up. I assume you have also got the history of paying of an existing debt.

Also get on the electoral register (even if you don't vote). It is the single best thing you can do to improve your credit rating.

CC companes prefer to see someone who pays the minimum payment than pay in full as it makes them money - why would they want to provide you with a convenient payment method and an interest free loan of 30 days if you pay it back in full?

Tarzanlovesgaby Sun 11-Oct-15 08:50:04

pay it off in full each month. some cc let you do a monthly 'sweep' that does that.
make sure you have the funds on your account so that you don't get into overdraft.

LibidinousSwine Sun 11-Oct-15 10:24:49

Thanks smile
The CC thing is mostly to do with car hire unescorted Extensive research has shown that its near impossible to hire a car abroad without one which seriously limits our holiday options.

Redcrayons Sun 11-Oct-15 10:28:51

I set up mine so the balance is paid in full on the payment due date. Missing payments is what shows up on credit reports rather than how quickly you pay it off, I think.

wickedwaterwitch Sun 11-Oct-15 10:33:22

Credit reference agencies will show data to anyone looking at your file which will show how much is outstanding and whether you paid on time.

If you don't want to get into debt again pay it off straight away every time. But that won't name any difference to your rating, it'll still show as an on time payment.

If you want to improve your credit rating also make sure you're on the electoral roll.

WhoisLucasHood Sun 11-Oct-15 10:37:28

I have mine on D/D so it's paid in full each month. BTW, I'd recommend the Santander 123 card for fuel and groceries as the cash back is pretty good. We've earned £48 so far this year just by spending on this rather than my debit card.

NotDavidTennant Sun 11-Oct-15 10:39:48

As has already been said, your credit card debts only come due on the monthly payment date, so your credit record will only show whether your payments are up to date for the monthly billing period, it won't show exactly when you've paid.

If you're being ultra-cautious then pay them off as soon as you can. If you'd prefer more convenience then set up a direct debit to pay off the full balance each billing period, but make sure you have sufficient funds on the payment date each month to cover this (and also make sure you never go over the £500 credit limit).

Redcrayons Sun 11-Oct-15 10:44:27

Also, be prepared to have your limit hiked up in a few months. When the CC company see you are responsible, they throw more money at you to tempt you further. I have £12k on one card

LibidinousSwine Sun 11-Oct-15 11:41:00

Thanks again, it looks like I can pay it off immediately then. I am on the electoral roll and have the normal grown up DD's on my account so hopefully that is all helping.

AndNowItsSeven Tue 13-Oct-15 18:29:38

Don't use more than 75% of the credit available if you use it all each month it shows you " need credit".

AndNowItsSeven Tue 13-Oct-15 18:30:25

There was meant to be a full stop after " available"

TalkinPeas Fri 13-Nov-15 15:32:59

Don't use more than 75% of the credit available if you use it all each month it shows you " need credit".
Up to a point.
I max mine out occasionally - and my limit is many, many thousands of pounds - but always pay it off in full on time
OK except this month where I cocked up my cashflow and paid half three days late and incurred £90 in interest
and the little dears keep increasing my limit !!

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