“Debt is Good”!? Did we mistype the headline?
By clearing off your monthly credit cards each and every month although is great does not give any indication on how well you would manage debt. When someone who is looking to provide you finance looks at your score they are none the wiser whether you are a later payer, pay minimum only.
So by leaving some debt ‘on the table’ and making sure you do not miss payments will actually give your credit score a boost. Having this trail of behaviour information is greatly loved by those Credit Reference Agencies.
The new fintech companies these days are coming out with many new ideas. One that is useful here comes from a pre-paid card provider called Pockit. They have a service called LOQBOX which essentially works by deciding how much you wish to set aside. You then pay monthly into a safestore and each month LOQBOX will report the payment to all the UK credit rating agencies. These transactions then leave that behaviour trail and provide proof that you’re good at repaying money.