Credit Rating: How it works and How to improve it discussion area

balmk

jplmac wrote: »

Credit reports show payment history for the previous 3 years. If you close the account it will always show the 3 years immediately prior to closing the account. Therefore as I have late payments on cards which I will soon be able to close would it not be worthwhile waiting for 3 years until the late payments are no longer shown and then closing the accounts. This would mean my credit score should improve in 3 years rather than in 6 years. Is the negative effect of having late payments greater than that of having credit accounts that have only recently been closed but have no late payments showing?

Thanks for your help.

The credit reference agencies hold 6 years worth of data, not 3, so any negative information will be held on your files for 6 years from the date that it was logged.

However, aged negative data is better than recent negative data (though still not great) and so you may find your credit score slowly improving as time passes.

JimmyTheWig

balmk wrote: »

The credit reference agencies hold 6 years worth of data, not 3, so any negative information will be held on your files for 6 years from the date that it was logged.

However, aged negative data is better than recent negative data (though still not great) and so you may find your credit score slowly improving as time passes.

The theory of the question still stands.
What happens to an account on your credit history when you close it? Does the last x years (3 years according to jplmac; 6 years according to balmk) stay on the file forever? I.e. is it best to keep an account open until it is clean and then close it so it shows a clean history forever? Or does the "dirty" history of a closed account get retired in the same way that on an open account would?

Greenr

Moggles wrote: »

Checking your own credit file is not classed as a credit check and has no effect whatsoever on your credit rating

Hi

Can anyone tell me if searching for car insurance quotes on Moneysupermarket.com, confused.com or gocompare.com means that you get credit checked??

Thanks!!

NickX

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Greenr wrote: »

Can anyone tell me if searching for car insurance quotes on Moneysupermarket.com, confused.com or gocompare.com means that you get credit checked??

No, simply getting insurance quotes will not result in a Credit Check because you are not applying for credit. Hope this helps.

xgingerx

Hi All, just to clarify this confussion on the 3yr 6yr reporting of info.

You credit files only show your last 3 years payment history, this is fact, but if you settle or close an account the ACCOUNT stays on your file for 6 years and shows the last 3 years payment history not the last 6 years

Hope this makes sense

after 6 years of closing an account / defaulting or settling an account it is automatically deleted by the credit agency (Normally anyway !)

Greenr

NickX wrote: »

No, simply getting insurance quotes will not result in a Credit Check because you are not applying for credit. Hope this helps.

great, thanks for putting my mind at rest.... i'm due to re-mortgage early next year so trying to keep credit checks to a minimum!!

JimmyTheWig

xgingerx wrote: »

Hi All, just to clarify this confussion on the 3yr 6yr reporting of info.

You credit files only show your last 3 years payment history, this is fact, but if you settle or close an account the ACCOUNT stays on your file for 6 years and shows the last 3 years payment history not the last 6 years

Hope this makes sense

after 6 years of closing an account / defaulting or settling an account it is automatically deleted by the credit agency (Normally anyway !)

Still don't understand, sorry.
Lets have an example.
Say you missed a payment last month then cleared the balance this month. You have two choices - leave the account open or close it.
If you leave it open then in three years time the missed payment will fall off the credit report. Correct?
If you close the account, what will be on the credit report in three years time? The account will still be there, as it lasts for six years, but what payment history will be there? Will it be the last three years (i.e. the time when the account was closed) or would it be the last three years of the account being open (i.e. including the missed payment)?

xgingerx

Hi yes, bascially you are right in what you are saying, if you had the last 3 years of bad payment and then closed the account you would have that last 3 years of bad payment showing for the next 6 years, what you would be better off doing is getting the payments upto date and leaving the account open until the negative info drops off and if you still want to close it close it then as you will then have a settled account with a spotless line of green zeros ie no missed payment. (ie close it once you have the 3 years of good history)

Hope this makes sense, but you can see how closing accounts could make your credit file worse for longer.

jimbo26

If you leave the account open the bad info will drop off in 3 years. If you close the account the bad info will remain for 6 years. I found this out the hard way.

By closing the account you in affect show up to 9 years of history. I still have a missed payment on a MBNA card from 8 years ago.

JimmyTheWig

Thanks for the confirmation. A silly way for it to operate, but if that's the way it does then it should probably be in the article.