Overdraft killing my credit score?

pvt

My Halifax £10,000 overdraft facility hasn't impacted my meaningless credit score of 999.


In answer to all those who are saying you don't need it: it is useful if you want to be able to spend a large unplanned amount on a debit card. You can then make a transfer from a savings account the same day so that the overdraft is technically unused.

takman

pvt wrote: »

My Halifax £10,000 overdraft facility hasn't impacted my meaningless credit score of 999.


In answer to all those who are saying you don't need it: it is useful if you want to be able to spend a large unplanned amount on a debit card. You can then make a transfer from a savings account the same day so that the overdraft is technically unused.

Why would you want to do that when you can get cashback on a credit card purchase and also get up to 45 days earning interest on the money till you need to pay it (or even more interest free if you have the right credit csrd).

But your savings should be in current accounts anyway so they all have debit cards which you can spend the money on. But even if you don't have the cards with you with online banking I can transfer money between accounts just before I make a purchase. So an overdraft is pretty pointless!.

But if you already have credit cards with £10k plus limits then your large overdraft won't be hindering you too much. But for some people if they had a £10k overdraft they wouldn't be able to get other types of credit.

takman

TheShape wrote: »

I'll be keeping my 'just in case' overdrafts 'just in case' I need them. I've got a £1500 overdraft facility on my main account and a few ranging from £50 to £500 on other accounts.

No need for anyone to worry that having a small overdraft facility is going to stop them getting that credit card/car finance/mortgage.

But what's the point in having them?. They all add up and are taken into account by lenders so your overdrafts may be reducing the amount of useful credit you can get.

Plus if you think it's possible to get an unexpected £1500 taken from your account then your financial management is severely lacking!.

Shakin_Steve

People like having access to a large overdraft facility. It makes them feel all warm and trusted like, even though they probably can't afford to use it. If I have access to a £5000 overdraft and you only have £2000 then, obviously, I am far superior to you.
Innit?:rotfl:

TheShape

takman wrote: »

But what's the point in having them?. They all add up and are taken into account by lenders so your overdrafts may be reducing the amount of useful credit you can get.

I have overdrafts on some accounts which I do not keep in credit beyond a couple of pounds but are used to fund their linked regular savers. If a DD into the account is delayed beyond the SO into the regular saver the account would go into an authorised rather than unauthorised overdraft.

Plus if you think it's possible to get an unexpected £1500 taken from your account then your financial management is severely lacking!.

I think it highly improbable, but to think you could make a judgement on my financial management from the existence of an overdraft would be pure conjecture.

takman

TheShape wrote: »

I have overdrafts on some accounts which I do not keep in credit beyond a couple of pounds but are used to fund their linked regular savers. If a DD into the account is delayed beyond the SO into the regular saver the account would go into an authorised rather than unauthorised overdraft.

I very much doubt you are crediting accounts by direct debit to fund linked regular savers, I actually don't know of any account with a linked regular saver that accepts funding by direct debit. It is most likely a standing order that you have setup.

Also a standing order will not take payment if there is no money in the account. It won't take you into an unauthorised overdraft under any circumstances, they simply won't make the payment.

I think it highly improbable, but to think you could make a judgement on my financial management from the existence of an overdraft would be pure conjecture.

I wasn't judging your financial management based on purely having the overdraft because I know people generally are wary to get rid of them even if they don't need them. The only reason to not get rid of an overdraft is because the person isn't confident in their finances and their management of them.
If you haven't used an overdraft in 12 months then really there is no reason why you should keep it. But lots of reasons to get rid!

Kiwi4444

Thank you everyone, great read but I have decided to get rid of the overdraft completely, I don't use it and it could be stopping me from getting better credit!! Thank you

MEM62

takman wrote: »

Even if you never use an overdraft just having one available shows your not completely confident in your finances. Someone who was in control of their finances would happily reduce their overdraft to zero as their is no need for them to have one.

Complete tosh!

My account has a £5k overdraft that I have never used but am happy to let the facility sit there, as it has done for over a decade. It has had no discernible impact on my credit standing and says absolutely nothing about my ability to control my finances.

takman

MEM62 wrote: »

Complete tosh!

My account has a £5k overdraft that I have never used but am happy to let the facility sit there, as it has done for over a decade. It has had no discernible impact on my credit standing and says absolutely nothing about my ability to control my finances.

So what is the point in having it there if you will never need to use it?.

It may be having an impact on your other financial products without you knowing about it. What kind of limits do you have on your credit cards?, how do you know they arnt lower than they otherwise would be?.

MABLE

My overdraft facility is £10k with Lloyds and use part of it every month for the purpose of doing a round robin and I make sure my account goes back into credit by close of business to avoid any charges. However it still registers with the bank I am making use of the facility and as such less likely of it being withdrawn. Well that my theory anyway!