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

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  • Hi,

    Sorry if I have posted this in the wrong place!! I'm very new to this but wondered if anybody could give me some advice please??

    I have a bank account with the Abbey National, with an overdraft of £1000. A few months ago, i transferred my account to Natwest. This was simply due to the poor customer service and ridiculous charges Abbey were giving me!! I arranged to pay my over draft back to them at a rate of £100 per month. This was all agreed, i have paid every month and have never been late with a payment!!

    I am getting married next year and have been looking into getting a mortgage with my boyfriend as we are shortly to be buying a house. I have always been extra careful in terms of my credit rating, but when i went to check it before seeing my FA about a mortgage, it showed that Abbey had me down as having 5 late payments!!!! I called them to question this and they said that they would put this on my credit rating every month until I had paid the overdraft off!! Even though i haven't been and wont be late with any payments??

    This has really upset me and is affecting me getting a mortgage. Can anybody please advise if this is normal practice and if there is anything i can do to change it??? Thanks.
  • hur575
    hur575 Posts: 343 Forumite
    The thing with overdraft is you get it with bank account, once you close the account you should clear off that overdraft first, what you could have done, leave the account open until overdraft is cleared then you asked them to close it.

    Abbey should have explained that to you but I am sorry I have no advice for you, surely someone here can suggest something.

    good luck
  • neilsedaka
    neilsedaka Posts: 396 Forumite
    Part of the Furniture 100 Posts Name Dropper
    Having been turned down for a financial product for the first time ever, I decided to investigate. I recently applied for a Post Office credit card and was rejected. Post Office say they check using Experian.

    On discussing the issue with Experian it transpires that, contrary to the advice from Martin and the advice that I have read in this forum, it is better *not* to close unused credit cards. Experian advise that it is better to request that card issuers reduce the credit limits rather than closing the cards completely. The reason, according to Experian, is that closing credit cards suggests that the user has a habit of opening and closing cards for the purpose of 0% balance transfers. In my own case I have never done that. A second reason for rejection in my case is having too high credit limits on the cards that I have retained. Comments please.
  • lbear
    lbear Posts: 5 Forumite
    A bit complicated, but i'd like some advice about my partners credit rating. A few years ago he was serving a prison sentence and this caused several problems with a loan he had been paying. He was obviously unable to pay while he was in prison and he contacted the lender to tell them this. Some years later, we have been saving for a deposit for a house for 2 years and are hoping to have enough by the end of this year. When i recently checked copies of our credit files, the defaulted loan is on his file and the default is registered as being in 2005, by my guess, this would stay on his files until 2011. Am i right? I'm also assuming that this is going to cause problems when we apply for our mortgage. Is there anything we can do? Citizens advice have said that the default is on there now and even if we contacted the company to offer to pay off the defaulted amount, it would still remain on his files that he had defaulted.
    I appreciate that most people will be of the opinion that its his own fault for being in prison, but without getting into a moral debate and explaining the complexities of his case, can anyone offer any advice? Do we have to just sit it out? Do you think it will cause major problems with a mortgage application? The default is about £900.
  • Moggles_2
    Moggles_2 Posts: 6,097 Forumite
    I have always been extra careful in terms of my credit rating, but when I went to check it before seeing my FA about a mortgage, it showed that Abbey had me down as having 5 late payments! I called them to question this and they said that they would put this on my credit rating every month until I had paid the overdraft off, even though I haven't been and won't be late with any payments?

    The status codes shown on current accounts have a different meaning from those associated with other types of credit and lenders vary in their use of these codes.

    An overdraft is not a loan. If you decide to close a current account and transfer your business to another bank, you must pay off your overdraft first, otherwise you're in effect in debt to the old bank. Do you have savings with which to pay off the remaining debt straight away? If so, I would do so.

    Please note: lenders like stability, so best practice is to apply for credit facilities, where possible, before you move/change jobs/change banks. Being with the same employer, bank and current address for a while, all help when applying for credit.
    People who don't know their rights, don't actually have those rights.
  • helnag
    helnag Posts: 439 Forumite
    Hi,

    I will be looking to get a mortgage within the next 4 years and would really like to know how I can improve my rating as I have tried hard but according to CreditExpert my score is still poor, never going above 500.

    I have in the past been very bad with money and debts but have been paying everything on time for the last 2 and a half years (apart from one car payment which was 7 days late in December last year due to problems with my bank - I have since changed accs and no probs since) On my credit expert report I owe around £9000 in total, which is the car HP (£4600 balance16 months remaining), a loan (£2900 balance 17 months remaining), Next catalogue ( £340 balance), Capital One CC (£0 balance), I am on the electrol role and have only had 2 searches in the past year which from what I can see were only a generic check and the capital one card.

    I just want to improve it now so that when the time comes I don't face too many problems...I am working hard now to clear the 2 Welcome accs early (the car and loan) as the interest is extortionate!!! Will my rating improve as these get lower? Also I have only been at my address for 4 months so I know that has an affect.

    Many Thanks in advance :o:o
    PAD total since 27/07/09 = £60.83 - [strike]Capital One[/strike]:[strike] £192.73[/strike]£27.00 Next catalogue: [strike]£429.00[/strike] £154.00
    Welcome car HP: [strike]£6090[/strike], £3900, Welcome Loan:[strike]£3370[/strike], £2660HLC #1: [strike]£907.00[/strike]£637.00, HLC #2:[strike] £838.00[/strike]£608.00
    Sealed Pot Challenge 2009 - Member #649 - Target £500...banked £119.50 already.
  • kittymac1
    kittymac1 Posts: 46 Forumite
    Part of the Furniture Combo Breaker
    Hi all, i hope i am putting this in the right place.

    I am looking for some advice, I have got a pretty terrible credit history, which all stems from a few years ago.

    I have 4 defaults on my account all from 2003 and all but 1 are satisfied (i'm sure this one is satisfed but the file hasn't been updated since 2006 and i daren't ring them in case it isn't), these defaults are just starting to drop off after the six year wait.

    My advice is really what to do now, i have the cashplus card and have already transferred all the money into the account to pay off all the monthly payments.

    Do i wait it out until december when the final default drops off or start applying for things now, i couldn't even get a phone contract 6 months ago.

    I'm so scared of the rejection spiral that i daren't apply for anything.
    £5 a day April Challenge ~ £0 / £160.

    Pay one debt 2013 ~ £/£4875.21
  • Moggles_2
    Moggles_2 Posts: 6,097 Forumite
    neilsedaka wrote: »
    Having been turned down for a financial product for the first time ever, I decided to investigate. I recently applied for a Post Office credit card and was rejected. Post Office say they check using Experian.

    On discussing the issue with Experian it transpires that, contrary to the advice from Martin and the advice that I have read in this forum, it is better *not* to close unused credit cards. Experian advise that it is better to request that card issuers reduce the credit limits rather than closing the cards completely. The reason, according to Experian, is that closing credit cards suggests that the user has a habit of opening and closing cards for the purpose of 0% balance transfers. In my own case I have never done that. A second reason for rejection in my case is having too high credit limits on the cards that I have retained. Comments please.

    Credit reports, when ordered directly from Experian (and Equifax) are valuable. After all, this is the information lenders search when you apply for credit. Experian sends accompanying notes, which are a good read as well.

    That said, credit reference agencies are there to provide your credit history. The actual methodology (and the process of scoring itself) is done by their clients, the lenders. None of us - including the CRAs - knows what criteria are used by individual companies like the Post Office. Lenders do not disclose this information.

    The advice you were given is somebody's best guess and strikes me as a pretty sweeping statement, tbh. As you say, the suggestion that closing credit cards points to a user who opens and closes accounts for the purpose of 0% balance transfers doesn't apply to you.
    A second reason for rejection in my case is having too high credit limits on the cards that I have retained.
    Without knowing your annual income or your credit limits, it's impossible to comment.
    As with most things, I would say moderation is key. Please see also #441 just above yours.
    People who don't know their rights, don't actually have those rights.
  • ntswi
    ntswi Posts: 1 Newbie
    I am looking to get a mortgage and wanted to do a credit check to make sure all is ok before I apply.
    I can see a search for when I was getting quotes. I was not informed that it would show on my credit report and so wanted to check if anyone knows if it will affect my score.
    It appears as:
    Application Type: Identification: Generic Check
  • rusty-london
    rusty-london Posts: 118 Forumite
    My Girlfriend and I are looking to buy our own place, hopefully some time this year but my credit rating isn't brilliant.
    I changed my current account provider a couple of months ago but haven't yet closed my previous current account.

    Would it be worth going back to my old current account which I've had for the past 6 years to help improve my credit rating?
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