Credit rating affected by 0% Apr?

Buffman

Buffman

Buffman

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So folks a quick question :

Got a tesco credit card (0% for 18 months), I currently make all payments on this (As it also offers cashback).

If I choose to pay the minimum amount on this up to the 0% limit (circa 3k) will it look bad on a credit rating? (I will have over 2* the credit rating in the bank saved up, and offering me interest).

I only ask as potentially I would like a mortgage in 2 years or so.
 
Not at all, paying your credit card on time will only help with your credit rating, no matter the APR.

There are people that say having a credit card near its limit for prolonged periods of time can hurt your credit rating, but how true that is I couldn't say. But as you're planning on paying it off then that shouldn't be an issue
 
Steedie said:
Not at all, paying your credit card on time will only help with your credit rating, no matter the APR.
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To confirm, I will be paying the minimum (not the required amount ) ie excess of 300 (say 325-25)quid on it a month for the next 10 months
 
I was once told, and I am not sure how true this is, to pay more than the minimum amount each month even just by a pound. I don't know what would show up on your credit record etc. but they were saying it as if it shows if you paid the minimum or more than the minimum so anything above the minimum looked more positive than just paying the minimum.
 
That's still fine, as long as it's not less than the stated minimum and is on or before the due date, it doesn't matter
 
Looks much better if your paying it off in full each month.
Having a credit card empty is not great either. Currently looking at mortgages now and ive been advised to spend at least £50 a month on the card and pay it all off each month.
They arent just looking at credit rating any more they look at your total spending in detail. They stress test you as well now to see if you can handle a rise in interest.
 
Nearly all companies have bespoke algorithms. No one apart from employees can say for sure.

It also depends on what you define as credit rating. Risk premium or profitability.
 
MooMoo444 said:
Does having some balance on your card for a few months affect your CR? Like say 20% of the limit?
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I think anyone answering this would be speculating. There are so many credit card myths I've heard:

1) Don't ever pay off in full, leave a small amount like £5 on as paying off in full harms your credit rating (one of the more bizarre ones)
2) Don't keep a card near it's credit limit
3) Don't leave payments too near the due date as it looks bad

Etc etc.
 
Steedie said:
I think anyone answering this would be speculating. There are so many credit card myths I've heard:

1) Don't ever pay off in full, leave a small amount like £5 on as paying off in full harms your credit rating (one of the more bizarre ones)
2) Don't keep a card near it's credit limit
3) Don't leave payments too near the due date as it looks bad

Etc etc.
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Yeah I've pretty much heard so many things. I had a few £100 on mine that I couldn't pay off all at once, so it was on there for a couple months. Nowhere near the limit mind, but I always wondered if it was a black mark as I couldn't cover it all at the end of the month.

Since got rid of it though.
 
Number 1 is true when it comes to applying for credit. They want to make money off you and someone that always pays in full never pays any interest. Different when it comes to mortgages though they like no debt at all.
 
The Craig said:
I will have over 2* the credit rating in the bank saved up, and offering me interest).
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Thats what I am doing.

I pay £100 towards the CC each month but its split to the following:

x = minimum CC monthly payment

£100 - x goes into savings to gain interest
x - goes to pay monthly min required.

At end of period I take all the "£100 - x + interest" in the savings and pay off the card.

This way I pay 0% interest on the CC balance until the end and get (currently) 3% on the "left over" bit form the £100 going into savings.

There will be extra I have over from paying the balance at the end of period whereas if I just put the £100 into the CC each month over the same period, I dont get any interest from it. This is the smarter way to do it. Almost like stoozing.



edit: and no, it wont affect your rating.
 
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No such thing as a credit raitng - except for the "made up scores" given to you by the likes of Experian or Equifax to sell you thier products and services.

You do have a credit history and lenders have "lending profiles" that they try to match to your credit history.

To one lender, paying off all your debts on time and in full will look bad (as they wont make any money from you) but to other more risk averse lenders that would make you a good candidate for thier products.

General rule - never miss a payment, don't get ccj's and keep your borrowing within reasonable limits and you'll be good to go. Overall - borrow and pay back debts to suit your needs and circumstances, not a lenders.
 
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I've had credit cards left maxed out for the last 4 or 5 years, as I fill up 0% cards and instead put the money in savings accounts. I've paid the minimum payment, left them maxed and then cleared them off once the 0% runs out, and I've had no issue at all in getting mortgage offers in principle. None of the IFAs I've used have had concerns over it either.
 
Skeeter said:
I've had credit cards left maxed out for the last 4 or 5 years, as I fill up 0% cards and instead put the money in savings accounts. I've paid the minimum payment, left them maxed and then cleared them off once the 0% runs out, and I've had no issue at all in getting mortgage offers in principle. None of the IFAs I've used have had concerns over it either.
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Coolio, this is my plan. Might pay like 100 rather than 25 but still won't pay the excess. In4 interest gains
 
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