As the title says, basically when you don’t live here and don’t build up credit its somehow worse? I left the country when I was 18 so I literally have none. I’ve managed to get a credit card with tesco at 49%Apr but how does it work? Do I buy something small and pay it off straight away? Or should I max it out and pay it off bit by bit? Any help will be greatly appreciated
4 comments
Man.
If you want to use a credit card then there’s two rules:
1. Pay it off in full every month, ideally by direct debit
1. Don’t spend more on it than you would with a debit card
Use it for everything, always pay it off immediately.
Edit: pay it off immediately you get the monthly bill.
If you want to build up credit, getting a credit card is the first move. I got my first credit card at 18, I’m 21 now and so I’ve had 3 years of building up credit. Depending on what type of credit card you get, you use it differently. One of my credit cards is a store card, so I can purchase products on the card, choose how long I want to pay it off and pay in instalments. I usually use this card if I’m buying something pricy, like a new laptop, phone, furniture etc.
Then I have my second credit card. I use this credit card to build up credit. So if I’m buying food or clothes, and it isn’t too expensive, I’ll opt to pay for it on my credit card and then I can pay it off before the due due. Doing this, coupled with not going near your credit limit helps build up your credit score.
Another thing, you might already have a credit history. I opened my first bank account in 2016 and I still have it open now and it’s on my credit file. As a result, it’s helped boost my score as it shows stability given I’ve had the account open for 6 years. Same with my phone contract which I’ve had for 4 years.
Best tips: stay within your credit limit, try to not use more than 30% of your available credit. Always pay your balance before the due date, if you can’t, pay the minimum payment. And do not apply for too many credit cards within a short timeframe. That messes up your credit score as it looks like you’re in bad financial shape. Plus never use your credit card to withdraw money from a cashpoint. That negatively affects your score.
A bit of both, or so I discovered a while ago. Friend was trying to rebuild her credit, got herself a Capitol One (?) credit card. Higher than you could pay interest however very good to rebuild credit with. She bought a few little things with it and paid them off in full, she bought a few big things and then didn’t use the card again until she had paid it all off. She also overpaid every month, so if the minimum payment was £25, she would pay £35. At no point did she get close to her credit limit, close to or over the credit limit not very good, paying things off in an orderly way very good. It took a couple of years however it did the job and credit rating was restored.
Second hand knowledge so feel free to correct me if it is wrong, or has changed.