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

CannyJock

moatmeister wrote: »

So are you saying that actually having the loans will not affect my credit rating as long as they are being serviced ok?

It'll have an effect, but it's not all negative would be the best way of putting it. Having the debt and managing it properly may increase the probability of qualifying for more unsecured credit, but it will also reduce the amount of additional unsecured credit you'll get.

From the advice we've had from mortgage brokers, for a mortgage application your annual repayments will be deducted from your net of tax income to derive a net of tax and debts income. That is the figure they will use for their affordability calculations and as a multiplier for your maximum mortgage amount.

You'll already know your gross and net of tax numbers, and your annual repayments on the loans. From these you should be able to estimate the maximum mortgage you will get and whether your deposit makes up the difference.

If the loans are high APR then in pounds and pence, it may make more sense to clear these from your savings and increase the amount of the mortgage you're taking out. Especially if you're going for a fully-flexible offset mortgage.

moatmeister

Thanks.

I assume when you are talking about unsecured credit you mean cards and personal loans as opposed to mortgages??

My application, whilst genuine, may not look the most attractive to lenders (Self Cerification, run down albeit slightly down valued property in need of renovation, some structural problems, Likelyhood of a retention, Already high 70% LTV) so I want to maximise the chances of getting it without compromising my cash flow. Its not really about apr's etc in the short term I have access to a private "off the books" loan of a further 30k from a friend if I need it but would rather not go down this road at this stage unless absolutely necessary

Elderwoman

There's an important question missing on that checker. Income level. My partner and I come out as an excellent risk but there's no way anyone is going to give us another credit card now that we are retired and living on the old age pension. I know because I had a Saga card for many years but when Saga changed their provider everyone had to re-apply and there was a cutoff point for income. I was below it, so I lost my card. I also applied for an Amazon card and got knocked back. (Luckily we already have cards from before we retired).

Moggles_2

Elderwoman wrote: »

There's an important question missing on that checker. Income level. My partner and I come out as an excellent risk, but there's no way anyone is going to give us another credit card now that we are retired and living on the old age pension. I know because I had a Saga card for many years but when Saga changed their provider everyone had to re-apply and there was a cut-off point for income. I was below it, so I lost my card. I also applied for an Amazon card and got knocked back. (Luckily we already have cards from before we retired).

This point has been made before, but cannot be stressed too often. It's at best a very rough guide. The same applies to credit scores.

Credit reports, when ordered directly from Experian and Equifax, are invaluable. After all, this is the information lenders search when you apply for credit. Experian supplies explanatory notes as well, which are a good read. Additional services like credit scores are a nice little earner for the credit reference agencies, but of little practical value to cc applicants, chiefly because they take no account of annual income. Certainly not worth paying extra for, IMO.

On the plus side, older customers are seen by some lenders as being more reliable and less of a risk to lend to. Have you checked your credit reports just to be sure there's nothing else - other than your fixed income - working against you? For help, see page 1 of the *How to obtain credit reports* sticky

gizmomum

Hi Everyone, am now trying to get to grips with my credit report. I have what may seem like a bit of an odd question. My husband is listed as a financial associate following an application for a joint account that we made. We never actually set up the joint account and all of our finances are seperate (no joint accounts or mortgage)
As I read it financial associates aren't necessarily people you are related to or living with but those you have joint financial products with? As we do not, and also I fear that he is effecting applications I may make (his credit score will be pretty bad) can I ask them to take him off?
thanks for your help
gm

Moggles_2

gizmomum wrote: »

My husband is listed as a financial associate following an application for a joint account that we made. We never actually set up the joint account and all of our finances are separate (no joint accounts or mortgage) As I read it financial associates aren't necessarily people you are related to or living with but those you have joint financial products with? As we do not, and also I fear that he is affecting applications, I may make (his credit score will be pretty bad) can I ask them to take him off?

Yes, absolutely.

Whilst you remain linked, lenders are likely to view you as too great a risk. Once your financial affairs were truely separated though, you could write to the credit reference agencies and ask for a notice of disassociation, to stop his credit history affecting yours in future and vice versa

gizmomum

Moggles, thankyou so much for the quick reply that's a huge help and sounds like something positive I can do for my credit rating fairly quickly. It's nice to get some good news :-)

Shakeybob

I wonder if I could pick your brains to get some advice on how to address 2 defaults on my credit report.

One is for a mobile that my ex-wife had in my name for which I was unaware till tonight that there was any debt. I would be happy to come to some arrangement to pay the outstanding in return for them removing the default, but I seem to be unable to contact anyone that is able to take the money and give me any details of the debt!

The second is for an AMEX card. Upon realising I'd missed a payment I contacted AMEX to pay the outstanding only to be told that I could not pay them as it had gone to a collection agency and they would be in touch. When they finally did get in touch, they told me that if I didn't give them £1500 in the next 24 hours they would be sending the bailiffs! I told them that firstly I would like details of how the figure had been calculated as I had bank statements proving I had been making payments and also that I would be happy to pay in instalments anything I owed provided that I could have the details. The agent just hung up on me! All subsequent calls were of similar results until I just gave up. I recieved no further contact from either AMEX or the collection agency.

The credit report is Equifax and I don't seem to be able to get an email through to them asking advice on who to contact or how to get a note on my file.

Extremely frustrating, how difficult can it be to pay your bills!?!?

Emzie0121

I currently have a credit card with about £150 on it, a joint loan with my partner for £2500 and a netbook on store credit for £269 which im not due to start paying back till july next year. we've gone to look for a car, found the one we want and my partner has been turned down for the finance although most of our credit is in my name. we set up accounts on the experian site and got our scores (mine is 515 and his is 586) does anyone know how to explain to me how we can improve our score??

Thanks :T

Moggles_2

Emzie0121 wrote: »

I currently have a credit card with about £150 on it, a joint loan with my partner for £2500 and a netbook on store credit for £269 which i'm not due to start paying back till July next year. We've gone to look for a car, found the one we want and my partner has been turned down for the finance although most of our credit is in my name. We set up accounts on the Experian site and got our scores (mine is 515 and his is 586) Does anyone know how to explain to me how we can improve our score?

Presumably you have a bank account, a regular income and you're on the electoral roll at your current address.

For tips to improve your chances of credit card acceptance, 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

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