When is a 'credit account' NOT a credit account

hardplace-rock-me

I'm planning ahead and trying to make my credit rating as good as possible as I will be trying to transfer my mortgage into my name solely in the near future. My spouse and I have recently split up (long story but he was extremely abusive which resulted in his arrest, being removed from our home and being charged and convicted with assault) and I've been trying to pick up the pieces, in a practical sense, ever since.

As I'm still living in the property, I've been switching various household bills into my name (they were all in his name) and many show up on my credit file as 'new credit accounts' for example my energy supplier, internet provider and even a new current account at my bank - which I purposely didn't request an overdraft on - so how can that be a credit account?! The company who supply my water don't show up so why does my energy provider? I can understand the internet provider showing up but I'm most shocked by the new bank account being included.

Can anyone offer any advice of a way to tackle this issue?

[Deleted User]

What is the issue you want to tackle? Assuming you don't default on the accounts, it shouldn't be a problem.

Madbags

hardplace-rock-me wrote: »

As I'm still living in the property, I've been switching various household bills into my name (they were all in his name) and many show up on my credit file as 'new credit accounts' for example my energy supplier, internet provider and even a new current account at my bank - which I purposely didn't request an overdraft on - so how can that be a credit account?! The company who supply my water don't show up so why does my energy provider? I can understand the internet provider showing up but I'm most shocked by the new bank account being included.

Can anyone offer any advice of a way to tackle this issue?

What's the issue exactly. This all sounds normal.

supermassive

Let's bypass the usual know-it-alls expecting everyone to understand what's normal and why it's normal and get to the point that was raised quite a few times in the opening post.

Your bank account is on your credit file as a credit account because you may go overdrawn - even if you don't have an overdraft - and that would mean you owe the bank money. That needs recording on a credit report.

Your energy supplier shows up because you use the energy, without paying first, and then they bill you/charge you and trust you to pay what you owe. It's the most obvious thing you can have on credit.

Basically, if there's potential you will owe money, then it's a credit account.

hardplace-rock-me

Deleted_User wrote: »

What is the issue you want to tackle? Assuming you don't default on the accounts, it shouldn't be a problem.

My point is that everyone needs certain utilities so there's no way of avoiding having them, but they shouldn't be seen as 'credit' surely?

I've had to transfer the household bills into my name and there have been a fair few that have been changed in a short period of time. It looks like I can't manage to live off of my income when in fact I can.

On a certain credit ref agency site it says:

Credit Applications:
The greater the number of credit applications on your credit report, the greater the impact on your credit score
If you make multiple applications for credit within a 6 month period banks and financial institutions worry that you're living off credit rather than your income. These credit applications may reduce your credit score and therefore make it harder for you to be accepted for further credit.

In particular the following 'If you make multiple applications for credit within a 6 month period banks and financial institutions worry that you're living off credit rather than your income'

In my opinion I have not 'applied for credit' at all, merely transferred the everyday bills into my name.

I would like the criteria that credit reference agencies use to lump all kinds of bills as 'credit' to change - a big ask maybe?

I googled about adding notices of correction and found a FAQ on how to do it but I can't find anything relating to the suggested solution on the CRA website.

fermi

https://forums.moneysavingexpert.com/discussion/3172602

Any product which relates to the provision of goods or services before they are paid for can potentially be included in your credit reference file. The list below is not meant to be exhaustive but is designed to give an indication of the types of product that can be shared, including information about them for the benefit of those who might not be familiar with them.


Budget/Revolving

An account or facility for the purchase of goods up to an agreed credit accounts limit. Revolving accounts may involve numerous purchases and repayments, whereas a budget account is repaid by constant regular amounts. Interest is charged on the credit taken.

Credit and store cards

A card allowing credit up to an agreed limit and on which a monthly bill will be generated requiring payment by a set date. Repayments are made either in full, or as a proportion of the balance owed – a minimum amount will be set by the lender and advised on the monthly statement.

Credit cards may be used in any outlet that accepts the type of card but store cards can only be used in the issuing store.

Communications (Internet services, Cable, Satellite TV, Telephones, Mobile, Fixed line)

This will cover all communications services which are paid for under contract or subscription. Pay as you go type products will not be included.

Utilities (Gas, Electricity, Oil, Water)

Utility accounts that are paid monthly, quarterly or annually may be included on your credit reference file. Pre paid metered accounts are not generally included.

Factoring (business only)

A way of obtaining credit against payments expected on outstanding invoices.

Home collected credit (consumer only)

Small-sum, fixed-term credits. Repayable weekly. An agent will call on the customer each week in the home to collect repayments and, where required, issue further credit . Home collected credit includes informal flexibility as standard to help debtors cope with unexpected budget pressures. In effect, the home credit agent can - during the weekly home visit - agree misses or part payments on the spot (normally at no extra cost).

Lease and hire purchase

Lease agreements such as those for cars or machinery (business) where the item is subject to monthly payments over an agreed term. Generally the goods do not belong to the individual until all payments are made.

Loans

Personal and business loans are paid over a set period usually with a fixed payment amount. This can also cover loans for retail purposes and insurance premiums.

Mail order

Mail order credit is generally in respect of goods purchased through a catalogue or the internet. Repayments are made either in full each month or as a percentage of the balance owed.

Mortgages (Commercial, House purchase, Buy to let, Second mortgages)

A loan, secured against property (which can be residential, buy-to-let or commercial) commonly used to purchase the property, but can also be used for a variety of other purposes including home improvements, or to raise finance for either personal or business use.

Pay day loans (consumer only)

A small, short-term loan that is expected to be repaid on the borrower’s next pay day.

Retail credit

These are deferred payment accounts e.g. buy now pay later. These are generally paid over 12 or 24 months.

Student Loans(consumer only)

Loans to pay for further education.

hardplace-rock-me

supermassive wrote: »

Let's bypass the usual know-it-alls expecting everyone to understand what's normal and why it's normal and get to the point that was raised quite a few times in the opening post.

Your bank account is on your credit file as a credit account because you may go overdrawn - even if you don't have an overdraft - and that would mean you owe the bank money. That needs recording on a credit report.

Your energy supplier shows up because you use the energy, without paying first, and then they bill you/charge you and trust you to pay what you owe. It's the most obvious thing you can have on credit.

Basically, if there's potential you will owe money, then it's a credit account.

Thanks supermassive for explaining. It does make sense when you put it like that, but I feel there should be something to differentiate between someone having a household bill in their name and trying to borrow money - as things stand there is nothing to determine the crucial difference, at first glance at least.

stator

The OPs question is essentially:

Will this look bad on my credit report?

If I apply for a mortgage, will it look like I've applied for lots of credit elsewhere, or will the bank be able to see that it's mostly utility companies and so disregard it?

fermi

Any company checking your report should see the general type of account, so they can differentiate. i.e. type: credit card, loan, mortgage, utility, communications etc.

They would take that into account.

hardplace-rock-me

stator wrote: »

The OPs question is essentially:

Will this look bad on my credit report?

If I apply for a mortgage, will it look like I've applied for lots of credit elsewhere, or will the bank be able to see that it's mostly utility companies and so disregard it?

You got it stator, that's my worry - I'm hoping it's the latter as it would be grossly unfair otherwise.

hardplace-rock-me

fermi wrote: »

Any company checking your report should see the general type of account, so they can differentiate. i.e. type: credit card, loan, mortgage, utility, communications etc.

They would take that into account.

Thanks fermi, that's reassuring to know, though I feel it would be more beneficial to consumers and companies alike to have some way of separating the essential 'applications for credit' from the loan applications. Placing them all under the same umbrella seems wrong and misleading, if only at first glance as I said previously. Thanks again for clarifying though.