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

Katy_M_2

Me too! My boyf teases me because every time we go to spend money on anything or make payments or any kind of financial transaction whatsoever, no matter how small - I'm..

"Wait! I have to consult the spreadsheet first! This could have a detrimental effect to my masterplan!!"

I think he thinks I'm a bit mental but we shall see...oh yes, we shall see....

KillerB_2

Hi all.

I've just spent the last 6 months attempting to resolve my credit history. Firstly Experian incorrectly stated my electrol status, then in resolving this managed to wipe everything else off my report!

I've finally got into a position where my "credit score" is 978. I understand this is the Experian score only ( using creditexpert.co.uk) and that banks may see this differently.

I have 2 outstanding loans amounting to 7500 and 2 credit cards. One of which i use regularly, once of which i don't. outstanding balance of 900 ( which i will pay off fully this month and have been doing so reguarly for the past 6) I also earn 48k a year and have monthly outgoings of about 1200 ( this leaves me easily 1500 disposable)
I have recently applied for credit with Alliance and Leiscter to consolidate the 7500 as this was taken out before resolving my credit history and I'm being charged 22% apr on.

I was refused. I then contested this, explain the above points in an email, and was again refused.
The only adverse factor the credit expert report suggests is my high borrowing. I had assumed 7500 was not really very high and as I'm allying for a loan to consolidate this it would be taken into account during application.


3 queries really:

1. I cannot see anything adverse on my Credit Expert report. A&L certainly used this firm as i can see the credit check. Is there information i cannot see from this report and why would (what seems to me) such a small amount be refused?

2. Can anyone suggest an independant adviser that could disect my credit report and history and explain why (what i feel) such a good report may be considered uncredit worthly by a main stream bank like this.

3. I have minimal information from A&L as to why they refused me credit. What information (if any) am I legally entitled to see or request from them as to why they may have refused me credit.

Really struggling here. after trying so hard to resolve all this with Experian to be refused is a real slap in the face.

Thanks in advance.

Another thought. I was recently involved in a situation involving my credit card being cloned. My bank caught this. my card was cancelled and a new account has been opened. this appears as a seperate credit account against my name, (a total of 9 accounts, although most are settled) would this effect my score at all?

Moggles_2

Katy_M wrote: »

I quite often read that it's not good to always be maxed out to your credit limit ...

Right

... but also read that it is better to reduce your available credit limit whenever possible.

Well, you haven't read that here. Individual circumstances vary. There's no black and white solution that applies across the board.

As I chip away at my debt, I would rather decrease the limits so that I am not tempted to spend again, but I worry that this will affect my credit rating, as I will constantly be at the top end of the limit.

You're right to be concerned, IMO

Obviously, we don't know your annual income, but I would think carefully before reducing credit limits every time you pay off a chunk. Lowering limits leaves no record on credit files that they were reduced at your request (as opposed to the lender's decision). Reducing credit limits can affect future applications for credit if you overdo it. Also you may not be able to reinstate 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

If you don't trust yourself not to spend on the card, cut the corner off and file in a safe place or ask a trusted member of your family to look after it. You'll need the card number/expiry date etc. should you decide to close the account at some point.

izools

I hope Moggles would agree with me here that it would be good to find a middle ground -

I.e don't keep reducing your limits so you are always touching them, but certainly if you feel more comfortable reduce them at a point.

I.e. once your balance is at about 50% of your limit, it shouldn't hurt to reduce your limit so that your balance is then at about 66% of your limit. And keep lowering once your balance shows about 40% ~ 50% just a bit so that you don't go much over 66% used.

That way you shouldn't harm your credit score, nor should you have much temptation to spend

milliemonster

izools wrote: »

I hope Moggles would agree with me here that it would be good to find a middle ground -

I.e don't keep reducing your limits so you are always touching them, but certainly if you feel more comfortable reduce them at a point.

I.e. once your balance is at about 50% of your limit, it shouldn't hurt to reduce your limit so that your balance is then at about 66% of your limit. And keep lowering once your balance shows about 40% ~ 50% just a bit so that you don't go much over 66% used.

That way you shouldn't harm your credit score, nor should you have much temptation to spend

Izools - you explained that much better than I did thank you!

Katy_M_2

Moggles wrote: »

Lowering limits leaves no record on credit files that they were reduced at your request (as opposed to the lender's decision). Reducing credit limits can affect future applications for credit if you overdo it.

This is where I've been going wrong :rolleyes: I have no idea why I would have thought this, but I thought I was being a good little soldier reducing my own limit as I went along, but it's actually made things worse for me!

Moggles wrote: »

If you don't trust yourself not to spend on the card, cut the corner off and file in a safe place or ask a trusted member of your family to look after it. You'll need the card number/expiry date etc. should you decide to close the account at some point.

This is good advice It's also what I usually do. I only have 2 credit cards at the moment, one is used for monthly grocery purchases and paid off in full each month, the other card was a balance transfer, I originally cut the card up but recently re-ordered it as I needed it for an emergency, I made the mistake of only paying off the minimum amount for the first 4 months and the lender has just reduced the limit slightly, which has made my percentage look worse.

This was a shame as I usually pay off more than the minimum on any credit cards I have, but I had just moved into a new flat so finances are stretched at the moment, I didn't realise that only paying off the minimum would result in them lowering the limit so quickly. I do think it's a good thing that lenders are doing this and totally understand why.

Katy_M_2

izools wrote: »

I.e. once your balance is at about 50% of your limit, it shouldn't hurt to reduce your limit so that your balance is then at about 66% of your limit. And keep lowering once your balance shows about 40% ~ 50% just a bit so that you don't go much over 66% used.

That way you shouldn't harm your credit score, nor should you have much temptation to spend

Thanks Izools, makes perfect sense :beer:

The main reason I am trying to perfect my credit rating at the moment is that I have a loan with a balance of approx 5k. I also have a Barclaycard with a limit of £2150 (now nearly maxed out)

Eventually, I want to transfer the balance of my loan onto a 0% bt credit card. So I can a) save on some of the interest by early settlement and b) pay off more whenever I can (loan is fixed payments)

The reason I thought it would be better to reduce my limits was that when I go to apply for a new credit card to transfer the loan to - I thought it would be better if I had as little credit already available to me as possible.

I now realise that it will be better to wait that little bit longer until my percentage has reduced a lot more.

Thanks for all your advice

kazimojo69

My credit score on Experian is diabolical - mainly due to the fact I have no credit!!

I now have an account with Marisota. I have ordered an item and it has been delivered.

Do I pay for it now online or wait til I get the bill and pay it then?

Just want to ensure it is showing as being paid .

Thank you xx

Katy_M_2

Hello me again!

Just a quick query on behalf of my OH.

If you apply for a bank account (basic bank account with no overdraft or cheque book etc) - does it show on your credit file as an application for credit?

Thanks in advance

walshy.walsh

nope! not a basic one.