How long can it take to fix credit score?

mickburkejnr

This month, like everyone at one point, I'm finding myself a bit short of money. I called my bank (The Co-Operative) on Sunday and asked them if it was possible to increase the limit on my Credit Card to £1,000 as it has been at £500 ever since I got it 4 years ago. The guy said that had gone straight through. I then asked if he could increase my £900 overdraft by £260 (as I prefer the overdraft than card). He said I'd need to apply and to call back in two days. I found this strange, as I've never had to do it before.

Yesterday I called them and they said I had the application refused. I asked him why, especially as the credit card went through without a problem, he said they've written to me about it but he didn't know why. I thought, then, to check my credit score on Equifax and it's rated as Very Poor. This stunned me because I always had good credit, so much so I bought a car from Peugeot on finance of about £10,000 over 5 years in April without an issue.

On the report, it lists anything I've taken out etc, and it's all green. However, the credit card is listed as red saying that I have too much money on it. As I said, it has only ever had £500 on it and in fairness for the last 2 years I've never really cleared it although I have always met the repayments on time. Usually it asks for £10 a month but I always put in £20.

Now the reason I have the £900 overdraft that I'm regularly in and this £500 on the card is down to me being out of work a while ago and having to live away from home etc, as well as falling in to the trap of I've repaid it so I can use it again. I do get to the point where I've cleared half of them away but then some drama happens then I'm back to being back towards the limit of both lines of credit. This is changing though, as I'm moving back home and the wage I get from my full time job (which clears the overdraft every month) will be bolstered by self employed work I'm doing. Effectively, the money I have coming in within the next two months will clear both the overdraft and the card completely. I also want to buy a house now in 12 months time with my girlfriend, and the last month, but especially the last few days, has been sobering and stuff needs to change.

I've gone through everything I owe, and right now the only debt (barring overdrafts and the one credit card) is my car which I have £9,000 left to pay over the next 5 years, and my phone contract which is £25 a month. I don't have any other debts. The rest of expenses are down to self employed items such as server costs, but money I get through that work covers them.

Based on this Equifax report, it seems to me that the credit card is what is affecting my credit score, as it literally is the only thing on there that is highlighted in red. So to me, and I do feel I'm being naive here, once I get the credit card sorted my credit score should at least come out of the red. However, I know my long term use of my overdraft may have negatively affected my credit score also. So once I get on top of these two issues, how long, really, will the credit score take to fix?

Furthermore, now I've been declined the overdraft extension (which was temporary mind), this will also appear on my credit report. It's the first time I've been refused credit as well. How long will it take for this to subside?

Many thanks for help, sorry for the essay.

Tixy

Does your credit file show you as having been over the credit limit on your credit card at any time?

Don't focus too much on the scores/rating for the credit reference agencies, as these are only seen by you.

Ideally you need to start reducing the use of your overdraft and credit card, however as you have asked for an extension on both then its worth reviewing your finances to ensure your income does exceeds your outgoings and that you can start reducing those debts down.

The fact that you have been declined for an increase in your overdraft won't show on your credit file, all that will show is that a credit application was made (that is if the bank did search your credit file, although its possible they may have declined you without doing that search).

In terms of buying a house, pay off the overdraft and card. Then use the card regularly and repay in full each month. If you do that then from what you have said your credit files should not be a problem to being accepted for a mortgage.
That said your credit files are only a small part of a mortgage application. As you can start putting away regular savings each month, not only to build up a deposit, but also to demonstrate that you have disposable income and will be able to afford mortgage repayments.

mickburkejnr

Thank you Tixy for the clarification.

I've had a look and I can't see anywhere where it's reported it. It shows the credit I have and just a load of green boxes saying it's all up to date.

Regarding the increase, it was to basically cover me for this week and next week, then I didn't need it. Finances are the problem when it comes to the car needing a service, needing to buy equipment on top of rent and bills (hence the move home). I've done a budget to see what outgoings I have, and half of the income goes on bills and rent. The rest, by the looks of it, I spend. So that's going to have to stop.

I'll keep an eye on this, but the first thing as you said is to get the debt down. I'm capable of it I just need to do it. Thank you!