Credit Cards... Does it cost...

[cjt110]

...just to have one?

My credit rating is pants. I've never had any credit cards or loans in my life. As such, when I go to, for example, get a new mobile phone it tells me my credit rating is poor and I am rejected.

My husband said to apply for a credit card, get it and then cut it up as it will help me improve my credit rating. Applied for a capital one card - am activating online and it's asking me about setting up a direct debit. Surely if I have a card and don't use it, I don't need a direct debit because they won't charge me anything? Or am I being stupid?

I use my card like sensory...and earn lots of John Lewis vouchers.

Like PPs have said, use the credit card to pay for something you already get, such as petrol or your food shop, and pay it off in full each month. Set a reminder on your phone or calender, or opt for paper bills if you're worried you will forget to pay.

I don't currently have a CC but did use one to help but my credit rating in my late teens/twenties.

As others have said, you need to use the credit card and pay the balance off in full every month. You could do say one grocery shop and pay it off immediately online, you don’t need to wait for the bill to be sent if you don’t want to.

Also, are you on the electoral role? I Was once rejected for a phone contract despite never having had any debts. We’d moved house and DH had filled in those forms and has terrible handwriting so my name ended up being spelt wrong on the electoral roll. All was resolved once I corrected it.

What bank are you with? We have a Nationwide account and credit card so we put big things on the card (better protection especially for holidays or big items) then I pay it off the next day. It's all on the app so I can clearly see what's what.

19lottie82 You have to pay to do that via experian. Any idea where else I can look?

What I would do - use it like a debit card, for everything. And every time you use it, transfer the exact same amount from your main account to a linked instant access saver. Then pay it off once a month. This makes perfect sense, but fills me with dread... see my complicated money movement issue at the mo already!!! I have one main account. My pay goes into that. I have a few DD's that go out of that. On payday, I work out what DD's I have going out for the month. Plus my money for the month. Surplus is put into the joint account. I then have to figure out what DD is out of my account - my main one or my spending one - move that. My spending one allows for me to have "pots" so I split out fuel money into pots.

Trying to remember to move money into a pot each time I spend sounds like a nightmare.

What do I need a credit rating for anyway?!

cjt it is a truly bizarre fact but someone who has been in masses of debt and got back on the straight and narrow will have a better credit score than someone who has never even been overdrawn! I suppose it may be something to do with the banks/lenders not making any profit from the latter group

I use my credit card - which is paid off in full each month by direct debit - for all my shopping, including food and petrol. I also get points for supermarket vouchers every so often by doing this - it costs me nothing at all to use my credit card and I'm thereby getting a kind of 'cashback' every so often.

I am on the electoral role - in my married name. My mortgage and house is still in my maiden name - would this make a difference? We got married 6 years ago.

I have one that I use for online groceries so it gets used regularly for similar amounts. I pay if off manually each month once I get paid (although a DD obviously does this automatically). I've built up a big credit limit so that should I need it in an emergency it is available.

My DP got refused mortgage on grounds of no credit history which was an eye opener to the advantage of using one wisely.

Blobby10 Tell me about it. I was raging. I wanted to get a loan to buy a new car. Myself. I didnt want to have to rely on money we already had. Or my husband. The bank we have a joint account with which holds a sizeable amount - and have banked with for a total between us of 40 years - even rejected a joint loan application.

I could not fathom how they could reject us when we've never defaulted, never been in arrears or overdrawn...

We also use a credit card like sensory and HRT. Pay for absolutely as much as possible on it to earn cashback. Balance is paid off in full every month by direct debit.

I find it a lot simpler than spending from the current account like a lot of people do because you have to not spend the money needed for direct debits later in the month.

Lots of other advantages of using a credit card - much reduced choice so likely to be more expensive when hiring cars. Also lots of car hire places and hotels take a card deposit, so it's a lot better to lose a chunk of unusued credit limit than money from your current account while the hold is in place.

Also purchase protection - when Monarch went bust 2 days before we were due to fly last year, the credit card that I paid for the flights on refunded the cost in full along with the extra costs incurred by having to book more expensive flights at short notice. Even though we had travel insurance that included scheduled airline failure cover, it only provided cover in very limited circumstances so was effectively useless.

There are so many advantages to using a credit card that it seems a little irrational to refuse to use one.

Your finances seem a bit complicated at present OP
Why not make life easier on yourself?
Do you have a fixed salary amount coming in every month or does your pay vary each month?
Do your direct debit payment vary in amount each month or are they fixed amounts? Do they come out on various dates during the month?

I have all my DD payments set to leave my bank account on the 1st of the month. I get paid on the 28th of the month so I know that there will be money to cover all the DD payments on the 1st. Once all the DDs have gone out I move money into joint account or savings as needed.

OP try Noddle. It’s free.

No need to use a credit card for everything, as pointed out, just use it once a month and pay it off straight away.

What do you need a good credit history for? Credit basically! It’s all fair and well saying you won’t need it but chances are you will.

TV or broadband contracts, phone contracts, cars, mortgages, ect ect

You could do say one grocery shop and pay it off immediately online, you don’t need to wait for the bill to be sent if you don’t want to

This is wrong.

Most credit card providers will update CRA's with the statement balance every month.

Even if you use it for £1k worth of transactions monthly, if you pay it off before the statement is issued, your statement balance every month will be £0 - that's what will get updated with CRA's.

To have a positive effect you have to wait for the card provider to register that you owe them money, which happens with the issue of the statement.

You sound very sensible @cjt110 Rather than start complicated efforts with a new credit card, I would really encourage you to check your credit score to establish why you were refused.

Then, you will have some idea of what you need to fix the problem. Anyone who suggests a solution without knowing what the issue is, isn't being very helpful.

Wilding I am probably making a hash of it truth be told.

My salary, give or take, is the same each month, bar a quarterly bonus. My DD's are fixed amounts - except my mobile phone which can vary if I go over minutes etc.

I downloaded and use Monzo as it's instant showing as debited from your account. I seem however to have gotten a bit complacent and things are getting complicated again.

It’s very possible that your credit file will not have made the link between married-surname-you on the electoral role and maiden-name-you that pays your mortgage every month. Definitely get this updated ASAP.

Build up to it op...still split your fuel money into a separate pot but just buy your petrol with the credit card, and pay the card off from your separated fuel money.

Surely if I have a card and don't use it, I don't need a direct debit because they won't charge me anything?*
The credit card company are making an assumption that you will use it. You may as well use it and pay it off in full every month, as that will give you a better credit history than just having it and not using it.

Just trying to sort myself out now... Just noted down which DD's come from/to where. I only have one that comes from a different account so am going to move them all into one account.

But I don't want to use one.
In which case you won't build up a credit history, and will never be able to obtain credit at competitive rates.

you won't build up a credit history, and will never be able to obtain credit at competitive rates.

The OP has mentioned a mortgage, so does have a credit history. It is much more plausible that the recent refusal of credit was to do with using different names on electoral register and elsewhere. Until a credit check is run and the problem identified, it will not be possible to know what solutions will work.

Finally Where is the best place to check my details - I have looked at experian who say I have a very poor rating but show me no details unless I subscribe

I got a 0% one to build my credit rating. I used it to pay our car insurance (as it was cheaper to pay the whole year than monthly, and we didn't have it up front as had just paid for a new boiler); we then paid it off over 6 months.
Do you use mobile banking? It made it really easy to keep track of how much we had left to pay.

If you have a joint mortgage and a joint account then having a credit card won’t improve your score. I suggest going to the credit reference agencies to find out what your score looks like. I’m betting it has something to do with voters roll history or your partner’s credit history.