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

YorkshireBoy

milliemonster wrote: »

So my question is, what level do we need to get this down to before it is worth applying again?

Individually I'd say you need to have debt not exceeding 50% of your income, based on my recent experiences.

...when I tried the Barclaycard checker, it says they can't locate us and to check we are on the electoral roll...

The Barclaycard pre-application "checker" searches CallCredit doesn't it? The application itself, should you decide to proceed, searches Equifax. Have you verified all 3 agencies have your correct ER details recorded?

we have made sure we closed all unused accounts

This will show that you are even more heavily indebted, being as your used to available ratio will have increased, and will reflect in the CII figure obtained from the CRAs.

milliemonster

This will show that you are even more heavily indebted, being as your used to available ratio will have increased, and will reflect in the CII figure obtained from the CRAs

But thats what this site advises you to do so you don't look like you have access to loads of credit, can't win whatever I do can I?

Moggles_2

milliemonster wrote: »

Last time I successfully got a new CC was my Mint card which was about 2 years ago. I last applied for a new one a couple of months ago and got turned down, hubby the same. This is about the 4th time we have tried since we moved here. We last moved house in March 2008, our address has been updated on Experian and Equifax (not sure about Call credit) Normally our address always pops up when we start entering the address (its an old house and the address is high st'!, postcode hasn't changed but I haven't been able to get any new credit since I have been in this house. Initially I thought it was because we weren't on the electoral roll but we definitely are according to the council and to my report with Experian and Equifax.

This points to an address anomaly, but there are other possibilities, so please keep an open mind.

As YB says above, the Barclaycard pre-application "checker" searches CallCredit and, since this is the easiest to check, I'd make certain your address and electoral status are recorded correctly on there first.

If all appears okay, I'd inspect the electoral roll. You can do this at your nearest public library or using a recent polling card if you have one handy.

Pay particular attention to the format of your address. An extra line may be inserted/omitted or the order reversed (where a house name, for instance, is used in addition to the house number). You'd be surprised how often discrepancies arise. It's not necessarily an error. Very often it comes down to a difference of opinion as to how an address should be formatted rather than an actual mistake.

With luck, the ER and Postal Address Finder formats will match and it'll be purely a question of sticking with that version. Provided that you're consistent when you apply for credit facilities, bank accounts or to the credit reference agencies, you should be okay.

P.S. Don't worry if your address is formatted differently on council tax bills and the like. That's of no consequence, but the electoral roll version counts when applying for credit.

Please keep us posted.

Moggles_2

milliemonster wrote: »

We do live in our overdrafts though, but that is only because I am using the overdrafts for extra cc payments (as the interest is less on the overdrafts!) I could clear the overdrafts immediately when I get paid if I had to if this would make a difference ...

These may not amount to much compared with the credit available on your credit cards, but bear in mind that overdrafts are repayable on demand. Credit card debt, on the other hand, is not. Please be aware that if you apply for new credit, potential lenders will pay more attention to overdraft balances, because it's known that the same level of debt on credit cards only requires a 2% to 3% minimum payment each month and cannot be called in.

milliemonster

Thanks Moggles, thats great info, I have registered with Callcredit to get access to my report they have to check the address but have to wait for a PIN to come through the post first:rolleyes:

As for the voting cards we get through, TBH I couldn't say for sure but I am pretty sure the address they have on there is exactly as I have been inputting it when applying for credit. The only address that ever seems to be different is the one we have on our water bill which has a name for our house (rather than just a number and street as on everything else)

It will be interesting to see what is on callcredit but I am still thinking that it probably is the amount of credit we already have and the fact we use our overdrafts all the time. Maybe I should look at paying off the OD's but I begrudge doing so when I know the interest on them is so small compared to the CC's. I did reduce the OD on a couple of our accounts a couple of months back but one of them increased it instead! I can't now ask them to change it back as I will be charged £25 for doing so.

So I think YB may be right, according to Experian I owe £26k personally (this includes my overdrafts) and on my salary of £37k this is prob the reason why I can't get anything else. I guess we will have to just keep overpaying at the moment.

jamesd

milliemonster, the recommendation that you clear your overdrafts is correct. They are intended for short term borrowing and a constant overdraft can be taken as a sign of financial mismanagement. Even though its cheaper for you than some other borrowing.

You should also pay at least £1 more than the minimum payment on every credit card so that none report to credit reference agencies that you are only making minimum payments. Not all credit cards do this extra reporting but it's best to be safe and a Pound per card is cheap enough. Making only minimum payments can be taken as an indication that you're having difficulty paying.

In addition, some scoring takes any credit facility (overdraft or card balance) more than say 90% used as an indication of possible trouble, so it's useful to get all but the cheapest down to 90% or less of the credit limit.

If you don't already have a Virgin credit card, I suggest that you phone them and say you'd like to apply for their 0% balance transfer card but have sometimes had trouble getting your address matched, so you'd like them to help you get it matched and let you know whether they have any trouble with it. Then you and they can work together to try to sort out what's happening, perhaps trying alternative forms of the address. If you have a Virgin card already, pick any other card run by MBNA (Post Office for example).

I'm suggesting MBNA-run cards because they are known to have particularly generous credit limits, so are one of the places most likely to be interested in giving you a deal.

If you call the MBNA places during business hours you can also ask to speak with an underwriter if you're declined. You can then explain that you've already greatly reduced your available credit and tell them about how much you're regularly paying down your balances by each month so that they can see that you're handling the credit you have without trouble. No guarantees but this can cause lenders to change their minds or give higher limits.

Be prepared to say what credit limit you want and why. I suggest that you write down the amounts owed on your two or three most expensive cards and offer them those balances so they can pick whichever limit for the card that they are comfortable with offering, if any.

YorkshireBoy is a skilled stoozer with lots of experience in persuading credit card companies to give deals. Very reliable advice from that source.

Moggles_2

Originally Posted by milliemonster
Maybe I should look at paying off the OD's but I begrudge doing so when I know the interest on them is so small compared to the CC's. I did reduce the OD on a couple of our accounts a couple of months back but one of them increased it instead! So I think YB may be right, according to Experian I owe £26k personally (this includes my overdrafts) and on my salary of £37k this is prob the reason why I can't get anything else.

Well, it could be all of those things. It does seem odd that B'card couldn't locate your details on CallCredit's database though. That wants some explaining.

milliemonster wrote: »

The only address that ever seems to be different is the one we have on our water bill which has a name for our house (rather than just a number and street as on everything else)

In itself, this may be of no consequence, but if all appears okay on your CallCredit report, I'd inspect the electoral roll to make absolutely certain. Getting this right obviates the need to produce ID every time you apply for credit/savings accounts.

More importantly, because of the sheer volume of applications received, some lenders routinely reject borderline applicants whose ID cannot be verified electronically via the CRAs. An extra line inserted in your address (eg. previously unused house name) can immediately kibosh an application

Very best
M

YorkshireBoy

jamesd wrote: »

If you have a Virgin card already, pick any other card run by MBNA (Post Office for example).

MBNA don't run the PO card James, it's run by Bank of Ireland.

There's a list of the main* MBNA run cards here...

http://www.stoozing.com/cards.htm

and on the MBNA site here...

https://www.mbna.co.uk/creditcards/index.html (see the left hand menu)

However...I seem to recall milliemonster has previously had a 'run-in' with MBNA with her A&L card so may have a low internal score with them?


* The table is a little out of date so I'll message the site owners to a) remove A&L [it's now Santander] and b) add N&P and ICICI.

milliemonster

Thanks for all your advice.

What we do is always overpay every card by about £5 a month and the most expensive 2 which currently are A&L at 34% (this is hubby's) with a £5k limit and £750 owing we are paying a min of £100 a month off that, I think the min payment on this is £14, and the Natwest (again hubby's) with a limit of £8900 and current balance is about £6100, min repayment is £140 and we are paying anything between £250 and £500, the APR on this card is 24%.

Now I know you would prob say we should be clearing the A&L card first but when I worked out the interest on both balances, despite the APR, more interest is being charged on the Natwest card. Anyway I am hoping to clear the A&L completely at the end of the month as we have some savings I can use to clear it.

We did ask A&L if they would give us a LOB transfer deal but they said no. Hubby also phoned Natwest last week to see if they would offer anything, they said they are currently reviewing their rates anyway and would write to us and could see we had been overpaying.

I had paid off my A&L card a year ago and applied for a Virgin card earlier this year but got declined straight away.

I am going to probably reduce the amounts we pay at the end of the month (when they are all next due) to clear the overdrafts as much as I can. I must admit I hadn't realised the impact using the od's could cause to our credit ratings.

kittymac1

Hi all,

Around 1 year ago i came on here in a bit of a state, i had been banging my head against a brick wall thinking i would never get out of my bad credit score situation.

I am just dropping by to say thanks to all those who offered advice and to also ask for a liitle more.

I am waiting for my final default to fall of my credit report (Dec), i took out the cashplus credit builder card and now have 12 shiny 0's on my report (well maybe 11 if the latest one hasn't appeared yet)!

I opened my first store account with Simply Be (first time i have been accepted for anything in years) so things are going in the right direction, i'm just wondering where to go now, i would like to open more accounts to get those sought after 0's on my account, i'm in a very financially stable position now but have well and truely learned my lesson!!

I just want to get my credit rating up before applying for proper things like a loan or mortgage, which i hope to do in a few years!!

Any suggestions welcome,

Thanks