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

MDDH_2

1) I always thought that overdrafts (and thus any instances of going over the limit) are NOT monitored by credit reference agencies, as they are not strictly credit agreements in the way loans or credit cards are. But I have started to have doubts.

I do realise that the bank you have an account with will use your overdraft behaviour to calculate your score, but are these actually traced by the likes of Experian etc?

2) I have seen several pieces of "advice" that mentioned utility bills as affecting your credit rating, but as far as I know the accounts you have with water, gas or electricity companies don't get listed. They would only get listed if you get into serious trouble and there is a court ruling against you? I thought that only mobile phone contracts were treated as credit agreements?

And finally, two specific questions.

3) I applied for a Ryanair credit card in a fit of madness and when I found out what a con the "free flights" benefit was I phoned them (GE I believe) to cancel my account. I asked the phone person waht my balance was, I was given a figure, I knew there wa snothing else to go through so I paid it off there and then using a debit card and assumed my account would be closed.

I was never notified of the closure of the account but assumed it just happened. I am not certain whether I was getting any statements in the meantime but eventually discovered - that's something like 3 months later - a letter saying that I still owed them something in the region of £3. I phoned but they said their systems were down and they couldn't access my account or phone me back when they were OK again. I paid it eventually using online banking, but I am now wondering whether this will affect my credit score if I wanted to apply for anything? Is there no minimum to the amount that can be counted as "missed payment" (I was never charged a penalty by the provider) and is there nothing I can do about it - after all THEY gave me wrong amount to pay when I phoned to close my account.

4) I shop at JD Williams website and their system has a sneaky way of assuming you want to purchase goods on credit. I THOUGHT I paid by card (whose details I saved with the website) but apparently I did not. I only found out when I was sent a statement with a penalty charge (I tend to throw away paper correspndence which I assume is junk mail, that will teach me) . Never mind a poxy £12 charge, and to rectify I phoned them again asking to have the credit removed altogether which they did after a lot of pretending you can't do it. My question is, are all credit agreements created equal (ie is a missed payment of £30 with a catalogue company as bad as amiaaed payment of £800 with a mortgage provider)?

THANKS!!!

tania1990

Hi,
I'm turning 19 in 3 months and I have:

a student account (on which I have paid two charges for recently exceeding my agreed 0% overdraft)
an abbey 16-18 current account (without overdraft facility to which I transfer money to use day-to-day, to avoid overspending on the student acc)
a mobile phone contract (paid in full by DD) and;
an arcadia staff card (GE Money store card equivalent on which I always pay in full, in cash, before the due date).

Other than those I don't have any 'credit products' and I'm in the black with my student and current account. :A

1. Will my overdraft charges affect my credit rating for 6 years, or am I misinterpreting the posts?
2. Other than registering on the electoral register, what else can I do to build/improve my credit rating?

zoe123

Hi there,

My partner and I are saving for a house deposit. Currently, we are using my bank account and wages to pay bills/rent etc, and using my partner's account to save i.e. his wages are only used to save and get transferred frm the c/account to the saving account. Is this the right thing to do? Or will this affect my credit rating as my wages get spent every month?

Thanks!

Moggles_2

tania1990 wrote: »

Other than registering on the electoral register, what else can I do to build/improve my credit rating?

Well done. If you've enrolled, you've made a start.

For tips, have a look at the *Credit Rating: how it works and how to improve it guide* especially Martin's *Manage and Improve your credit score* article, which triggered this thread

Moggles_2

zoe123 wrote: »

My partner and I are saving for a house deposit. Currently, we are using my bank account and wages to pay bills/rent etc, and using my partner's account to save i.e. his wages are only used to save and get transferred frm the c/account to the saving account. Is this the right thing to do or will this affect my credit rating as my wages get spent every month?

As long as your current account is well-managed and you keep within the Ts & Cs, the manner in which its used has no bearing on your credit rating.

Whether this is the right way to manage your joint finances is another matter. Your partner has it made, from the sounds of things.

drussii

Be careful when you apply for a free credit check as the whole exercise from the Credit Reference Agencies is to get your up to date personal information for distribution to their customers. Also, be careful when going in to check your credit report, I , inadvertently clicked the wrong box whilst trying to make sense of the Equifax website and now I am told that I have taken out a subscription of £7.50 a month for three months and there is no way that they can correct that mistake and refund my money. Talk about thieves together!! BE CAREFUL!!

woolsyj

I just applied for a mortgage and got rejected.

The mortgage guy didnt understand why I got rejected so suggested I checked my credit rating - so I did, and BOY did i get a shock!

I had a very low score (cant remember what it was but it was high risk maybe in the 200's) I looked through it all and there seemed to be no problems so I rang up the number to ask why my score was so low. The lady said there was no reason for it to be low, i had nothing bad on there. There was one problem that none of my current accounts where linking through (all have overdraft facilities) so suggested i asked Natwest to ensure they released my data. But they had never heard of this - i have spent much time on their phone lines and in branch and noone seems to be able to help me!!

A bit of background info:

I'm on the electoral role
I have had a job since i left uni last July
Only ever saved money
Never missed a payment on my bills
Only just applied for my first credit card (to try to improve credit rating!)
No loans

Please PLEASE can someone help me

1. How can i get my current accounts to show up on my credit report
2. How else can i get that EXTREMELY poor score up!

Thanks in advance!

Woolsyj

Moggles_2

woolsyj wrote: »

I just applied for a mortgage and got rejected. The mortgage guy didn't understand why I got rejected ... Only just applied for my first credit card (to try to improve credit rating)

Well, there's your answer then. It takes time to build a good credit rating. You can't do it overnight. Once you've operated this and some other credit facilities for a bit, your credit rating will improve.

There was one problem that none of my current accounts were linking through (all have overdraft facilities), so suggested I asked Natwest to ensure they released my data ...

You cannot insist on this. The decision to report to the CRAs rests with the bank. NatWest would of course report any negative data associated with these accounts. Obviously, your current accounts are well managed.

For more tips, have a look at the *Credit Rating: how it works and how to improve it guide* especially Martin's *Manage and Improve your credit score* article, which triggered this thread

http://www.moneysavingexpert.com/banking/credit-rating-credit-score#improve [/QUOTE]

SoloBurr

Hi,

I have several credit cards all of which I use for various reasons and plan to keep, however one thing I wondered about is the credit limits. The total amount of credit I have available FAR exceeds what I need even in the most extreme months (by about £9,000 I would say!). Would getting the credit limits reduced affect my credit rating? Does that sort of information even get passed to the credit reference agencies and if so how often is it updated?

Furthermore will the credit card companies even allow me to pick my credit limit, or will them impose restrictions as to how low it can be?

Does the same apply with current accounts and overdraft limits. I have a £1000 overdraft but never ever use it so if it helps I could get rid of it or reduce it.

Thanks! :beer:

Moggles_2

SoloBurr wrote: »

I have several credit cards all of which I use for various reasons and plan to keep. The total amount of credit I have available FAR exceeds what I need even in the most extreme months (by about £9,000 I would say). Would getting the credit limits reduced affect my credit rating?

Obviously, we don't know your annual income, but I would think carefully before reducing credit limits, especially if these are already modest.

Lowering limits leaves no record on your credit file of the former more generous one. Nor will your credit files show they were reduced at your request (as opposed to the lender's decision). Lowering credit limits can affect future applications for credit, if you overdo it. Also you may not be able to reinstate some of the former limit, should you change your mind later.

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

In addition to the number of accounts in use (our national average, btw, is five credit cards), lenders look at the extent their credit limits have been utilised. Maxed out accounts make you look stretched, so it's wise to leave plenty of headroom

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 safer 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 decent-sized credit limits well.