Arranged Overdraft Question

thebottomline

Hi all,

I am a recent graduate so am slightly unsure of the workings of overdrafts, and couldn't seem to find an MSE guide, so I'm hoping I can get some assistance from you fine folks.

Being a recent grad, I am with Natwest and have been since the start of University, on a Student Account, then onto a Graduate Account, and, as of the end of June as that's 3 years after I've graduated, onto a regular Current Account, losing all the previous benefits of the graduate accounts.

One of these benefits which I have only had to dip into once or twice in the last 3 years is the interest free arranged overdraft. In the letter informing me of the change in my account, I was informed that as of the end of June, I will have up to £100 interest free overdraft allowance.

However, I am about to change roles and also move house, and thought that I may well have to dip into the overdraft a small amount for one or two months only to help pay for some furniture, and for a week or two that I'll be between jobs unpaid doing the move and seeing family.

My question is - am I able to easily request an arranged overdraft with my bank? If so, does it go through the credit check system/have any adverse affects on my credit rating for asking? And are there any rough rules or frameworks that Banks usually adhere to? E.g. 10% of net annual salary is generally accepted or similar? I am on £24k p.a. and have only dipped into the overdraft when I had to fork out over £11k in one month for both tuition fees for my wife and a fee other ad-hoc one-off expenses.

The reason I ask is that I see from the "Best Bank Accounts" page that banks such as First Direct are currently offering cash to switch, and an overdraft of £250 based on my salary and above - so it may be easier to switch if it avoids any marks on my credit rating or similar, but switching Banks, D/D's, details with employer, etc., seems like it could be quite an upheaval for limited gains if I can get the same OD facility in my current bank?

One other complication that may affect this - I currently have a small loan with my current bank that I took out just under 2 years ago - I have never defaulted/missed a payment, etc., but I thought it was worth mentioning as it may be a reason to stay with my current bank or a limitation to the OD. Could it be that an easier way to get access to short term funds is a credit card? I've always been taught to fear the credit cards!

So, any help on what the best route forward to take is is much appreciated, as I say I'm new to all of this.

Thanks all.

InsideInsurance

If you speak to your bank they should be able to advise if they would do a credit check or not. In some cases they will be able to just use their previous experience of you to extend your overdraft further.

It is certainly easy to apply, more difficult to get and a pain if you decide you have to appeal the decision.

thebottomline

Thank you for your help.

One area I'm a bit clueless about is credit checks/credit rating. Would I be right in thinking that, if they do a credit check on me, it is damaging to my credit rating? Or will it be damaging to my potential if I've recently been checked?

As I just moved into a rented property, so had a credit check done then, and the landlord said he was a bit concerned (due to my low balance at the time - having just paid out the £11k) but that my salary justified it - it had a bit of back and forth as he was deliberating - taking out insurance, etc., and I was concerned what impact (if any) this would have had on my credit rating - even though I was then allowed to rent the property. Are my concerns valid? Is there a cheap way to check mine?

Thanks again for any help.

innovate

http://www.moneysavingexpert.com/loans/credit-rating-credit-score

callum9999

thebottomline wrote: »

Thank you for your help.

One area I'm a bit clueless about is credit checks/credit rating. Would I be right in thinking that, if they do a credit check on me, it is damaging to my credit rating? Or will it be damaging to my potential if I've recently been checked?

As I just moved into a rented property, so had a credit check done then, and the landlord said he was a bit concerned (due to my low balance at the time - having just paid out the £11k) but that my salary justified it - it had a bit of back and forth as he was deliberating - taking out insurance, etc., and I was concerned what impact (if any) this would have had on my credit rating - even though I was then allowed to rent the property. Are my concerns valid? Is there a cheap way to check mine?

Thanks again for any help.

Searches never permanently damage your report. Basically, the more searches you do the more desperate for credit you look - setting off alarm bells as to why you are requesting yet again.

If you get a credit check then it will only remain on your account for 1 year (i.e. no-one would ever know that you searched then after that period), and I believe unless you have a ridiculous number, most places put most emphasis on the number in the last 6 months.

If that credit check from the landlord is the only one you've had in the last 6 months - another from Natwest will not have any major affect to your short term rating, and zero affect to your long term rating.