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How to use credit card?

12 replies

Nordman · 21/11/2020 15:24

I have a couple of credit cards. I buy everything on these credit cards, all of my day to day expenses as well as larger one-off purchases. Then at the end of the month I always pay off in full completely from my current account. The reason I do this is so that my money stays in my account for longer.
I just checked my credit score on one of those apps for the first time in ages and saw my score is low and it says because I have a high credit card usage.
If the amount I'm spending each month is roughly the same, why does it matter to my credit score whether I spend on a credit or debit card?

OP posts:
BuddhaAtSea · 21/11/2020 15:26

Because it looks like you’re relying on the credit. Use no more than 30% of your credit limit :)

dementedpixie · 21/11/2020 15:29

You dont want it to look like you are relying on the credit card for day to day expenses. Mine is linked to amazon, ebay, etc and then is used for any online purchases. Any other shopping transactions are made by debit card

Jolonglegs · 21/11/2020 15:30

Why not just use a debit card as the money that you're keeping in your account isn't earning any interest.

DappledOliveGroves · 21/11/2020 15:36

Have you checked all the credit score providers? I have a 999 score with Experian but a lower one, for some reason, with Credit Karma (not much lower, but it seems to have dodgy data and says I'm not on the electoral roll when I am).

Many people I know use their credit cards for everyday spending and then clear them each month (to get bonus air miles, cash back etc, depending on the card). I can't see why your actions would lower your score?

Nordman · 21/11/2020 15:48

I suppose I never thought it would look like I was relying on credit because I clear the balance each month. So would it be better to continue using the credit cards but for fewer transactions, or better to not use them at all?
The app I used to check is ClearScore but yes actually I should check others to see the difference.

OP posts:
Nordman · 21/11/2020 15:48

I remember about six years ago one of my credit card accounts was closed down because I never used it, which is why I started using them regularly.

OP posts:
BoulangerieBabs · 21/11/2020 15:56

It's about how much as a % of your available credit you use. I get a warning on the app that I use saying that I'm using more than 25% of my available credit and it may adversely affect my score.

BarbaraofSeville · 22/11/2020 07:08

You could try asking for a credit limit increase. I do the same as you and my credit score is good to excellent. However my main credit card rarely goes above about a third of the limit. But that's because the limit is high, not because my spending is low, it's not, we average about £1.5-2k pm on the credit card, but this is just our normal spending and it's cleared every month.

Credit scores are fairly meaningless though, banks use their own systems to decide whether to lend you money and how much to charge you to do so.

Why not just use a debit card as the money that you're keeping in your account isn't earning any interest

If use of credit card is an alternative to overdraft use, it can save a lot of interest as the money stays in the current account longer, preventing overdraft use.

Also banks see use of overdraft as a bad thing, while regular use of a credit card that is paid off in full every month is a bad thing.

Plus there are numerous other benefits to using a credit card like purchase protection, cashback, cashflow management and it makes it simpler to manage your current account. Instead of having to monitor your balance and anticipate future direct debits to avoid spending the money needed, you just put everything on the credit card and it comes out in one lump a few weeks later and you can treat it like any other bill.

Nordman · 22/11/2020 11:52

So I'm spending around 1K per month on the cards and I do get cashback for it so it's worth carrying on, but sounds like it should be fine to carry on with if I increase the credit limit so that the 1K is a lower percentage of the total limit.

Thanks so much for all these replies, it's interesting to hear the advice. I've never really known how to manage finances and I really wish this sort of stuff was taught at schools!

OP posts:
delilahbucket · 23/11/2020 22:19

I have a credit card I use in a similar fashion. All my spending goes on it. Much easier to keep tabs on what I've spent on none essentials. My credit score is very very high, so I can't see how yours is so different. I do have several credit cards though and only really use that one so my used amount of available credit is very low.

PontiacBandit · 23/11/2020 22:28

I do the same, all spending is on credit cards paid off every month but I have decent limits and spend a small percentage of that. It is worth it for the cashback and Amazon vouchers.

LightUpLetters · 25/11/2020 11:00

I have an account with experian with a 999 score.

I spend about 4k a month on a credit card which is almost the limit and clear it every month. I do this so if there is any fraud on it, it doesn't affect my normal bank. My score never changes on experian.

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