Credit Score affected by Overdraft

CreditCruncher

I have a graduate plus current account with HSBC with an agreed overdraft of £900.There's an account fee of £9.95 pm and I have never availed over the agreed overdraft limit.

However this is not my salary account ;I have an outstanding debit of over £800 since July 08 and I have been paying the debit interest for the same every month.

I was shocked to see my equifax credit score report in which HSBC has given me a DANGER score since Nov 08 eventhough I have stayed within the limits and paid the debit interest & account fee in time.

Is this acceptable for an overdraft? Can I pay off the overdraft amount in full and request for a notice of correction on my credit report?

Any advise would be greatly appreciated.

chuckley

that would explain my own credit issues then...

but 2bh since hsbc switched up their own rules in a short space of time with grad accs, it doesnt suprise me!

you may get it removed if asked. they may have other details?!

Paul_Herring

An overdraft is meant to be a temporary loan, not a long term one, which is how you appear to be using it, hence the score. More so, since you appear to be indicating you're not regularly crediting the account with funds (over the fee.)

Is this acceptable for an overdraft?

Your use of it, no. HSBC's marking of it, yes.

Can I pay off the overdraft amount in full and request for a notice of correction on my credit report?

It may simply be enough to credit the account with more funds per month - if you have any standing orders/unchanging DD's you could move them over to that account, and fund the account with the sum total of them.

CreditCruncher

Thanks for you replies guys!

chuckley wrote: »

you may get it removed if asked. they may have other details?!

what other detals did you mean,chuckley?

chuckley

i don't know. have u had problems with them over anything on that month?

coz wasnt that the month, they recalled accounts over 'reviews'????

personally i got asked for ID around that time... tho just looked at my report and mine is fine.

Sharon87

I better start using my HSBC Graduate OD account! I don't have regular funds going in there any more either. I really need to look at my credit report as I knwo it's crap lol.

jamesd

CreditCruncher wrote: »

I was shocked to see my equifax credit score report in which HSBC has given me a DANGER score since Nov 08 eventhough I have stayed within the limits and paid the debit interest & account fee in time.

There's no such thing as a danger credit report from a bank or anyone else. That may be some rating given by whatever place you're using to check your credit report.

What your report should say is that you have an overdraft facility of 900 and that you are within it. It should say this for every month that this has been the case. If your actual credit report doesn't say this then that would be a problem that you should seek to resolve with HSBC.

An overdraft facility that's being more than 90% or sometimes more than 80% or 75% used is something that some credit scores would count as negative thing but this is not a rating given by HSBC, just by whoever is using the raw data that HSBC provides. An overdraft that shows no sign of being reduced would also normally be a sign of potential financial trouble for the account holder and hence could be a negative indicator. It appears that the danger score might be an attempt by whatever credit checking service you're using to alert you to this possibility.

Normally someone who is maintaining an overdraft balance would be expected to arrange a loan to pay it off over several years and eliminate the routine use of the overdraft facility. For an overdraft of just 900 that might be more expensive than just keeping the overdraft.

CreditCruncher

chuckley wrote: »

i don't know. have u had problems with them over anything on that month?

coz wasnt that the month, they recalled accounts over 'reviews'????

I never had any problems with them at all but I think they were automatically reviewing all the accounts in the difficult financial climate and sadly I was picked on!

CreditCruncher

Thanks for your advice jamessd..

jamesd wrote: »

There's no such thing as a danger credit report from a bank or anyone else. That may be some rating given by whatever place you're using to check your credit report.

I should have been more clear;it was not a danger credit report but as you said a rating given by equifax!

jamesd wrote: »

Normally someone who is maintaining an overdraft balance would be expected to arrange a loan to pay it off over several years and eliminate the routine use of the overdraft facility. For an overdraft of just 900 that might be more expensive than just keeping the overdraft.

But it has just been a matter of months and not years! HSBC never tried to contact me to discuss any workable options before being punitive either.....

CreditCruncher

Sharon87 wrote: »

I better start using my HSBC Graduate OD account! I don't have regular funds going in there any more either. I really need to look at my credit report as I knwo it's crap lol.

You better do that or the WORLD's LOCAL BANK might treat you bad!!

jamesd

CreditCruncher wrote: »

But it has just been a matter of months and not years! HSBC never tried to contact me to discuss any workable options before being punitive either.....

So far you've written nothing at all that suggests that HSBC is being punitive or doing anything other than accurately reporting facts, as it's supposed to. So long as HSBC is correctly reporting that your overdraft limit is £900 and your balance is £800 or more overdrawn, whatever it really is, then HSBC is acting perfectly properly.

No need for them to contact you about this: they are reporting accurately and you are within your limit rather than over it, so as far as they are concerned, you're OK.

How other places view that is a different matter. Equifax is correctly telling you that some - many - will regard that accurate information negatively, as a sign that you're in financial trouble. The possible exception is if it's a 0% deal. Some places will notice that and disregard the overdraft due to the special offer. Generally, though, persistent overdrafts are going to be taken as a bad sign.

If HSBC isn't reporting that your limit is £900 and so your balance is within the limit, that would be wrong.