Why poor credit rating?

rachael12345

Hi all

New to this forum malarkey so please bear with me if I don't provide the correct info.

I went to check my credit rating yesterday with Credit Expert, and although I wasn't expecting it to be brilliant, I was expecting more than 570

I have five credit cards - £0 + £0 + £1650 + £3800 + £6200.
Total £11650
The total credit I have available to me is £23600.

I pay back in the region of £360 per month (£300 on the largest balance and the minimum on the other two) and have done for about a year at least. At the moment they are all interest free, but in the coming months this interest free period will end on the £1600 card, with the other two interest free periods ending middle of next year. I'm now concerned as my plan was to transfer these to another interest free card, though I'm now thinking this may not be possible if I cannot get accepted due to my 'poor' rating of 570.

I have NEVER defaulted, NEVER paid late EVER. Since I started with my own bank account / overdraft, cards, EVERYTHING has always been on time, so I cannot understand why my credit rating is so low. I checked Noddle a few months back and my score was 2/5 and has now gone up to 3/5, so for all I know my rating could be on the up. I am guessing it may be my 'utilisation ratio' my cards are pretty much 50% used. My salary is £17000pa, so not sure if credit check companies use this or are even aware of your earnings to compare with debt???

So basically I'm after advice on how to improve this rating. I pay off the maximum I can afford to, I only use one card for spending, and this is for things like car tax, fuel if I go over what I usually budget for, but each month I repay what I have spent that month, plus the £360.

One of the cards I have zero balance on and don't use. I've read you should get rid of cards you don't use, then I've read contradictions telling me closing accounts will affect the utilisation ratio, and may even make my credit score worse! AArrgh!

Does it matter if I pay the minimum on two cards, and then £300 on another? Should I spread the payments equally between all three cards?

Twelve months ago I owed almost £19000 on cards as I bought a second hand car, that was basically a heap of **** on wheels, and had to go through the courts to get my £3800 back. This took months and so this has obviously affected my rating too. I finally feel that I'm on the way to sorting myself out financially, and this has just been a kick in the teeth. Any advice would be greatly appreciated.

kloana

rachael12345 wrote: »

I went to check my credit rating yesterday with Credit Expert, and although I wasn't expecting it to be brilliant, I was expecting more than 570

Ignore your score. It means absolutely nothing.

I have five credit cards - £0 + £0 + £1650 + £3800 + £6200.
Total £11650
The total credit I have available to me is £23600.

Despite having a lot of credit available, having £11k spent on CCs alone is quite a lot.

I pay back in the region of £360 per month (£300 on the largest balance and the minimum on the other two) and have done for about a year at least.

Pay a bit more than the minimum on the other two, without over-stretching yourself.

I'm now concerned as my plan was to transfer these to another interest free card, though I'm now thinking this may not be possible if I cannot get accepted due to my 'poor' rating of 570.

The number means nothing. It will neither prevent (nor facilitate) you from being able to get a further credit card deal in the future.

I have NEVER defaulted, NEVER paid late EVER. Since I started with my own bank account / overdraft, cards, EVERYTHING has always been on time, so I cannot understand why my credit rating is so low.

Your credit is fine - somewhat over-committed, but you're paying it down the best way.

I checked Noddle a few months back and my score was 2/5 and has now gone up to 3/5, so for all I know my rating could be on the up. I am guessing it may be my 'utilisation ratio' my cards are pretty much 50% used. My salary is £17000pa, so not sure if credit check companies use this or are even aware of your earnings to compare with debt???

Ignore Noddle, too. Utilisation is a factor, yes, but the actual score is still arbitrary.

So basically I'm after advice on how to improve this rating. I pay off the maximum I can afford to.

Just keep going.

One of the cards I have zero balance on and don't use. I've read you should get rid of cards you don't use, then I've read contradictions telling me closing accounts will affect the utilisation ratio, and may even make my credit score worse! AArrgh!

Swings/roundabouts. Just don't add to your debts.

DCFC79

The score is just a figure, its a representation of how the CRA's see your score but remember they aren't lenders so cant determine if you are likely to get say the 4% apr on a loan from a lender.

Looks like verything else has been covered by Kloana.

rachael12345

Thanks, I feel slightly better about things. I do obsess over it a little. I look forward to pay day so I can pay a bit more off! (How sad). I think as you say, I just need to keep going.

kloana

rachael12345 wrote: »

Thanks, I feel slightly better about things. I do obsess over it a little. I look forward to pay day so I can pay a bit more off! (How sad). I think as you say, I just need to keep going.

If you keep plugging away as you have been, you'll eventually be amongst the best of credit prospects (note that it involves much more than a made-up score, and you should never pay good money for someone to make that number up for you! ). At that point (when your credit card balances are much lower), you should look at reducing some of your limits, or closing unused cards altogether.

In the meantime, don't worry about it!

rachael12345

Thank you. This has really helped :j

Fruit_and_Nut_Case

I think pretty much everything has been covered. It's been hinted at but not mentioned explicitly that a potential lender does not see these "scores" but only the raw data from which they make their own decisions.

Remember also that the agencies have no idea of what your income is.

CLAPTON

just to say again: pay a little more than the minimum on each card as the credit files highlight that the minimum is being paid which is generally considered a bad thing.


however your total debt of 11,500 and a modest salary of 17,000 will be seen as very high

rachael12345

So am I right in thinking that the lenders do not see your actual score at all? This is just something I, and the credit check company can see?

CLAPTON

rachael12345 wrote: »

So am I right in thinking that the lenders do not see your actual score at all? This is just something I, and the credit check company can see?

the score is a made up fiction

the people that may agree to lending you money, see whats on your report and they have their own system of deciding whether to lend to you. (which is why paying more than the minimum on each CC is a good thing)

Thrugelmir

rachael12345 wrote: »

So am I right in thinking that the lenders do not see your actual score at all? This is just something I, and the credit check company can see?

Lenders receive datasets from the Credit Reference Agencies with regards to credit cards. This enables them to analyse trends in borrowing , utilisation , repayment history over the previous 72 months. In addition they now see accounts which are 0% balance transfers and whether just minimum payments are being made.

Added to other factors. Lenders will score you against their own internal benchmarks.

There's a drive towards responsible and affordable lending. Mortgages were first. Pay day loans are being addressed. Credit cards will get their turn in due course.