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

Moggles_2

microbebi wrote: »

Will reducing my amount of available credit improve my credit score? I am currently only using 49% of available credit. I do want access to more credit and will look to make an application once my credit score is better (not as good as it could be in part because of the available credit?). I do not want to use this available credit, as I have a balance on there at a promotional low APR for life of balance rate.

If I've understood your post correctly, your current borrowings are on a life-of-balance
credit card.

Obviously, I don't know your annual income but, if you have no other credit cards at the mo, your available credit is by no means excessive. I believe the national average is five and many of us here have seven or eight credit cards on the go

walshy.walsh

Moggles wrote: »

If I've understood your post correctly, your current borrowings are on a life-of-balance
credit card.

Obviously, I don't know your annual income but, if you have no other credit cards at the mo, your available credit is by no means excessive. I believe the national average is five and many of us here have seven or eight credit cards on the go

what would be a good amount to have to improve your score?

Moggles_2

walshy.walsh wrote: »

What would be a good amount to have to improve your score?

Bear in mind that potential lenders cannot assess the way you handle credit directly. The best indication they have is the payment history and credit limits on your existing cards with other lenders.

Other things being equal, it's better (credit score-wise) to have fewer cards with higher limits, than a clutch of cards with lowish limits.

Obviously, your available credit increases with each successful cc application. So, if you ever want to reduce your available credit, it's better to cancel a card completely, as Martin advises, rather than request a lower limit.

Cards that are closed down and marked "settled" stay on your file for six years and indicate that you can handle a higher credit limit well

walshy.walsh

i have no credit history, so have just got a capitalone card! well its in the post anyhow! i dont particularly want any cards, BUT i would like to boost my credit history for getting a mortgage in a year or two! will this one card used wisely be enough to boost my score?

microbebi

Moggles wrote: »

If I've understood your post correctly, your current borrowings are on a life-of-balance
credit card.

Obviously, I don't know your annual income but, if you have no other credit cards at the mo, your available credit is by no means excessive. I believe the national average is five and many of us here have seven or eight credit cards on the go

Thanks Moggles

My main worry is that I need to get a new credit card, but am concerned that when card companies see how much available credit I have (and impact of this on my credit score), they will reject me.

E.g. I have several cards where I have a £1500 balance but a £4000 limit. I will not spend more on these cards as they are on a life-of-balance cards.

Will lowering the cards limit (and thereby reducing the amount of credit to which i have access) improve my credit score?

Thanks again. Apologies for not being very clear. Hard to explain!!!

loub83

Hey,

Need some advice, i currently have about 5 grand of debt, checking credit scores and reports regularly. With EXperian I have a very poor rating despite only having one bad account in the past (i had charges put on a bank account, only had online access, didnt check the account and then got charges for being overdrawn from the charges, account settled anc closed over a yr ago but know its gonna take 6 yrs to disappear).

Have just checked credit score today and has gone down points even though nothing has changed and i've just been paying as normal. I am using around 67% of available credit. I am totally at a loss about what I can do (apart from pay more) to improve my score and to understand why its so bad with them but is fair with another credit agency.

I earn around 30k so the 5k of debt isnt huge but because of it am finding it hard to get a mortgage. I've been told if I had a mortgage it would improve my score but cant get one.

Am totally getting stressed by it all as although i'm not in any financial difficulty at all and pay everything on time I have this bad rating that is stopping me being able to get a mortgage,

Any advice? thanks

mairuzu

My wife is Japanese and does not yet have British Citizenship, so cannot be added to the electoral role. In the guide, it says that we should write to Experian ect. to advice them of this.

How should we do this? Do we need some sort of account number with each agency?

Any help gratefully received.

Moggles_2

walshy.walsh wrote: »

I have no credit history, so have just got a Capital One card! Well, it's in the post anyhow! I don't particularly want any cards, BUT I would like to boost my credit history for getting a mortgage in a year or two! Will this one card, used wisely, be enough to boost my score?

Congratulations on getting a starter card from Capital One.
:beer:

If I were you, I'd use your C1 card for at least 6 months, spending a little every month and repaying in full by the payment due date. (Provided that you always settle the statement balance by the payment due date, you'll get up to 56 days interest-free on purchases and never pay charges.)

Then apply for a second back-up card and use the two credit cards wisely for a further 6 months to build your credit rating.

Very best
M

walshy.walsh

so after 6 months ish, a second card would be easier to obtain?
bear in mind, that i dont particularly want any cards, just more a means to an end!

Moggles_2

microbebi wrote: »

My main worry is that I need to get a new credit card, but am concerned that when card companies see how much available credit I have (and impact of this on my credit score), they will reject me. E.g. I have several cards where I have a £1500 balance, but a £4000 limit. I will not spend more on these cards as they are on life-of-balance cards.

How many is several? If you have five credit cards or fewer (and you've said that none is maxed out), it's unlikely your application would be rejected for this reason alone, unless you have a low annual income. Your credit limit on the new card could be affected though.

Will lowering the card's limit (and thereby reducing the amount of credit to which I have access) improve my credit score?

Not necessarily and it may make things worse.

Obviously, I don't know your annual income, but I would think carefully before you reduce limits which are already modest. Lowering limits can affect future applications for credit, if you overdo it.

Bear in mind that potential lenders cannot assess the way you handle credit directly. The best indication they have are the payment history and credit limits on your existing cards with other lenders.

In addition to the number of card accounts in use, lenders look at the extent their credit limits have been utilised. Maxed out accounts make you look desperate for credit, so it's wise to leave plenty of leeway.

Other things being equal, it's better (credit score-wise) to have fewer cards with higher limits, than a clutch of cards with lowish limits. So, if you want to reduce your available credit, it's better to pay off the balance and cancel a card completely, as Martin advises. Cards that are closed down and marked "settled" stay on your file for six years and indicate that you can handle a higher credit limit well.