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

alo6

CannyJock wrote: »

If you missed the payments, regardless of the reason, it'll stay because it's factually correct.

If your HP car is on your credit report then paying it off will reduce your total amount of debt which would improve your score. So long as you don't use one form of debt to clear another that is

cheers, ah well, my own fault about the late payments, no doubt about that.

But about the HP. It was up at £5200 or something like that originaly on the report. (outstanding debt was £10700). i phone up santander, paid £4700 (the settlement figure they quoted me)on the 24th, i think. Received a letter confiming completion of my agreement, checked my report yesterday. outstanding debt was still £10700 and santander HP Record was at £922 and still satisfactory not settled.

i used my own money to do all this so it should be going down surely.

Moggles_2

Miss_J wrote: »

Well I am at the end of my student overdraft rate with Halifax and need to make arrangements to pay it back. It runs out in 2 weeks time. Halifax will be cutting my OD by £1500 which I can't afford to pay back all at once. I called them yesterday to see what arrangement I can make and they have said that all they can do is enter into a repayment plan with me if I can't pay back the funds in time. In order to do this I have to let my account get into arrears before they will set up a payment plan. How much is this going to affect my credit rating?

You're right to be concerned, IMO.

An overdraft is repayable on demand. In other words, you have to pay back any amounts you owe immediately, when your bank asks you to.

If you have to agree to a repayment plan to reduce the overdraft more gradually, then realistically you must be prepared for that to affect your credit rating.

I have another OD on an account that I manage well, but also not in a position to pay back in full

Currently, the other bank will have limited info about your Halifax account due data protection regulations, but if you arrange a repayment plan with the Hally, it will certainly know about that.

Would credit cards start upping my APRs or reducing my credit limit so that I have loads to pay back there?

There's an increased risk certainly.
I would resort to a repayment plan only if there really is no other way to raise the £1500.

Moggles_2

alo6 wrote: »

About the HP. It was up at £5200 or something like that originaly on the report. (outstanding debt was £10700). i phone up santander, paid £4700 (the settlement figure they quoted me)on the 24th, i think. Received a letter confiming completion of my agreement, checked my report yesterday. outstanding debt was still £10700 and santander HP Record was at £922 and still satisfactory not settled. i used my own money to do all this so it should be going down surely.

Unlike credit searches and an increasing number of online and telephone credit card applications which appear on your credit file more or less in real time, this type of data can take up a month or more.

PrivateEyeReader

Just testing to see how this works before my long post asking for advice goes on!

PrivateEyeReader

I have a situation that I would like advice on, but has not been answered completely by the posts on this forum.
I applied for and was subsequently declared bankrupt in the first half of 2006. 10 months later I was discharged. I opened one of the few bank accounts available to a person in such a position shortly after the bankruptcy was declared and have been occasionally using this account ever since, keeping a small balance in it. My salary and all bills (some of which are in my name) are paid into and from my wife's bank account. I am employed in the public sector and earn over £40,000 a year (net of over £25,000). Our house is owned by my wife's parents, bought with a loan secured on their house (they own/owned their house outright, it is valued at over twice the value of 'our' house). We pay the loan/mortgage they took out and there is over a year left to run on the current deal they have. The loan/mortgage they have is an interest only one and we are currently overpaying (by nearly £200 per month, but will be more in the coming months), in order to build up equity. She has no loans and pays off her credit card (used only occasionally) every month. Our bills are all paid on time (standing orders and direct debit) with no loans or any other credit.
With the scene set, now the question:
How can I get into a position where we can get an affordable mortgage before the end of 2010? My bank have told me at least 6 years from bankruptcy (I'm sure I was told 5 years when I was declared bankrupt). My in-laws want to be able to repay the loan/mortgage secured on their property by the end of the current deal they have (before the end of 2010). My wife, children and I are happy in this home and really don't want to be forced to sell the house because we can't get an affordable mortgage, which for all intent and purpose, we currently have.

CannyJock

Your best bet is to keep doing what you're doing by the sounds of it.

Read the thread on getting back on the credit ladder, possibly starting with the sub-prime cards.

From what you're saying you've got over a year to paint the sort of credit picture that a lender wants to see. So any credit searches from anything you apply for now, even if you go a bit overboard will be gone in 12 months time.

alo6

Moggles wrote: »

Unlike credit searches and an increasing number of online and telephone credit card applications which appear on your credit file more or less in real time, this type of data can take up a month or more.

thanks for the answer. but why would they have reduced it by like 5k to 900 instead of the full schabang?

CannyJock

alo6 wrote: »

thanks for the answer. but why would they have reduced it by like 5k to 900 instead of the full schabang?

The £922 will be the rebated interest that they'll credit you with as they close the account.

With certain loans, the total amount of interest for the term of the loan is added to the amount borrowed on day one. It's then this figure they report to the CRA's!!! When you get a settlement figure they will work out a lower figure and credit you back the interest. Unlike mortgages and credit card debts where the interest is calculated and added on the amount outstanding.

It should show as £0 balance and Settled on next month's report but always worth checking to be sure.

Miss_J

Moggles wrote: »

You're right to be concerned, IMO.

An overdraft is repayable on demand. In other words, you have to pay back any amounts you owe immediately, when your bank asks you to.

If you have to agree to a repayment plan to reduce the overdraft more gradually, then realistically you must be prepared for that to affect your credit rating.

Currently, the other bank will have limited info about your Halifax account due data protection regulations, but if you arrange a repayment plan with the Hally, it will certainly know about that.

There's an increased risk certainly.
I would resort to a repayment plan only if there really is no other way to raise the £1500.

Thanks for the advice, have managed to scrape together the £1500, with a let help from a family member ( more debt!) but thankfully won't have to enter a repayment plan.

Moggles_2

Miss_J wrote: »

Thanks for the advice, have managed to scrape together the £1500, with help from a family member (more debt!) but thankfully won't have to enter a repayment plan.

That's cool to hear :T