Trying to get Credit Report in order - show a Current balance or reduce used Credit?

unidentified

Okay, here's the situation...

I am wanting to apply for a 0% Balance Transfer card soon.

Credit report would seem to currently state that I am using 72% of my available credit. This is spread across 2 cards, but in the past 12 months I don't believe I have ever once gone above this at any point - in fact I'm sure I haven't.



I didn't realise previously, but the credit report also has my current bank account listed and even shows its balance in that account which currently isn't very much (only few hundred pounds).

Before I apply for the new 0% BT card, I will receive one more payment from work (monthly wages).



My question here is should I:

(a) use my monthly wage that I receive to make a payment to my existing credit card , thus reducing my used amount to (roughly) 67% of available credit but leaving my bank account still with a very low balance (not much better or much different than it appears right now, maybe even with less)

or

(b) keep my wages in my current account so that my current account shows a good healthy balance of at least a months wages, but leaving my amount of available credit used at around 72% or so?

I just don't know which is going to look better here.




I should also note, I would appear to have a very good credit history, no missed payments, all cards settled and so on, never made the minimum payment but always made at least double the minimum every month so am sure that should look okay...


Just worried they'll see my bank account and think, this guy has no money, when in reality I would have just used the money I had received to reduce my credit % to make it look better.

You only get one credit search by the company so I need to make sure to get it right.

- Or maybe I am only getting hung up on a very minor detail?

Arrrgh.

I really don't know.

Advice please?

Consumerist

From what you say, it seems you should have little problem.

Banks tend to look for signs of debt stress e.g. several credit cards on which you consistently pay only the minimum repayment each month, dipping in and out of a bank overdraft, etc.

If you have just one or two credit cards and you haven't defaulted in the last six years then I see no problem for you.
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Consumerist

Deals_Expert wrote: »

interesting

To get your post count up, try the Money Savers Arms where you will get lots of thanks too.
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unidentified

I had forgotten to mention, at present my report shows a balance of a few hundred pounds, but it is a few hundred into the overdraft.

It lists it as "Overdraft Balance" = 420 pounds (or whatever it is)


Again this is unusual, it's the first time in around 10 years or more that I've ever actually had to use my overdraft amount but was the fault of a mistake on the part of my employer who screwed up my wages for last month and left me short of cash to use.

By the time this months wages and the correction of wages from last month goes in that is what would take it to the positive side and bring it back to my original issue above.

I'm fearful also that they would look at this (that i'd been quite a bit into my overdraft) as not a good thing at all.



Should also mention here, while my used available credit is 72%, that is shown as £8526 used of a possible available £11800.

I would need another card of around £5000 to tart part of that, but that would take my available credit to around £16800, I'm not sure if they would give me that in these lean financial times even though I have a good salary. In reality though I would be scrapping one of the cards when the balance is transferred, which would by the time one card is closed then bring the overall available credit down to £9600, but they wouldn't know I had planned to do that.



On the first card (bigger interest rate) I normally make repayments of between £400 - £600 or so every month (the actual amounts aren't reported in my credit history though, only the total for this card), while on the second card I make smaller repayments, between £50 and £75 or so per month (the monthly repayments are displayed for this card, which again is why I worry could make my repayments look pitiful cos I'm actually focussing on the other card which has a higher APR% instead and they can't see my repayment amounts for that one).


If I used my forthcoming wages to make a payment (could pay around £600 or so but would have to keep the rest for monthly expenses), I could have that down to £7926 and 67% but would have very little showing in my bank balance. Would this translate to debt stress with a lender?


In reality I'm not debt stressed as I have a repayment plan, am just tarting, but not sure how they would interpret it all by looking solely at what I've told you without having an explanation.



Anyone any other opinions now that you've seen the actual figures?

manufire

interesting, too

unidentified

Two spammers on this thread, great lot of help I must say.

Thanks so far consumerist but please read the rest.

Moggles_2

If possible, I would pay down your overdraft and wait for this to show on credit files, before you apply for a new 0% BT card.

As you know, overdrafts are repayable on demand. Credit card debt, on the other hand, isn't. Lenders will pay more attention to overdraft balances, because it's known that a similar level of debt on credit cards only requires a 2% to 3% minimum monthly payment and cannot be called in

unidentified

Thanks for that info Moggles, I had thought that myself...

Either way I decide, I decided that I need to at least zero the account so it doesn't show me using the overdraft.



Though when I get my wages in, it will automatically leave me with a positive balance.



The issue then becomes what to do with the majority of the wages.


Do I use the majority to decrease the credit used to 67% leaving me with only £100-200 or so showing in current account...

...or do I maybe even split this decision, reduce the credit used to say 70% (instead of current 72%) and leave a couple of hundred more in the current account (around £400 ish or a little more)?

Decisions decisions.

Moggles_2

Banks vary in their use of status codes and the data they report to the credit reference agencies. Credit files don't normally show the balance of current accounts though, at least they didn't last time I looked (January).

Have you read the accompanying guidance notes about current accounts? As long as your current account is well-managed, the actual balance is of no consequence

unidentified

Banks vary in their use of status codes and the data they report to the credit reference agencies. Credit files don't normally show the balance of current accounts though, at least they didn't last time I looked (January).

Hence why I was surprised to see it listed, don't see what it has to do with my credit.

By Credit file do you mean the Credit Report (ie. my Experian report that I am viewing)?

When a lender looks, do they not see the same report that I am seeing? Also, which status codes do you mean?

CannyJock

unidentified wrote: »

Hence why I was surprised to see it listed, don't see what it has to do with my credit.

By Credit file do you mean the Credit Report (ie. my Experian report that I am viewing)?

When a lender looks, do they not see the same report that I am seeing? Also, which status codes do you mean?

They don't show the balance of a current account. They report an overdrawn balance and the amount of the overdraft available as available credit. If you have a positive balance they report £0. Eg:


Company name: SANTANDER CURRENT ACCOUNT
Account type: Current Account
Overdraft Balance : £0
Overdraft Limit : £1,000

File Updated for the Period to: 17/01/2010