Overlimit

david_28

Can you please let me know how much a few things (that I probably should not have done) will affect my credit rating? I'm finding it hard to get credit, the last time I checked my credit rating it was 400ish on Equifax a few months ago. When I applied for a payday loan at "Sunny" through Topcashback I got the response that my credit score is not good enough (ouch).


1. I have been over my overdraft limit a few times for up to a week or so on my two current accounts.


2. I have missed one credit card payment (MBNA) and have been over my credit limit on all 3 a few times (I'm not sure how long going over stays on file and how much of an impact it has). This is on my cards taken out over the last 3 or so years.


During my student days, I missed 3 consecutive payments and 2 in a row a few times at the end of my student loan period. By my calculation, these will start to come off my account early next year, as the first (and one I missed 3 in a row on) will have been cancelled for 6 years. Will I see a large jump in my score when this happens?


3. I have taken out 3 or 4 Wonga loans which I heard someone say can look bad, but am not sure if this is true. Never seen them on my Equifax report though?


4. For the last couple of years I have been unemployed for health reasons but have been looking again for a few months and have a few definite possibilities. Am I correct in believing that being able to put that I am in full time employment on applications will have a massive positive effect? I'm not the best managing my finances, but I can't be worse than the typical person applying for Vanquis type cards and payday loans?

Tixy

Going over your credit limits and missing payments all mean a potential lender will view you as a higher risk to lend to. They know it means you are statistically far more likely to miss payments to them or default on loans to them.

Doing this multiple times on multiple accounts will be viewed as someone who either has is unable to afford to pay their bills as they become due or who has no money manageement skills.

Most mainstream lenders would likely not consider there to be much difference between going over limit or missing payments, both are a problem.

As these missed payments / limit breaches get older they will gradually start to have less of an impact on your ability to get credit. Particularly if you can demonstate more recent responsible use of credit.

With regards to payday loans on your file these generally indicate someone who is unable to survive on their current income and is desperate for credit - as they are such expensive loans generally only people who are desperate will take them out, and so for mainstream lenders they are a definite factor of indicating someone is a higher risk.
Having had payday loans in the past, assuming they were paid back on time, would not be viewed as negative by other payday lenders.

I believe wonga report to experian.

With any application for credit the lender takes in to account not just the information from the credit reference agencies but also the other information on your credit file, and crucially income/employment is a big factor.
Yes being in permanent employment is preferable to a potential lender, and the higher income a person has then the higher amount of credit a lender would consider they could afford to repay. But being employed won't negate the negatives on your file.

david_28

Thanks for your response. When you say that the influence of going over my limit will gradually decrease, if I were to stay under them all for a year, would I see a big increase in my rating? How long do I need to avoid Wonga before the effect on how much of a risk I am perceived begins to diminish? My main goal is to be able to get another 0% credit card at some point in the future and transfer what I have not paid off on the current ones onto it.

Tixy

Its impossible to know for certain what each individual potential lender would consider acceptable as they all have different criteria.

Cards with 0% promo rates are usually relatively tough to get. I would think you may well be looking at needing 3 years of positive credit history with no missed payments/negatives.

There is one current card that offers a short 0% period for people with negatives on your credit file which is the capital one card. But the limits are usually a max of £1500 so fairly limited for balance transfers. and the rate post promo deal will likely be much higher than your MBNA card. I think the indications are you need at least a year of clean credit history to stand a chance of being accepted for this.

AliceBanned

I totally understand that you have money problems and feel you need to borrow, but you would be better off staying within your limits for well over a year. If you are just trying to improve your credit rating so that you can borrow more, this is not going to help you and you will continue to struggle. Why don't you aim to keep within your limits and then start some savings once you have paid off some debt and have the income to do so? Then you won't need to borrow as you will have something set aside. Easier said than done I know, but it sounds like you are struggling partly because of your debts so why add more?

david_28

I agree with you Alice, when I get back into work I want to pay my debts down, consolidation would just be a temporary measure (easier said than done, as you say, but hopefully). Just need to get out of the cycle of overlimit charges and Wonga loans and stabilise things for the time being. If I get to being debt free, I'll look to have one rewards card that I pay off in full each month.

Thrugelmir

david_28 wrote: »

I'll look to have one rewards card that I pay off in full each month.

Learn to spend in cash i.e. what you've got in your pocket. The simplest and best way of budgeting. Too easy to swipe the card without a second thought. With a card you've already spent the next pay cheque so by default are already borrowing money.

The_Boss

david_28 wrote: »

Can you please let me know how much a few things (that I probably should not have done) will affect my credit rating? I'm finding it hard to get credit, the last time I checked my credit rating it was 400ish on Equifax a few months ago. When I applied for a payday loan at "Sunny" through Topcashback I got the response that my credit score is not good enough (ouch).

They wouldn't have said that as you do not have a credit score - they do not exist. The number you refer to from Equifax is a made up number that has no relevance in the real world (note that lenders will generally freak out if they see you have, have had or applied for pay day loans and reject applications).