Should I get a credit card?
Discussion
I’m not sure what is best for me to do, my credit score on Halifax is showing as 606/710 which is just into ‘good’. One of the main reasons it says that I could improve is that I have a low credit limit.
Recently I’ve been struggling a bit each month, never have much spare money and will likely be like this for approx the next year or so. (Nursery fees still to pay, wife will be on smp for 9 months)
I’ve never been one to borrow money or buy things I don’t need, however i’m wondering whether in order to alleviate pressure for a while and also to improve my credit rating, should I apply for a credit card, Halifax will offer me a 0% purchases for 17 months with limit of £3,000.
I’ve tried a check on uswitch which says I have a 90% chance of getting a barclaycard credit card with 0% on purchases for 24th months.
I have 2 credit cards already which I never use, took out in I think 2010 purely as 0% on purchases at the time so I just put the money spent into savings and then paid £5 a month and then full balance off just before the 0% expired.
Recently I’ve been struggling a bit each month, never have much spare money and will likely be like this for approx the next year or so. (Nursery fees still to pay, wife will be on smp for 9 months)
I’ve never been one to borrow money or buy things I don’t need, however i’m wondering whether in order to alleviate pressure for a while and also to improve my credit rating, should I apply for a credit card, Halifax will offer me a 0% purchases for 17 months with limit of £3,000.
I’ve tried a check on uswitch which says I have a 90% chance of getting a barclaycard credit card with 0% on purchases for 24th months.
I have 2 credit cards already which I never use, took out in I think 2010 purely as 0% on purchases at the time so I just put the money spent into savings and then paid £5 a month and then full balance off just before the 0% expired.
In your current situation I would only use a credit card for usual purchases like fuel, food, etc. & pay the balance off completely each month.
I have used various credit cards for years & never paid any interest. Each card has different offers each month. E.g. this week our Barclaycard is giving 10% cash back on most items bought at Morrisons.
I have used various credit cards for years & never paid any interest. Each card has different offers each month. E.g. this week our Barclaycard is giving 10% cash back on most items bought at Morrisons.
Supernova190188 said:
Simpo Two said:
Why do you feel you need a higher credit rating?
One reason was hoping to remortgage in about 2 years so thought it may help a bit there too?Just be careful not to borrow more than you can repay, especially with an eye on interest rates and gas prices. Leave yourself some slack or you could find yourself on the wrong side the slope.
I once worked with a former bank manager. He described extending a loan as like pulling a drowning man into shallower water - but further from shore...
My credit rating is currently excellent, bizarrely the only area where there is room for improvement is in the amount of credit I have access to.
The next step up score wise is only available once I have over £15,000 in available credit and I currently have less than half that.
I asked my bank to increase my limit, but my spending habits do not require that level of limit and as such it was not granted.
What I did find is that my credit score would jump up and down a little bit quite frequently; what I traced this to was actually clearing my balance.
Strangely (well initially) it seems that having £0 balance is a bad thing, as it means you have no way of demonstrating an ability to effectively manage credit. I have started to leave a little bit of a balance on my card, just so that it demonstrates use of my available credit.
Since I employed this tactic my score does not go up and down and has started to slowly increase even further. I am currently at 95.2% of the maximum score available.
I would definitely recommend getting a credit card, as actually having access to credit will improve your score and then using it responsibly will enhance it further.
The next step up score wise is only available once I have over £15,000 in available credit and I currently have less than half that.
I asked my bank to increase my limit, but my spending habits do not require that level of limit and as such it was not granted.
What I did find is that my credit score would jump up and down a little bit quite frequently; what I traced this to was actually clearing my balance.
Strangely (well initially) it seems that having £0 balance is a bad thing, as it means you have no way of demonstrating an ability to effectively manage credit. I have started to leave a little bit of a balance on my card, just so that it demonstrates use of my available credit.
Since I employed this tactic my score does not go up and down and has started to slowly increase even further. I am currently at 95.2% of the maximum score available.
I would definitely recommend getting a credit card, as actually having access to credit will improve your score and then using it responsibly will enhance it further.
Glosphil said:
In your current situation I would only use a credit card for usual purchases like fuel, food, etc. & pay the balance off completely each month.
I have used various credit cards for years & never paid any interest.
+1I have used various credit cards for years & never paid any interest.
It's also safer to spend the bank's money than your own (online purchases etc) plus you have added security in disputes iirc. Just have it so the entire balance is paid off each month (via direct debit).
It's very rare I use my debit card now.
If I had a card with the 0% on purchases for x amount of time, would you use that or would it be beneficial to not use it and pay off complete balance in full each month?
Also I’ve heard it’s better to not use your whole credit available too, maybe just run it up to approx 1/3 of available credit?
Also I’ve heard it’s better to not use your whole credit available too, maybe just run it up to approx 1/3 of available credit?
Supernova190188 said:
If I had a card with the 0% on purchases for x amount of time, would you use that or would it be beneficial to not use it and pay off complete balance in full each month?
Also I’ve heard it’s better to not use your whole credit available too, maybe just run it up to approx 1/3 of available credit?
If I have a big spending month & get close to my credit card limit I then make a one-off pay0ment to bring the amount owed down again. If course I also pay off the outstanding balance from the next statement. Also I’ve heard it’s better to not use your whole credit available too, maybe just run it up to approx 1/3 of available credit?
The Dictator said:
My credit rating is currently excellent, bizarrely the only area where there is room for improvement is in the amount of credit I have access to.
The next step up score wise is only available once I have over £15,000 in available credit and I currently have less than half that.
I asked my bank to increase my limit, but my spending habits do not require that level of limit and as such it was not granted.
What I did find is that my credit score would jump up and down a little bit quite frequently; what I traced this to was actually clearing my balance.
Strangely (well initially) it seems that having £0 balance is a bad thing, as it means you have no way of demonstrating an ability to effectively manage credit. I have started to leave a little bit of a balance on my card, just so that it demonstrates use of my available credit.
Since I employed this tactic my score does not go up and down and has started to slowly increase even further. I am currently at 95.2% of the maximum score available.
I would definitely recommend getting a credit card, as actually having access to credit will improve your score and then using it responsibly will enhance it further.
You seem to regard a credit score much as the score in an arcade game. If you don't need credit, you don't need a credit score. I have no idea what mine is, neither do I care, and if it is zero, I shall consider that an achievement!The next step up score wise is only available once I have over £15,000 in available credit and I currently have less than half that.
I asked my bank to increase my limit, but my spending habits do not require that level of limit and as such it was not granted.
What I did find is that my credit score would jump up and down a little bit quite frequently; what I traced this to was actually clearing my balance.
Strangely (well initially) it seems that having £0 balance is a bad thing, as it means you have no way of demonstrating an ability to effectively manage credit. I have started to leave a little bit of a balance on my card, just so that it demonstrates use of my available credit.
Since I employed this tactic my score does not go up and down and has started to slowly increase even further. I am currently at 95.2% of the maximum score available.
I would definitely recommend getting a credit card, as actually having access to credit will improve your score and then using it responsibly will enhance it further.
To get a higher score you need to be a good debtor - in other words, get into debt and pay interest - which is what they want you to do. Paying it off on time in full means they can't make any profit out of you - so what motive do they have to lend you more?
g3org3y said:
+1
It's also safer to spend the bank's money than your own (online purchases etc) plus you have added security in disputes iirc. Just have it so the entire balance is paid off each month (via direct debit).
It's very rare I use my debit card now.
This a good idea I've been through the last 10 years saying no to using my credit cards but as you say you're spending the banks money and not risking your own just set up the DD to pay off in full every month. It's also safer to spend the bank's money than your own (online purchases etc) plus you have added security in disputes iirc. Just have it so the entire balance is paid off each month (via direct debit).
It's very rare I use my debit card now.
Simpo Two said:
You seem to regard a credit score much as the score in an arcade game. If you don't need credit, you don't need a credit score. I have no idea what mine is, neither do I care, and if it is zero, I shall consider that an achievement!
To get a higher score you need to be a good debtor - in other words, get into debt and pay interest - which is what they want you to do. Paying it off on time in full means they can't make any profit out of you - so what motive do they have to lend you more?
You make a fair and reasoned point there, which is unusual for PH, what on earth were you thinking? :-)To get a higher score you need to be a good debtor - in other words, get into debt and pay interest - which is what they want you to do. Paying it off on time in full means they can't make any profit out of you - so what motive do they have to lend you more?
I definitely got sucked into checking it each month and seeing where I could improve it. It doesn't hurt to have a really good credit score and there are certain things that you can do relatively easily to enhance it.
I currently have no need to deploy my score on anything, but it's reassuring to know I can access the best deals if and when I do.
If you want a credit card and don't want to make use of credit, maybe get one with rewards/cashback.
We have a Natwest Rewards account and a Natwest Rewards credit card which when combined does return a small amount of money over the course of a year.
As others have said, the score itself isn't that meaningful.
We have a Natwest Rewards account and a Natwest Rewards credit card which when combined does return a small amount of money over the course of a year.
As others have said, the score itself isn't that meaningful.
Simpo Two said:
You seem to regard a credit score much as the score in an arcade game. If you don't need credit, you don't need a credit score. I have no idea what mine is, neither do I care, and if it is zero, I shall consider that an achievement!
To get a higher score you need to be a good debtor - in other words, get into debt and pay interest - which is what they want you to do. Paying it off on time in full means they can't make any profit out of you - so what motive do they have to lend you more?
A proven record of paying off debt NOT a proven record of paying interest. To get a higher score you need to be a good debtor - in other words, get into debt and pay interest - which is what they want you to do. Paying it off on time in full means they can't make any profit out of you - so what motive do they have to lend you more?
We have 4 credit cards, two joint and two individual we always pay the balance off in full each month don't pay interest but do enjoy some of the rewards associated with spending on them. We never use our debit cards and use the credit cards for pretty much everything, we spend less than £100 per month in cash between us, the companies make money purely due to the traffic on the card not only the interest so yes they are happy to increase the limit as and when we ask
Having a good credit score enables you to get cheaper credit or offered credit when others are refused, there is no downside to improving your credit score
Look at the cards offered to those with poor scores , limit of £1500 and rate of 35% compared to 0% for up to 21months for others
I've no idea what my credit score is and never have,
I've always managed to get offered the top rate when applying for loans and never had any issues getting a mortgage agreed so my score can't be that bad,
I also always pay my credit card balance in full every month and have done since I've had it, plus most loans I've had have been paid off early to save on interest charges sometimes in a matter of weeks and it doesn't seem to have affected my ability to borrow money.
I really can't imagine how knowing a number I have no direct influence over outside of being credit worthy, would be of any benefit to me.
I've always managed to get offered the top rate when applying for loans and never had any issues getting a mortgage agreed so my score can't be that bad,
I also always pay my credit card balance in full every month and have done since I've had it, plus most loans I've had have been paid off early to save on interest charges sometimes in a matter of weeks and it doesn't seem to have affected my ability to borrow money.
I really can't imagine how knowing a number I have no direct influence over outside of being credit worthy, would be of any benefit to me.
Supernova190188 said:
One reason was hoping to remortgage in about 2 years so thought it may help a bit there too?
To be fair your credit rating will be just one of the things that the mortgage co. looks at when assessing the remortgage, and a 'good' score will most likely be enough in that regard. I think these days they probably put more weight on affordability so it's your bank statements they'll probably be more interested in.As others have mentioned, best not to get a credit card to pay for anything other than day to day spending which you pay off in full each month as it's a slippery slope if you are struggling to make ends meet; what if you are still short when that 20th month rolls around? But if used for a cash flow tool and you buy your every day stuff with them and pay off in full each month, they are great, you will never pay interest and you will pick up any perks along the way.
You don't have to use all your available credit to get a good credit score, but if you use too much (like 90% all the time) then it won't be seen as good. I think I have about £40k of available credit over a number of cards that I've picked up over the years for various purposes (one for foreign spending, one for air miles, one for supermarket points etc.) but I only have maxiumum of 10% utilised at any time. I have never paid a penny in credit card interest but the companies like to throw more and more credit my way. As someone mentioned above they make money every time I use my card, not just when someone pays interest. I suspect they make more money this way, as the people who do pay interest are probably the ones who will cause problems in the long run.
One thing to bear in mind, your credit score is based on a number of factors, not just the amount of credit and making payments etc. but also the number of times you've applied for credit over a period of time, so make sure if you are going to get a credit card, don't do it too close to your mortgage renewal as it might score against you. Other than that, the long and short of it is if you can stay disciplined with credit there's no reason you can't make it work for you.
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