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credit rating questions

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So I took the plunge and used Noddle last night to a credit rating. I got 4 out of 5 and wondered how easy it is to get to 5. Is it salary dependent at all, I'm on 23K.

All my bank accounts were green, but one was u/c - unconfirmed. This is because I have opeend it recently ready to do a bank transfer to yorkshire to get their £150 incentive. But then I got an eviction notice and have froze that plan, as I don't know how these sort of things would effect a credit rating. Also have many accounts, some places recommend closing a few down, would that help? Thoguht it's good to at least have one open with each company to help ensure you are viable for any customer only deals.

Comments

  • audigex
    audigex Posts: 557 Forumite
    edited 28 April 2015 at 1:34PM
    Forget these number-type rating - 4/5, 800, 80% etc are all meaningless.

    Every lender looks at different factors, and what they look for completely depends on the risk factors for the product you're looking at.

    Instead of looking at the score, look at the entire report and check it's accurate. Then look at your finances and identify risk areas: loans, payments etc.

    Lenders are far more focused on affordability now, than simple number crunching.

    Having many accounts isn't necessarily an issue in itself, but you may wish to close some of the newer/least used ones as it potentially suggests instability to have various open, empty accounts.

    I assume you're looking at a mortgage, so the real questions are really about
    1) Salary
    2) Value of property you're looking for
    3) How much savings you have
    4) How much debt you have
    5) How much money you have spare each month (or used to pay for rent)

    Work out what value home you want; if you have no debt and 10k savings you should be able to look at homes around £100k. If you have a little debt or more like 5k savings, you're probably looking around £80-90k.

    Then work out what the mortgage would be on this (take a look at MSE's best buys tool to get an idea). Look for a 5 year fixed rate over 25 years. If the monthly payment seems sensible to you, add £100 to it. If that still seems doable, you're probably ok.
    "You did not pull yourself up by your bootstraps. You were lucky enough to come of age at a time when housing was cheap, welfare was generous, and inflation was high enough to wipe out any debts you acquired. I’m pleased for you, but please stop being so unbearably smug about it."
  • ACG
    ACG Posts: 24,537 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    The score the credit agency gives you is worthless. Its their score and will not be used for anything.

    Mortgage lenders take the information (the payment history, balances, limits etc - NOT the score) from your credit report and combines it with the information on your application plus other internal sources and then scores your application.

    So whether you have 1 or 5 out of 5, dont worry about it. Same goes for the other credit agencies.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Thanks. Not seen many fixed 5 year, best deals I have been seeing are fixed 2, using MSE's best buy tools. I have no debt & 7K savings (although Noddle showed 0 balance in the two TSB current accounts that I have 2K each in (4% interest at mo) which is a bit worrying, I am assuming its the tool that's wrong & I haven't been wiped out). Parents are willing to give me 10K so 17 K to play with.

    Looking at property up to 110K (115K could be done at push, but no money left for solicitors fees etc, and monthly paymetns woudl be more expensive).

    At the mo I save £435 per month, and pay £350 rent,, so that means I can afford £785pm for mortgage and the various bills that'll come with owning a place. So want a monthly payment less than £500 ideally.

    So closing accounts wouldn't adversely affect my credit rating? What if I transferred my empty account to yorkshire with 1K in it as previously planned, would that affect my credit rating? It woudl have been so much easier if ISAs had a decent saving rate!
  • amnblog
    amnblog Posts: 12,727 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Forget your credit rating on Noddle or anything else - it means nothing to lenders.


    Just ensure you pay everything in full and on time - you can do no more.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
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