Under 500 Credit Score, Time to Write of Debt, and Setting Up LTD Company

Munch

Hello, it's been awhile since I've been on here be here goes...

My Noodle Credit Score is currently 498 as of 12/03/15, jumping up from 423 in 2 months after I got a decent job and started cycling money through my maxed CC from Aqua, which has just been increased from £400 to £800 at 39.9%.

My new job is a contractor under an umbrella company but I'm setting up my own LTD to register for the bike to work scheme, take home will be pretty much the same but I will need a business bank account (any ideas?)

I have an old MBNL debt from years ago, it says I defaulted on the 30/10/2010. On 31/01/2012 the account was bought by someone else... Arrow Global LTD. Once this gets to 30/10/2016, does that mean the debt is written off? I paid the whole thing off through a debt management company, then the final £25ish was one they phoned me direct for, then 2 years later I get a letter saying they are coming to my door for all my stuff and I owe them twice as much as I did originally, so naturally I ran and hid and now the letters have stopped. It's almost like they just don't care anymore... I hope.

I have been good though and continued to pay ones off that I think should be paid off instead of imagined ones. Once small debts are paid, does this mean my credit score would rise again? Now I can actually afford more than £2.50 a week!

Does anyone know of extra ways I can quickly increase that score? Except being on the electoral roll... I don't want any more knocks on my door from evil 3rd party companies.

Thank you all!!!!

[Deleted User]

The debt won't get written off, but it may be unenforceable if 6 years have passed without acknowledgement or payment of the debt.

Not being on the electoral roll will severely hamper your ability to get credit, as such people are much higher risk.

You also want to stop maxing your credit card, as that sends the wrong signals.

DCFC79

Stop focusing on your credit score, lenders don't see it.

Munch

Deleted_User wrote: »

The debt won't get written off, but it may be unenforceable if 6 years have passed without acknowledgement or payment of the debt.

Not being on the electoral roll will severely hamper your ability to get credit, as such people are much higher risk.

You also want to stop maxing your credit card, as that sends the wrong signals.

Ok so what happens after 6 years? Why do people keep saying 6 years! 6 years blah blah!

So defo get on electoral role?

Munch

DCFC79 wrote: »

Stop focusing on your credit score, lenders don't see it.

So what do they see? Why are people always talking about credit score? I don't get why it's important then.

Thank you!

Candyapple

What happens is after 6 years from the date of default, in your case 30/10/16 the default will be wiped from your credit file and will no longer show.

Your credit score, which companies like Experian etc charge a fee for, is pointless. Why? Because they do not lend you money, it is just a marketing gimmick.

When you apply for credit, each company has their own internal credit scoring policy which is confidential. Each lender has different profiles they may use based on what product / target market they are aiming for. eg Capital One will have a different lending criteria as they generally aim for the sub prime market / people with no/bad credit, whereas say American Express will have a different lending criteria say for people with a good history of using credit and paying it back etc.

Once the default drops off your file your credit files will be in better shape. There is no magic cure in building your rating up, all you can do is make sure you pay back everything on time, be on the electorall roll and keep an eye on all 3 credit reference agencies to make sure that the information being reported monthly is up to date and no discrepancies. That and time is the biggest healer.

DCFC79

Munch wrote: »

So what do they see? Why are people always talking about credit score? I don't get why it's important then.

Thank you!

Lenders see the history, the score is a representation of how the credit ref agencies see your credit history and that's it, lenders see any defaults etc.

Some people think having a 999 from Experian means they should get accepted for every credit application made.

You could have 5/5 from noddle but have defaults left right and centre.

Candy apple has posted some extra info.

Ebe_Scrooge

Munch wrote: »

So what do they see? Why are people always talking about credit score? I don't get why it's important then.

Thank you!

It's not important. At all. What is important is your credit history. Which means evidence that you can manage credit well. Things like using a credit card sensibly, not going near your credit limit, paying it off in full every month. Having a mobile phone, gas, electricity, etc., account that gets paid on time, in full, every month / quarter / whatever. Not constantly living off an overdraft. Paying a mortgage regularly. Not defaulting on any of your debts.

These are the sorts of things a lender will see, and will base their decisions on. Sure, they make money on the interest they charge, but ultimately if you look to them like the sort of person that's not going to repay the capital, they'll steer well clear. What they want is someone who will pay the capital, plus some interest (they're a business, not a charity, they need to make money ), on time every month. Doesn't matter if it's a credit card, car loan or mortgage, it's all the same thing.

To improve your your credit rating, it's simply a case of showing that you can use credit wisely, not overstretch yourself, and be sensible with it.

Munch

Candyapple wrote: »

What happens is after 6 years from the date of default, in your case 30/10/16 the default will be wiped from your credit file and will no longer show.

Your credit score, which companies like Experian etc charge a fee for, is pointless. Why? Because they do not lend you money, it is just a marketing gimmick.

When you apply for credit, each company has their own internal credit scoring policy which is confidential. Each lender has different profiles they may use based on what product / target market they are aiming for. eg Capital One will have a different lending criteria as they generally aim for the sub prime market / people with no/bad credit, whereas say American Express will have a different lending criteria say for people with a good history of using credit and paying it back etc.

Once the default drops off your file your credit files will be in better shape. There is no magic cure in building your rating up, all you can do is make sure you pay back everything on time, be on the electorall roll and keep an eye on all 3 credit reference agencies to make sure that the information being reported monthly is up to date and no discrepancies. That and time is the biggest healer.

Right, understood.
I'm on the electoral roll now, and I've spoken to most of my creditors, did both main credit reports (one was 2in1) and sent them off to the people setting up my LTD company and see if I can get the right business account etc.

So don't focus on the score but the actual account? Like how recently there was a default and how close to my credit limit I am?

(thanks again for your help)

Munch

Ebe_Scrooge wrote: »

It's not important. At all. What is important is your credit history. Which means evidence that you can manage credit well. Things like using a credit card sensibly, not going near your credit limit, paying it off in full every month. Having a mobile phone, gas, electricity, etc., account that gets paid on time, in full, every month / quarter / whatever. Not constantly living off an overdraft. Paying a mortgage regularly. Not defaulting on any of your debts.

These are the sorts of things a lender will see, and will base their decisions on. Sure, they make money on the interest they charge, but ultimately if you look to them like the sort of person that's not going to repay the capital, they'll steer well clear. What they want is someone who will pay the capital, plus some interest (they're a business, not a charity, they need to make money ), on time every month. Doesn't matter if it's a credit card, car loan or mortgage, it's all the same thing.

To improve your your credit rating, it's simply a case of showing that you can use credit wisely, not overstretch yourself, and be sensible with it.

This is really useful, you clearly know about this.
I've already started acting on it. Thank you

The_Boss

Munch wrote: »

So what do they see? Why are people always talking about credit score? I don't get why it's important then.

Thank you!

Because the CRAs have created this illusion that everyone has a "credit score" so they can flog this score to them while passing it off as the super important be all and end all.

Obviously if you're selling a product you're going to make it as attractive as possible and create a need for it. Experian's use of language in particular is very clever with how they market it (although at times borderline fraudulent). The "credit score" provided by the CRAs is a worthless random number as CRAs are not lenders, different lenders have different lending criteria for different financial products and the CRAs use incomplete data when generating the random "scores".

The reason people are always talking about credit scores is they don't bother to read the threads already posted on this board or the sticky threads before they post. If they did that would eliminate the vast majority of new threads started on here with "credit score" questions.