A reader asked:
I have fairly recently got an Aqua card with a limit of £1,900. Credit Karma suggests this is low and a higher limit (with low utilisation) reflects well with lenders. I’ve only just had a credit limit with Aqua so can’t get another one soon.
But I could be added as a secondary cardholder on my partner’s credit card. This is her idea – she has a limit of almost £10k. She never spends on this and nor would I. Would this work?
My balance is £1,500 at the moment but I expect to be able to pay it off fairly quickly – will this help my score or should I keep the balance high for a period?
Will being an additional card holder help?
No.
Getting put on your partner’s credit card will have no effect on your credit score at all.
It won’t even show on your credit record, so no lender that looks at your credit history will see it exists.
Legally she is responsible for the whole credit card debt. As an additional cardholder, you have no liability at all to repay the balance. So it only affects her credit score, not yours.
How much does the credit limit size matter?
Credit Karma suggests [£1900] is low and a higher limit (with low utilisation) reflects well with lenders.
That is correct, but like many “tips” from credit reports, it is pretty vague and not that helpful.
A previous article How much will my credit score change? has some actual numbers from Experian about the size of the possible increase/decrease to your credit score for many different changes in your credit records.
That points out that the size of your limit only has a small effect on your credit score.
Your £1900 limit is easily over the “small limit” level of £250, so you aren’t penalised because of it.
But it’s a very long way from getting to the “high limit” level of £5000! Even if Aqua give you another increase in 6 months it isn’t likely to get you to over £5000. And if it did it would only gain you a tiny 20 points on your credit score.
So trying to get your limit increased isn’t likely to be possible and it wouldn’t help much anyway.
It’s your utilisation that is harming your score
“Utilisation” is how much of your credit limit you are using.
This is an important factor in credit scoring, as the numbers in How much will my credit score change? show.
When your balance is under 30% of your limit, you gain 90 points on your Experian credit score. With a limit of £1900, you need to get your balance down from £1500 to under £570 to get this bonus.
If you can clear the card balance or get down to under £50 you will gain an extra 60 points. And of course you will be saving a lot of money each month that is now going on interest payments.
Pay off the balance quickly!
The boost to your credit score from cutting your utilisation happens almost immediately.
To be exact, it will be reflected the next time the credit card reports to the Credit Reference Agency, which is usually monthly. So you should see it on your next monthly report or the one after.
There is no benefit to your credit score from carrying a higher balance.
And it is only your current utilisation that matters. If it was 90% for a year and has now fallen to 10%, only the current 10% matters.
What else could help?
This reader expects to clear the card quickly. Then he can use the card once a month for something small and repay it in full by direct debit. That will give the biggest boost to his credit score and he pays no interest.
But other people may not be able to clear the card quickly. And may not have a partner with a great credit score who could help with a 0% balance transfer.
One trick that can help here is making a fixed payment to the credit card that is larger than the minimum payment. Say the minimum is £103 – round it up to £110 and set up a standing order to pay that. This small change can have a surprisingly big effect – it stops your minimum dropping a tiny amount each month and you will pay down the debt years faster.
Of course you have to stop using the card completely. Or new spending may increase your balance and that “fixed payment” will be too low – a disaster for your credit score.
Can you stop using the card? If not, then you have much bigger problems than your credit score, as you are getting deeper into debt every month. It would be good to talk to a debt adviser about your options.
Remember lenders don’t use the credit score you see…
You don’t have a single credit score. The three main Credit Reference Agencies (CRAs) – Experian, Equifax and TransUnion – each calculate a different score for you. These scores aren’t the same as many lenders only report to one or two CRAs, not all of them.
And lenders don’t use any of these scores! They use their own.
So people can focus too much on what their credit score is. A small change to the score you see may make little difference to anything real in your life.
The best ways to check your credit score
The credit card minimum payment trap
Credit score worries can make your debts worse
Steven says
Great article. Many thanks for the good work. I recently got a credit card to boost my score as I’ve had nothing on it for 5 years. I maxed it out and am paying it off in big chunks before the 0% runs out.
Stupidly tried to get a car on lease whilst this card was maxed and was declined. If I cleared the card today, and then saw this reflected in the credit reports, then how long would you think to reapply for a lease car? I will have that decline on my credit report now so I have to leave it 3 months atleast? There is nothing else on my report and I can afford to pay it fully off now no issue.
In a situation where I can’t get credit cos I’ve got no credit history (due to bad credit 6 years ago which thankfully is sorted now fallen off). Maybe I’ll be fine once this card is back to zero and just messed up here applying too early.
Sara (Debt Camel) says
how recently did you get the card? what is the limit and what is the balance now?
is there anything else on your credit record at all? I assume you have checked your credit records with all three credit reference agencies?
Steven says
Got card in Jan, maxed out to £1500 in March. Just paid £500 off it today but could clear it if I needed to. Plan was to clear it over next 3 months and then leave at zero.
On my report (checked all) are some pay day loans from 5.5 years ago that are paid up (missed payment on one, but was paid up). Then another small credit card with a balance which I cleared today, and a small phone bill which I only took out in Jan (last phone was fri years ago and is on my report as paid up no issue).
I’m guessing I’m daft to have applied for car finance yesterday when I planned on paying these cards today. But do I even think about applying again in the next 3 months, or wait as unlikely? I’m in no rush for a new car but saw an offer and went for it as student loan now paid off which the monthly extra money from that would have paid for it.
Apologies for extra info. Appreciate the advice.
Sara (Debt Camel) says
the payday loan with a missed payment – who was the lender?
You generally need a VERY good credit score for leasing.
Steven says
MyJar. Missed payment in Feb and March 2016. Paid and closed in April 2016.
Before the credit card my score was Good with Credit Karma and Excellent with Experian. Now Fair and Good. Hopefully when paid off they will both be excellent
I guess I need to get my name on more things to start building up a history again. I earn well and am saving towards a house in a couple years. Would have thought my earnings and spare income alone would be enough to get a car lease. Though ofcourse a credit report doesn’t show that.
Thanks again
Sara (Debt Camel) says
Myjar is in administration. I suggest you send them a complaint to generalcomplaints@myjar.com saying the loan was unaffordable. It is highly unlikely you would get any significant refund, but if they uphold your complaint the missed payments should be removed from your record.
“Plan was to clear it over next 3 months and then leave at zero.”
Sounds like a good plan to me. But when it is at zero, use it once a month for something small like a tank of petrol and set up the card to be repaid in full every month. That will maximise the benefit to your credit score.
Steven says
Awesome. Will do. Thanks so much. Keep up the good work, we all appreciate it so much.
Paul says
Hi Sara,
Great article as always and really helpful. I’m in a similar situation to the OP.
Is it better to have a card with a low limit and low utilisation or is it better to simply cancel the card as I’ve had conflicting advice? A Mortgage advisor has said I’m better off without any credit cards.
I have a £1k limit and I don’t really need the card – i only took it out to try and help rebuild my credit file. I put only fuel on it and pay off in full each month. Other than this card, i have a my mobile phone, car insurance and bank account on my credit file all with good payment history and that’s it. Will this alone help build my score or will that card help build my score quicker?
Sara (Debt Camel) says
£1000 isn’t a really low limit.
A Mortgage advisor has said I’m better off without any credit cards.
That sounds unusual advice.
What is your credit score and with which credit reference agency? When did you get this card?
Why did your credit file need rebuilding – were there old defaults that have dropped off?
Paul says
It’s 548 with Credit Karma and 734 with Experian. Had the card for about 4 months. I had historical issues with payday loans and defaults that have all been paid off and defaults that have now dropped off.
Even though advised to take a card out on both CRA’s, to improve my a score, it’s actually made my score go down since. Guess I should leave it for a few more months to hopefully see the benefit?
Sara (Debt Camel) says
getting any new credit always causes your credit score to drop intially. Just keep using ueach month and repaying it in full each month . You should see the benefits 3-6 months after opening.
I don’t understand the advice to close it.
When are you hoping to get a mortgage?
Time cures all credit record problems. Your Experian score may be better than your TransUnion score as it has fewer payday and bed credit lenders reporting to it.
Who are the payday lenders you used?
Anne-Marie says
Ive given up with my credit score.
I have the money supermarket app which works it out every month.
Last month my score dropped 6 points as according to the app I was “using more credit than 3 months ago” which is not true , my circumstances remain the exact same. I queried it and got a generic unhelpful response mentioning “hard searches” which in the apps summary section indicates there are none . If anything, Ive cleared debts over the past year whilst maintaining my payments . My score fluctuates but never goes up. The balance on my amigo loan is also never accurate. I am doing 6 things well though acc to the app
Such as paying bills on time, registered to vote, no defaults…
Is it just a crap app or do I just have a terrible credit score and will have forever?
Sara (Debt Camel) says
You just need to chill about tiny changes in credit scores. Not worth spending any time thinking about.
But your credit score must have been low for a reason. Do you have any missed payments/payment arrangements? If so, how long ago are they?
Ross says
Hi Sara,
About 15 months ago, I had 4 loans and 7 credit cards. Up until 2 weeks ago, I had used Credit Karma but it seemed ‘flaky’ at best. My score fluctuated between 548-577, out of a possible 710. Even paying off large chunks of debt, and ridding myself of a number of loans/cards, seemed to do nothing for my score. A friend recommended I try Experian. I joined Experian 2 weeks ago and my score, with them, was 971 out of a possible 999.
I was keen to transfer the remaining balance to a zero balance transfer card. I tried, with Experian, and they advised that I had a 95% approval rate with Santander for their Santander World balance transfer card. I applied, and was accepted. My balance transfer, from HSBC, for £3600 was approved and they have given me a credit limit of £6400. The balance transfer offer is 0% for 26 months.
At present I have paid off most cards and now have only the Santander Card, HSBC Card and a Barclaycard Platinum Card. The HSBC and BarclayCard are now at a zero balance but, here’s the question; Do I leave the HSBC and BarclayCard open, to help keep my credit utilisation percentage down to a low level, or just close them? The total, potential, utilisation is £14800 and I will have utilised £3600, with the balance transfer from one card to the other. I work out the credit utilisation percentage to be 24%, if I keep the other accounts open. However, it goes up to 56%, if I just leave the Santander Card open?
Could you offer your thoughts please?
Sara (Debt Camel) says
Even paying off large chunks of debt, and ridding myself of a number of loans/cards, seemed to do nothing for my score.
If these repaid debts had defaults or missed payments or payment arrangements, then repaying them does NOT improve your credit score. Bizarre, but them’s the rule.
Repaying debt only tends to really improve your credit score if it is credit card debt and you are reducing your utilisation.
A friend recommended I try Experian. I joined Experian 2 weeks ago and my score, with them, was 971 out of a possible 999.
If you look at your Experian credit records, you will probably see that some of the problem debts that showed up on Credit karma are not on Experian at all. Experian is not better or worse than TransUnion which credit Karma reports on – they are just reporting on different debts.
How much are you paying off the Santander card? if you can repay say £140 a month, you will have cleared the balance before the 0% period ends.
It would be good to keep at least one of the other cards and use it for something small each month and then repay it in full. Keep whichever card has the lower APR I suggest!
Do you have any need for credit in the next year or two?
Ross says
Hi Sara,
Thanks for coming back to me. None of the cards had missed payments/arrangements. However, they were sub-prime cards, so I am unsure if this made much of a difference? I am going to pay at least £200, per month, on the Santander Card. I disposed of the BarclayCard and HSBC card a long while ago. My thinking was if I haven’t got them, I can’t use them. However, I can easily have a replacement HSBC card sent, which has a lower APR than the BarclayCard. I did think that making a small purchase, and paying it off straight away, would help my score. I can’t really see me needing any kind of credit, in the next couple of years. However, I would like to maintain a good score as you can never, say never?
Thanks again
Sara (Debt Camel) says
then I would be inclined to close the Barclaycard , keep the HSBC card and carry on the good work of clearing the Santander card. There will be a temprary drop in your score when you close the Barclaycard, but it should soon pick up as the repayments get your utilisation lower.
This isn’t really a science, just a common-sense suggestion.
ffionpearl says
If you have not changed your credit habits during COVID, is it still worth waiting for things to settle down before making applications for large pieces of credit or is it just not an issue that we need to worry about? Is there a likelihood of increased rates due to lenders perceiving more lending risks at the moment? With so many people in precarious financial states? And for those who had payment holidays did these end up causing credit problems despite the promises from lenders?
Sara (Debt Camel) says
That’s a lot of large questions!
My guess is that if you are employed (not self-employed), haven’t had a covid payment break and you have a good score, then you shouldn’t worry about applying for a new mortgage or car finance.
If you had a covid break back in the first lockdown down but not since, that probably isn’t much to worry about.
But recent furlough, covid breaks or being self-employed may make things more tricky. If you can put off applying for large credit it may be a good idea.
I hear the odd report of a credit problem from a covid break eg this one https://debtcamel.co.uk/get-rid-of-a-default/comment-page-9/#comment-419087 but I don’t think they are common and they can be disputed.
A lender can work out if you had a covid break from the fact you made no payments to a debt. It’s not clear how many will bother to do this.
ffionpearl says
Thank you Sara; its good to have your views. What you say makes sense.
Lindi says
I too have a bad credit rating but my husband has a very good one. If he gives me a card on his credit card account will that harm his rating? We want an easy was to pay jointly fir things like petrol and food but have been told not to get a joint bank account. He pays it in full every time.
Sara (Debt Camel) says
Yes that will be fine. His account and credit limit won’t help you – but your bad credit rating will not harm him either.
See https://debtcamel.co.uk/joint-account/
Marg says
Morning,
I just want to check I have understood your advice (in the articles correctly).
I have 4 credit cards (limits – £200, £400, £600, £1550).
Historically my usage has been over 90%, but I am finally getting my debt under control – so to improve my credit rating, in the near future, my best opinions are
1) to lower my usage (in process down to 60% already)
2) cancel the card with the £200 limit as this is below £250
Is that correct? obviously there are lots of other things for me to do over the next three years until my CCJ falls off, but those two things feel like a good start
Sara (Debt Camel) says
Those both sound sensible steps.
Cancelling any card has a short term impact on your credit score. But the best thing in this sort of situation is usually to this as soon as possible and get that over and out of the way. Long term you do not want that low credit limit card.
People normally find that once they start working at paying off cards, this is a process that speeds up as it goes, as the interest you are being charged each month drops. (Of course this only works if you aren’t borrowing at the same time – if you stretch to pay more to one card but are then so short you have to put petrol or groceries on another card, that isn’t paying off debt at all.)
One thing that can help is a general review of your finances, not just the debts. I call this a “money detox” – see https://debtcamel.co.uk/money-detox-seven-easy-steps/
Karen martin says
Does anyone know if mbna credit card are good at letting you have a payment plan for say 6 months
Sara (Debt Camel) says
Please stop asking this question on about different creditors on different pages.
ALL credit card lenders will let you have a payment plan if you show them the information that you cannot afford the current payments.
NO credit card lenders are likely to say “Of course” if you ask but don’t explain your situation.
Tom Saunders says
Hi Sarah,
Over the years I have been very iresponsible with my credit and have now come to a responsible person and try and improve this but I know I will have a long wait.
I have 4 defaults and 2 ccjs and have a credit score of 257 on clear score I know terrible!
But I’ve recently started loqbox payment saving plan paying 20 pounds a month which I’m paying on time and on my 3rd payment and have a zuto credit card to hopefully improve my credit which i pay off in full every month…do i have actually any hope of getting my score respectful??please help!!
Sara (Debt Camel) says
What are the default dates on the 4 defaulted debts? Have you repaid these debts?
What are the dates of the 2 CCJs? Have you repaid these?
The new credit card, what is its limit? How much do you spend on it each month?
Tom Saunders says
The default dates are 2015,17,18 and 2019 know they haven’t been paid,and the 2 CCJs are 2017,18 and there outstanding..my credit card is 200 a month and I’m keeping it at 70 to 100 but repaying in full…I just don’t know how to address it all ..it just got out of hand and I’ve basically buried my head in the sand and prayed it would go away but now I’m paying the consequences.
Sara (Debt Camel) says
So the defaults drop off after 6 years, so the first will go this year, the last not until 2025.
The CCJs also go after 6 years, so 2023 and 2024.
Are you making any payments to the defaults?
Were any of the defaults from high interest debt? If they were, have you looked at affordability complaints – winning a complain may get you a bit of money but it would also remove the default from your reports.
The credit card, I suggest you aim to pay less than £60 a month on it. You never want to use 40% of the credit limit and under a third is better.
Tom Saunders says
Yes..one is for Loans to go for 500 but now want 2k with the interest..!!
The only other issue I have is lowell are on one account which is in default since November 15 is also a ccj for the same account from 2017 for 416 I rang them and they say they can do this…
Sara (Debt Camel) says
so read https://debtcamel.co.uk/worst-loan-in-britain/ about the L2G debt. Horrible. Well worth complaining about.
who were the other defaults from?
Lowell, yes it’s right that the CCJ and the original debt both show. the original debt will go in a few months time.
If you aren’t paying the defaulted debts, more of them are likely to end up with CCJs…
Sara (Debt Camel) says
why do you want a better credit score? Just because you hate having a bad one? because you need more credit eg car finance and want it cheaper? because you want to consolidate debt more cheaply? or are you looking forward to a mortgage at some point?
Tom Saunders says
Hi Sara,
I’m just sick of worrying about getting credit even for the smallest things and then getting refused, find it embarrassing, plus I just want to be a bit more responsible now..
If I come into a situation where I can buy a property I’d like to know my credit can help me in the future…that’s all
Sara (Debt Camel) says
ok so you don’t have an urgent need for credit, that’s good because the baby steps you are taking to improve your credit score with LOQBOX and the credit builder card aren’t going to help much for a long while.
What you need to do is start repaying the defaults and the CCJs. Because if you are applying for insurance or a mobile contract, those are the things that look worst. Doing this won’t increase your credit score, but it will make people more likely to give you small amounts of credit.
You don’t need another credit builder card, just keep on with what you have.
And don’t try to borrow to clear the defaults and CCJs – no interest is being added there, you just need to plod an=on and clear it.
With such a lot of debt problems it’s too early for LOQBOX to help much. You may as well carry on for the rest of the year, but then take the money out and try to settle a debt with it.
Tom Saunders says
Ok Sara Thank-You for your advice, I will attempt to get the 3 defaults under control stopping them from moving to ccj .I sent the temple you provided to loans to go and now waiting for a reply..
Thanks again
Tom Saunders says
Ok Thank-You Sara..
One thing ..on the research I did it’s saying you can’t have a CCJ and a default for the same debt cos it looks like 2 years into the default they went for a ccj so now the debt would take 10 years to go of so when default drops ccj stays on so I can’t even clear it…don’t you think that’s harsh?
Sara (Debt Camel) says
on the research I did it’s saying you can’t have a CCJ and a default for the same debt
I have no idea where you saw that but it is wrong.
cos it looks like 2 years into the default they went for a ccj
The defaulted debt drops off 6 years after the default.
If the CCJ was 2 years after the default, that will stay for 6 more years, so 8 years from the default date. i don’t know where your figure of 10 years comes from.
don’t you think that’s harsh?
I don’t make the rules.
Tom Saunders says
Hi Sara,
We haven’t spoken since the summer and I have been making steps to improve my credit status,
Firstly I’ve been listening to the 30% credit utilisation and my level credit card has gone from a £200 to a £350.
My zopa has remained on a £200 limit which I find strange as I’ve had that the longest and have stayed responsible but a couple of times exceeded the 50% ,I now have been approved for a totally money credit card with a £200 limit which again is strange because they are owned by one of the defaults previously I had??
My loans to go have a repayment of £10 a month and one of my defaults have dropped of and the other defaults and ccj I’m repaying lowell all £5 a month just to keep them turning into a ccj after the defaults ends..
Do you think this is all correct or could you give me any other advice you think I need to carry out..??
Anything would be appreciated.
Kind regards
Tom saunders
Sara (Debt Camel) says
Stop applying for credit builder cards! Which is what I said in the summer. Another one will not help you.
Are you running a balance on the Zopa card? The level card (I don’t know what that one is)?
If you ever want a property all the defaulted debts and CCJs that you are maiing token payments need to have been settled, even though they are not on your credit record.
natalie says
Thanks for this Sara.
I have paid off some old debts and closed accounts as satisfied with Lowell and Nat west today my credit score has gone down.
Is this normal? On clearscore it states that ‘status will improve on next report’ which will be on October 30th….
Sara (Debt Camel) says
Closing accounts normally has a temporary small bad effect on your credit record.
Nats D says
Ah ha any idea how long the bad effect lasts ….
Just you know when you’re trying to rebuild feels like you are going backwards
Thanks for the reply x
Sara (Debt Camel) says
a few months. Just ignore your credit score in this situation. You have to settle debts showing with missed payments or defaults – that makes lenders much more likely to lend to you. lenders do not use the credit score that you can see.
Nats D says
Perfect thank you
I’ll just continue on this path 😃
Thanks for replying
Steven says
Update: score has improved and I have got a car. The credit card definitely worked in building my score back up after having no history for years. Fortunate that I can spend on it and pay in full each month. Thank you for the advice on this page.
Kieran Stonestreet says
Hi Sara,
I have a default with the phone network 3G that happened a few years ago. I’m just wondering if I would be able to appeal to have it wiped as I wasn’t actually aware I even had the debt or that it had been passed onto a bailiff. I was away travelling for two years, during this time I didn’t receive any letters or emails. Once I returned home I moved to my girlfriends and shortly after received the letter informing I owed a small amount, I phoned and payed in full right away and couldn’t believe it had even happened.
I have never been in debt since or before and have always payed everything on time. I have ambitions to get a mortgage on a home with my partner but this default has kept my score in the OK zone on Experian (765). I’ve been using a credit building card and have an LOQBOX (which ends in November) to try boost the credit but am worried I will struggle due to this default.
Sara (Debt Camel) says
How long ago did you pay The default?