Does Reducing Overdraft affect Credit Rating?

Just_Peachy

I am trying to reduce my overdraft which is currently at £1150, i now have £550 to reduce it by but should be able to clear all of it within 5 weeks with £125 a week rent i get from a lodger.

I was wondering if i should reduce the overdraft each week or save it all up and reduce it to zero in one go, i was told by my bank that i'll get credit checked each time i request a new overdraft even if it's to reduce it - is this true? as i am working really hard to improve my credit and if this is the case then i will reduce it to zero only when i have the full amonut to do this. But i would prefer to do it week by week as then the money is not available in my account.

Thanks in advance

petebates26

I don't know how your bank will check you each time - but if they've told you they'll credit check each time, then that might be the case!

There's nothing stopping you paying the overdraft off as and when you get the money each week - then when your balance is zero, ask for your overdraft facility to be removed! If you're planning on having no overdraft at all, then just ask for it to be removed - if you're not appying for any overdraft at all, ten there shouldn't be a credit check!

DVardysShadow

Your overdraft is how much you owe the bank and you reduce it by paying it off. You are not credit checked when you do this.

Changing your overdraft limit may get you credit checked, but it seems hardly necessary for a reduction in overdraft limit - except in barmy 'computer says no' britain. So in your position, I would just pay it off as and when you can afford it. And when you are sure you can stay in the black, just ask for the OD facility to be withdrawn. There is no sane reason for them to credit check you for this - and if it did leave a footprint on your credit record, the Information Commissioners Office should be told.

charlyze2

I know this is a wierd one.

Im with natwest and if i want to reduce my o/d i will have a search on me. i was advised to wait until i could reduce it all to the level i wanted rather than in increments to avoid all the searches

However when i worked for lloyds we didnt to a search and i was a simple 1 minute job to reduce someones o/d and the new one applied the next day.

charlie

Just_Peachy

charlyze2 wrote: »

I know this is a wierd one.

Im with natwest and if i want to reduce my o/d i will have a search on me. i was advised to wait until i could reduce it all to the level i wanted rather than in increments to avoid all the searches

However when i worked for lloyds we didnt to a search and i was a simple 1 minute job to reduce someones o/d and the new one applied the next day.

charlie

Thanks, i'm with Natwest too and it was them who told me i'd be searched everytime i applied for a new overdraft limit regardless of if it was an increase or decrease.

clang_uk

That's interesting - a few years ago I was with Natwest (until a very rude lady in customer services told me she knew best!!) i often reduced my overdraft bit by bit and no one mentioned this to me! Do you know if this happens at any other banks - First Direct in my case!

jadex

Nationwide do similar thing and do credit search every time no matter if you want to increase or decrease your limit.
When they do a search to reduce your overdraft by say £500, they can conclude it should be reduced by more (say £1000) or withdrawn completely and you may end up with the difficult situation to clear more than you previously intended in very short space of time.
The best approach is just to clear it and leave it as it is if you don't want any searches.