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

tigerlily44

boomstyliemikey wrote: »

Hi guys Ive been rejected for a loan and I cant see why.
All ive had is 2 3 missed payments when I was younger in 2006 and 2008. Everything else is perfect Electoral role, searches ect yet Im getting a credit rating of 295 which is very low even though In October When I checked my credit report It had 400 and something. Its seems like my credit rating has halved for no apparent reason.

Firstly if you are buying your credit score, DON'T! There are enough posters on here telling you they are a waste of money and have nothing to do with each individual lender's criteria.

Secondly while you have missed payments it would depend on how late they were before they started becoming a problem - ie 1 missed payment would be viewed less seriously than 2-3 months in arrears which would indicate more than a temporary cash flow problem.

Thirdly it may be that you already have too much available credit for your income - more than half and lenders get jittery.

Hope this helps, I'm not an expert but there's lots on here who are

tiger

rvs80

Hi, i have only 1 current account. if i close the existing current
account and open a new current account in a new bank either single
or joint, will it create anew credit history for me?

izools

no it won't

I presume from that question that you have adverse data on your credit file you want to hide?

If not, may I ask why you are interested in creating a "new" credit history for yourself?

4nnabella

Hi everyone,

I am currently just over half way through paying off approx £16k of debt through a debt management plan and am a bit concerned with how long this is all going to take to come off my credit report. I took out the free trial with Equifax today, as I have not looked at my credit report for some time, and as far as I understand it, all the bad debt etc will stay on my file for 6 years after the debt is settled.

This has thrown up a couple of questions for me.

1. Despite the fact that all my creditors have accepted the payments I am making, all negotiated through Payplan, half the accounts on my credit report are showing as 'defaulted' or 'in arrears' (one is listed as 'arrangement to pay' - not quite sure what this really means). If they have accepted the proposed payments, surely they shouldn't show as 'in arrears' and so on?

2. Is there anything I can do now, to start rebuilding my credit rating? All my current bills, utility bills etc are paid in full and on time, my bank account is always in the black, I have an account with Littlewoods which I use but pay every month (current balance of £200 which will be cleared in a few months, no missed payments etc, my credit limit on this account is over £2,000 but obviously I have no intention of spending this much!).

I cannot apply for any new credit while I am paying off the debt but my husband and I will be looking to get a mortgage in the next few years (although we have no deposit saved so will need to do that first anyway!) and I would like to think that my credit situation will not cause us too many problems. The current estimated completion date for paying off my debt based on what I am paying now is September 2015. My aim this year is to revisit my budget and really scrimp and save every penny to put towards paying this off to see how much of a dent I can make in it. In hindsight I should have done an IVA as opposed to a DMP as it would have been completed last year! Never mind!

I just wondered if anyone has any tips or advice on how I can dig myself out of this hole any faster?

Thanks!

izools

Your accounts will show as in arrears and / or defaulted, correctly, because the payments are not being made in line with the contract / credit agreement agreed between you and the creditor when you took it out.

They are accepting token payments instead of taking you to court, not as part of a new credit agreement.

Unfortunately until all of your accounts are closed / settled / paid off, or they all default and six years pass from the default date, there will still be adverse information on your credit file affecting your ability to obtain credit and this will have an impact on your ability to get a mortgage.

Just going to be a matter of gritting your teeth and getting down to paying off the debt as fast as you can. If you have spare cash to save for a deposit, you have spare cash to go towards the debt. Do that first. If your creditors got wind that you were putting money in a savings account instead of paying them what you could *actually* afford they wouldn't be very impressed and in the most extreme circumstances could secure a CCJ against you to get that extra surplus income.

4nnabella

izools wrote: »

Just going to be a matter of gritting your teeth and getting down to paying off the debt as fast as you can. If you have spare cash to save for a deposit, you have spare cash to go towards the debt. Do that first. If your creditors got wind that you were putting money in a savings account instead of paying them what you could *actually* afford they wouldn't be very impressed and in the most extreme circumstances could secure a CCJ against you to get that extra surplus income.

Thank you

You have confirmed what I was thinking. I am just getting a bit fed up with not being able to do much about it apart from making measly little payments. Oh well. Will just have to refocus and make sure I am doing everything I can to plow every spare penny into the hole!

Thanks again!!

izools

Happy to help.

How long do you think it will take you to get the debt gone then? If more than five years, an IVA may very well be better for you.

Either way, good luck and keep up the good work chipping away at it as best you can :beer:

4nnabella

izools wrote: »

Happy to help.

How long do you think it will take you to get the debt gone then? If more than five years, an IVA may very well be better for you.

Either way, good luck and keep up the good work chipping away at it as best you can :beer:

According to Payplan, the estimated completion date is September 2015, with me currently paying just under £150 a month. I've got £8k to go. However, I have recently had a (small) payrise following a promotion at work so I think I should be able to up my payments a bit, so it shouldn't take me that long.

I would have done an IVA from the beginning if I'd thought about it a bit more. I don't think it's worth it now as it should be less than five years. I just keep telling myself that the personal satisfaction in knowing that I paid off every penny I owed will be worth it

geordie_ben

4nnabella wrote: »

I just keep telling myself that the personal satisfaction in knowing that I paid off every penny I owed will be worth it

Totally agree with you

For the £13k I owed I could have done an IVA, but I shifted round my debt to make it as cheap as possible, and have almost paid back every single penny myself. Something I'm very proud of.

By paying it all back myself I have learnt so much! Not only how to budget my money, but also how to save, how to find the best bargains.. I could go on and on about how much I've learnt.

I think if I'd done an IVA or something similar then I wouldn't have hardly any of knowledge I have now.

So I have the pride I paid it all back, plus the knowledge, and this knowlegde will mean I'll never get into a situation like that again :j

Dorsetdave

Read Martin's Article about the IVAs it might make you feel better about going down the DMP route. I was initially thinking about IVAs but that article laid out the facts and pointed out what a "Serious" step that is. Good Luck with your Plan, you're not alone.