How to keep a healthy credit rating when you have no debt

[fedup078]

If I pay off my mortgage and have no other debt I'm presuming that means I will end up with a poor credit rating in time?
I'm worried I then won't be able to get credit in future if I needed it
Is the only thing I can do is use a credit card for all purchases and pay it off every month ?
Anything else?

I don’t think it works like that. Mine didn’t.

But then again, I do have a 2 credit cards open that I don’t use.

Any reason why you don’t want to put day to day spending on a credit card? I just pay it off in full each month and have for years.

@Fridafever no I don't have a problem with doing that I just wondered if there was anything else I can do that I'm not thinking of

We have t had a mortgage for five years and no long term debt for many years before that. We both do use out credit card every month for husbands work expenses and larger purchases and pay it off in full every month. Out credit rating according to Noddle, ClearScore and Experian is excellent.

Sorry for the awful typing, glasses now on.

do you have a mobile phone contract? Having one and keeping it in good order counts towards a good credit rating.

@BitOutOfPractice £7 a month sim only
Does that count?

I do all My spending onan Amex card that gets reward points that can be redeemed loads of places, and direct debit to clear the whole balance every month

You should only be using about 10-20% of your credit card limit though. If it's at the max every month, that isn't good either.

I have never had any debt except my long paid-off mortgage (lucky me, fairly frugal lifestyle). My credit rating is perfect.

Use your credit card to buy your weekly shopping and pay it off immediately

Have a mobile phone contract.

Both of these will help.

Put all my spending each month on my credit card, then pay this off in full.

I also have a 0% one used for a larger purchase, pay of more than the minimum payment each month and will clear before interest free period runs out, whilst the money I would have spent on it is making (very little) interest in a savings account

Ensure that you’re on the electoral roll.

I’m interested to see your replies, I have no debt bar my mortgage. Although on my credit report it shows my o2 phone purchase ( monthly) and the water bill which comes out monthly. So that shows I pay regularly etc. still recommended to get a credit card. Even though I have no credit defaults/late payments etc and and excellent report.

I don’t want a credit card, I hate debt I had a bad time with it when young (All paid back no defaults) and although I’m older and much wiser I don’t want to have to get a credit card I don’t really need once the mortgage finished in ten years or so just to prove a rating.

Like others my only debt is my mortgage and I don't want a credit card. Never had an issue getting a mortgage and rather doubt I would have a problem getting credit, but I don't want it. Do you anticipate needing to borrow if your mortgage is paid off?

@GOODCAT I hope not but I also wouldn't want to think it was wasn't an option
Looking at other posts it doesn't look like it's going to be an issue
I can just keep an eye on my score and deal with it if and when I have to

You could keep a very small amount on the mortgage as that's an important factor that feeds into your credit score. This is useful for example if you did want to move house in future, it gives lenders some recent history. It entirely depends what your plans are.

Bear in mind that not having debt doesn't automatically diminish your rating or give you a "poor" credit rating, what it does is limit the ability for an organisation that would give you credit to determine you're a good risk.

if you don't anticipate needing to borrow lots of money, then you don't need to artificially take out credit just to keep a credit score at a level. As long as you have a past history of well- managed finances that shows up by having timely repayments then you shouldn't have a problem borrowing in future,

When I moved to the US on a work assignment, a colleague recommended store credit as a way to build up my credit profile. Not sure that it’s as prevalent nowadays, but basically, next big ticket item, that has interest free credit available, take that out, then pay early.
Look at a car service plan whereby you pay a fixed amount monthly?
Any direct debits which are interest free - council tax?

@daisychain01 thanks I've considering keeping a small mortgage too for the reasons you've stated

Using a free app like ClearScore enables you to easily see your personal credit score on a monthly basis, I think it's sponsored by Equifax credit agency,

@daisychain01 a few days ago I realised there is a score checker on my banking app. Might be useful info for anyone else wanting to check as I hadn't noticed before

Nice one @fedup078 ! Sounds like you're in the case

I use ClearScore and it's a bit scary but also reassuring that it knows all my expenditure almost as quickly as I do. At least I know my score is very current and accurate as its plugged into all the main sources of credit Eg Bank, mortgage, credit card and council tax. 👍

"on the case" - where's that edit function when I need it!

Your phone may or may not count. If it's paid on a debit card like Giff Gaff or similar it won't be reported, but if it goes out by DD it might.

Different lenders view a lack of credit use in different ways and obviously you may not want or need to borrow money, but it's better to be able to borrow money but not need to, than need to and be unable to, or find it more expensive than it has to be.

I don't understand why people seem so against using a credit card for their normal spending and paying off the balance in full every month by DD. It has so many advantages even if you don't need to borrow money.

Purchase protection if your supplier goes bust or fails to deliver or goods/services are deficient in some way

Cashback/points

Cheaper and easier to hire a car

Simpler finances - you don't have dozens of transactions coming out of your current account each month

Protection against loss of service/hacking. If your main account is hacked or the service goes down, you could be completely stuck and have no way of spending money. Having a back up means that you can still function financially and your direct debits will go out as normal.

Cashflow management for free if you need to make a large purchase, an overdraft costs money but you can spread the cost over a few weeks with a credit card.

Plus probably more.