Help with Understanding a 'Negative factor'

054123

Your borrowing on regular instalment credit has not reduced significantly over the last 12 months.

This is a long post, but any help will be appreciated!

I initially ran into money difficulty 7 years ago, however i am pleased to say that i have been squeaky clean for the last 6 years and the last 2 defaults drop off of my credit record in Jan '14. The only 'negative factor' that will be left is the above.

I rang creditexpert who advised this relates to a HSBC loan i have, the only credit on my file.

Essentially when i knew i was struggling, HSBC were really helpful and consolodated my credit with them into a 'managed loan' for approx £8,500. The monthly repayment was only £68. The loan was a bonefide agreement with all standard paperwork etc. I have a balance outstanding of approximately £4,500. In almost 6 years, i have never missed a payment on this loan and to all intense purposes it is just a loan (unsecured, granted) that runs perfectly well like any other. I know this is slightly naieve, but seeing how it has been running well since inception, i struggle with it being a negative factor. It is a bone fide agreement between myself and a lender to which i have kept my side of the bargain. who are credit expert to judge it's morality? Shouldn't they just be assesing the facts?

That said, i want to apply for a mortgage in April/May and would like my creit record to look as good as possible. How do i change this negative factor? I did speak to an IFA who checked the loan paperwork and basically said i should not do anything as lenders will look at your monthly expenditure and commitment to credit and if HSBC are happy to take £68, i should continue, regardless of the time left to pay. He said it would do more damage to refinance and shorten the time left to pay, only to increase my monthly outgoings!

Thank you for sticking through to the end!!

Any advice would be welcome,

Oliver.

marathonic

054123 wrote: »

Who are credit expert to judge it's morality? Shouldn't they just be assesing the facts?

The comments on Credit Expert are only their opinion of what is negative and positive in your report.

When you apply for a mortgage, the bank will have their own opinion. They don't see Credit Experts opinion that the balance hasn't reduced significantly, only the cold hard facts, i.e. the balances themselves.

Each bank makes their own decision based on the cold hard facts. It's possible that HSBC come to the same conclusion as Credit Expert whilst Halifax don't even look at the rate at which the balance reduces. The only people that know this is the banks themselves.

With mortgages, the level of your deposit is usually one of the most important things, provided you have no defaults or the likes. For example, I'd imagine that most banks wouldn't care about this loan reducing by very little if you've managed to save a 20-25% deposit over the past 6 years. If you only have a 5% deposit, or even 10%, you may run into difficulty.

054123

Thanks for the reply.

The world of credit scores is a strange and confusing place!