Some questions, if I may

Mad_Liz

Back in 2008 I was made redundant. I spent the next year caring for a poorly friend and when she died I took on her son. Consequently, my eye was off the ball when it came to my finances. However, although I stopped paying my bank loans and credit cards (all household stuff was dealt with), I didn't enter into any IVA/DRO/bankruptcy arrangements. I also had no CCJs issued against me.

Eventually, I got my act together, made my own personal arrangements with my creditors and am busily paying them off. I am monitoring my credit reports monthly and was rather taken aback in February when, having paid off several of the debts completely, my credit rating got worse.

My total debts were about £15K, and will be down to about £7K by the end of the year.

My friend and her husband had debts of £40K+ together, although hers were about £10K. They went down the IVA route and then ultimately declared bankruptcy. Their bankruptcy order was lifted in October 2013. My friend has disclosed to me that her credit rating is considerably higher than mine. She comes in as "Fair" while mine is "Very Poor".

We both have relatively new Vanquis credit cards that we are using to improve our ratings. Vanquis have raised my limit to £1750 even though my balance is never higher than £300. Her limit is £1000 and she is up to about £700 balance.

Just for clarification, she has been at her address/on the electoral roll for 2 years, 10 months while I've been at mine for 17 years.

It seems that her bankruptcy affected her credit rating less adversely than my efforts to repay my debts, which seems a little unfair. Is this normal or am I missing something?

Tixy

When you say your rating is getting worse is that just based on the rating/score that the credit reference agency sell to you?
If so then that is not a good indicator of your likely ability to get credit or how a potential lender would actually view your file.

Mad_Liz

Tixy wrote: »

When you say your rating is getting worse is that just based on the rating/score that the credit reference agency sell to you?
If so then that is not a good indicator of your likely ability to get credit or how a potential lender would actually view your file.

Yes, it is based on the scores from the credit reference agencies. I use Equifax, she uses Experian.

As it goes, neither of us is looking for credit so won't be able to see how a potential lender would actually view or files.

Tixy

You might find this worth reading
What your credit score really means

As you are using different agencies their interpretation isn't at all comparable. But even if you used the same agencies you might see this type of anomaly. It demonstrates the points made in the article above.

All other things being equal (your current incomes/current debts/job status/home status etc) a potential lender would consider your friend a higher risk than you, so she would be more likely to be declined or offered worse rates.

Mad_Liz

Having just asked Experian for a credit report, it would appear that I am now a "Fair" risk. I much prefer that!

Thanks, Tixy for your help!