Credit rating/score getting lower and lower...

PrincessPeanut

Hi there,

Can someone/anyone please give me some advise on why my credit rating is getting lower and lower, month on month.

A bit of history... My score about 6 months ago was around 600, which wasnt great, but since then I have managed to sell my house and clear my mortgage and long term debt (the deposit) against it, which was through NRAM about 10 years ago (I owned a house and was renting at the same time, so now I just rent the house where Im living). I have also paid off my credit card, cancelled both credit cards which had about £15k limit combined, and now have savings my in bank account of £10k+. I also changed bank accounts 2 months ago from Halifax to the Santander 123 account as per Martin as he said this earned the best interest on savings at the moment.

So, to me, it seems I have done everything in my power to improve my credit rating, but in fact its just getting worse, its now down to just over 500 and it is infuriating as I'm now in the best financial position I have ever been in.

I am registered to vote at my current address, so am therefore on the electoral register.
I have no loans, no credit cards and no overdrafts.
The only debt I do have is my car, which is through finance via Hyundai where I bought my car from.
I have never missed or delayed a payment ever.

BTW - I closed my credit cards as Martin said having an open credit card that you don't use actually goes against your credit score, but it seems it has had the opposite effect on me.

Any ideas what I'm doing wrong?

Thanks in advance
P

[Deleted User]

Relax, for the scores are but the outpourings of the CRAs' fevered minds. They have no relevance or meaning to anyone.

Paying off your mortgage and closing cards will have changed the scores, as any change in your circumstances is generally seen as a negatives by the CRAs.

However, to maintain a good credit history, I'd recommend continued use of at least one card. Spend and clear in full each month.

Moving from a mortgaged property to rented could also be seen as negative, as you no longer have an asset that lenders could secure against if needed.

Anthorn

Let's look at a hyperthetical situation: Fred has credit cards, bank accounts with overdraft limits, loans, telecoms and energy companies on his credit history which is very nice indeed. No problems there.

Then he decides to get new credit cards and bank accounts and pays off his old ones and closes them. He does the same with his bank accounts and switches telecoms and energy to different companies to save a bit of money.

Eventually, on his credit history his new accounts replace his old ones which are changed to "settled". Then he notices his credit score has plummeted, ignores it because he knows it's meaningless anyway, applies for a credit card and gets rejected.

What has happened is that the age of his accounts are too short for lenders to come to a decision. Fred is dependent on them looking at the history of the settled accounts.

So changing accounts can get a a low credit score and affect your credit history. Whether that applies to you only you know. Check your credit reports.

PrincessPeanut

Thank you.
So, from what you are saying, as I no longer have any credit at all (other than my car finance) there is nothing the lenders can base their decisions on. I guess that makes sense.

Anthorn

PrincessPeanut wrote: »

Thank you.
So, from what you are saying, as I no longer have any credit at all (other than my car finance) there is nothing the lenders can base their decisions on. I guess that makes sense.

If you have credit accounts you have credit. It all depends on a particular lender's scoring criteria. A good idea to leave long standing accounts alone and keep them and add new accounts if needed. Over time it improves.

datlex

Changing suppliers seems to have impacted my credit rating. I changed telecom suppliers in November, did not owe anything to old supplier neither were there any late payments. All payments up to date with new supplier. I also changed mobile phone suppliers in March, again credit rating went down.
When I look at Noddle and ClearScore I have no negative factors listed and 10 positive factors.
My score also fluctuates depending on my credit card balance, even though I pay in full each month. If the score is generated just before I pay my bill is lower than if it is generated just after.
The logic on Credit Scores is a mystery- never been sure why if you are paying £20 to one supplier and then pay £15 to a different supplier for example for mobile phone, your rating falls when actually your commitment has reduced.