Improving Credit rating-students

luquii

Currently I am a student with 2 student overdrafts that I have had since my first degree(ending 3 years ago), I am now part student, part worker and wondered whether having interest free overdrafts increases bad credit rating? I am also looking to use these overdrafts to take out an ISA?

jd87

There is no such thing as a credit rating. The "credit ratings" that you can pay to see, from companies like experian, where they give you an actual number, is just something they have calculated to sell to you as a product. When companies are thinking of lending to you they take lots of factors into account, not just a simple "credit rating".

One of the things that a company will look at is how much debt you already have. Overdrafts show up on your credit files, so any company you apply to for credit will be able to see that you already have this overdraft debt, and that will make them less keen on lending to you. The fact that it is interest free doesn't make any difference.

In other words the short answer is yes, interest free overdrafts do affect your credit rating.