Should I reduce my overdraft?

Katiem900

Hi guys,

Apologies in advance if this is a repeat thread, this place is a bit of a minefield of info to search through.

I have a really good credit rating, thanks to a few years of hardcore budgeting and being sensible (having no life).

My question is; is it better to reduce my overdraft or keep it and just not use it? I currently have a £500 overdraft which after calling in some family debts, Is being paid off very soon. Would it look better to have a £500 limit that is not used, or a £100 limit?

I have an AMEX card with a high limit which is used each month for general spending, and paid off before the due date, and this has contributed massively to my score increasing within the last 12 months. I wondered if overdrafts follow the same principal.

I'm getting a mortgage within the next year or so, so would like my score to remain as high as possible.

Thanks in advance

[Deleted User]

Keep it, but get out of it and don't use it.

Remember to thoroughly ignore your credit scores.

Katiem900

Clear answer - thank you!

Do the scores mean very little these days? In terms of credit history, I've had a few loans (primarily for family members) which have always been paid on time.

[Deleted User]

They mean the same as they always have- nothing.

While they sometimes give a general guide (and only sometimes, due to a few key anomalies in the CRA algorithms), they give no level of accuracy.

Check your files from time to time, but take a common sense view on what will look good, rather than chasing an unreliable number.

robin58

Would think having an overdraft then paying it off but keeping it in the black from now on, will look good on any credit check for a mortgage.

To be honest credit scores are worth something to the companies peddling the belief in them.

Look it another way. When you lend money to your mates, do you look at a mates credit score number or do you go by personal experience on how they have paid it back in the past.

All companies will have have their own views if a person is worth lending to.

Just like people in your circle of friends. Some you will lend to, some you wouldn't lend to if you were the last person on earth.

takman

Katiem900 wrote: »

Hi guys,

Apologies in advance if this is a repeat thread, this place is a bit of a minefield of info to search through.

I have a really good credit rating, thanks to a few years of hardcore budgeting and being sensible (having no life).

My question is; is it better to reduce my overdraft or keep it and just not use it? I currently have a £500 overdraft which after calling in some family debts, Is being paid off very soon. Would it look better to have a £500 limit that is not used, or a £100 limit?

I have an AMEX card with a high limit which is used each month for general spending, and paid off before the due date, and this has contributed massively to my score increasing within the last 12 months. I wondered if overdrafts follow the same principal.

I'm getting a mortgage within the next year or so, so would like my score to remain as high as possible.

Thanks in advance

How has years of budgeting and being sensible left you bring overdrawn?, something is wrong there.

How can you afford a deposit for a Mortgage in the next year or so if you can't even pay off a £500 overdraft after years of budgeting?.

Also you should get rid of your overdraft completely. Overdrafts are only required for people who have poor money management. There are so many other better ways to borrow money.

DCFC79

Whats this about loans primarily for family members ?

Have you taken out loans for family ?

Be aware its risky to mix money and family, not something Id want to go into.

Katiem900

takman wrote: »

How has years of budgeting and being sensible left you bring overdrawn?, something is wrong there.

How can you afford a deposit for a Mortgage in the next year or so if you can't even pay off a £500 overdraft after years of budgeting?.

Also you should get rid of your overdraft completely. Overdrafts are only required for people who have poor money management. There are so many other better ways to borrow money.

Overdraft facility was for family, loans were for family. My deposit is tied up in stock investments if you're that interested. It's never ideal getting loans for family but at the end of the day, it helped them and got them out of a rut - and If you can't help your family in times of need, when can you?

The question I asked was simple, do I keep the £500 and not use it or lower it - there's no need to go keyboard warrior.

Katiem900

DCFC79 wrote: »

Whats this about loans primarily for family members ?

Have you taken out loans for family ?

Be aware its risky to mix money and family, not something Id want to go into.

I have, but all were paid on time and one was paid back early - so yes risky but I'm the only member of my family who could at the time.

MABLE

DCFC79 wrote: »

Whats this about loans primarily for family members ?

Have you taken out loans for family ?

Be aware its risky to mix money and family, not something Id want to go into.

Many years ago I used my overdraft facility of £600 to help a friend out. Promised to me pay back when he received his John Lewis annual bonus.

He was as good as his word. Paid me back on time, the only problem the cheque bounced. Now an ex friend. Lesson learned the hard way.

Katiem900

MABLE wrote: »

Many years ago I used my overdraft facility of £600 to help a friend out. Promised to me pay back when he received his John Lewis annual bonus.

He was as good as his word. Paid me back on time, the only problem the cheque bounced. Now an ex friend. Lesson learned the hard way.

Oh dear, that's not good. I did it for immediate family who thankfully all behaved very well. Still, I shan't be doing it again now I'm almost ready to get a mortgage.