Clearing credit card effect on credit rating

adamz

Afternoon

I have just consolidated large credit cards debts, so paid off £50k across 5 cards.

Credit limits are:
Card 1 £11000
Card 2 £6000
Card 3 £10700
Card 4 £16400
Card 5 £16500

So around £60000 worth of credit.

I left a few hundred pounds on each card just to cover any left interest / planned minimum payments.

My issue is I have just been refused credit on a PCP card loan, the excuse was something like close to my full credit capacity.

My concern is that I have acted stupidly in clearing cards and it might negatively affect my credit rating (I see the comments regarding ratings not existing - so simply mean the ability to get a pcp deal).

Any thoughts on what effect clearing these cards will have to my credit position, and is it in my interest to encourage my card companies to speak Experian ? assuming that is heavily reduced balances will help my credit rating.

Thanks in advance.

Willing2Learn

If I read your post right, then you currently have £110,000 in credit and have used around £55,000 of it. When a lender looks at this data in your credit report they are most likely looking at this negatively when they score you against their criteria, policies and affordability checks.

madvicker

Can't comment on exactly why you were refused - it could be down to either credit exposure or affordability. What's your income? It could be that your debt to income ratio is too high for the PCP.

Alternatively, it could be that your credit reports have not been updated with the credit card pay offs. So the lender might have seen you are in £60k worth of credit card debt AND £60k worth of unsecured personal loan debt. It can take 6-8 weeks for a credit account balance to be updated with the CRAs.

adamz

Willing2Learn wrote: »

If I read your post right, then you currently have £110,000 in credit and have used around £55,000 of it. When a lender looks at this data in your credit report they are most likely looking at this negatively when they score you against their criteria, policies and affordability checks.

Sorry - I was not clear. I have £60000 available credit (combined credit limits), was previously around £10000 available as I had a combined £50000 balance (across 5 cards). The total balances now sit at around £1500 which I have left for now.

As around £32000 of the balance paid was across 2 Barclaycard's, is there anyway to persuade Barclaycard to contact Experien to update details. And will a picture of both cards more of less being paid off help my rating ?

My nett monthly income is £4200.

Thanks

[Deleted User]

You have no rating to improve.

The lender for whatever reason doesn't want you as a customer of theirs.

The CC's clearly aren't paid in full each month - I am guessing they are accruing interest as well each month?

Are there any defaults or late payment markers against any of them?

madvicker

Is there any reason why you have left the £1500? And what is your monthly payment for the loan?

It sounds like there just hasn't been enough time for your credit report to update with the paid off balances. It could be worth calling the PCP lender and saying you have paid off the credit cards. Although they may still look at your situation and decide you are overexposed as you could potentially go out tomorrow and spend £60k on your credit cards and be £110k in debt. Consider closing the the cards you don't need....

Edit:
You can't speed up the credit reporting process.... so asking Barclaycard to update your details won't make a difference.

adamz

!!! wrote: »

You have no rating to improve.

The lender for whatever reason doesn't want you as a customer of theirs.

The CC's clearly aren't paid in full each month - I am guessing they are accruing interest as well each month?

Are there any defaults or late payment markers against any of them?

the cards were for some time only covered by minimum payments (up to now !) so yes interest was built up - but now paid off.

No defaults or late payments .

adamz

madvicker wrote: »

Is there any reason why you have left the £1500? And what is your monthly payment for the loan?

It sounds like there just hasn't been enough time for your credit report to update with the paid off balances. It could be worth calling the PCP lender and saying you have paid off the credit cards. Although they may still look at your situation and decide you are overexposed as you could potentially go out tomorrow and spend £60k on your credit cards and be £110k in debt. Consider closing the the cards you don't need....

Edit:
You can't speed up the credit reporting process.... so asking Barclaycard to update your details won't make a difference.

I was told they were making a decision using the Experian report so I guess I just have to wait for the card companies to update the credit file as there is no way to speed up the process.

Frustrating.

Thanks

[Deleted User]

adamz wrote: »

the cards were for some time only covered by minimum payments (up to now !) so yes interest was built up - but now paid off.

No defaults or late payments .

Paying only the minimum and not being covered by a 0% promo offer will instantly set alarm bells ringing.

Willing2Learn

adamz wrote: »

Sorry - I was not clear. I have £60000 available credit (combined credit limits), was previously around £10000 available as I had a combined £50000 balance (across 5 cards). The total balances now sit at around £1500 which I have left for now.

As around £32000 of the balance paid was across 2 Barclaycard's, is there anyway to persuade Barclaycard to contact Experien to update details. And will a picture of both cards more of less being paid off help my rating ?

My nett monthly income is £4200.

Thanks

You have £50,000 loan and credit cards with a total credit limit of £60,000. When you add both limits together you have £110,000 of total credit. You have used £60,000 credit leaving available credit of £50,000.

sparkey1

You may have just paid off the debts, but the lenders dont send the info to Experian daily, they do it weeeks later. So at the moment your credit report shows you still owe the money as the information has not been updated. Always wait at least six weeks for the information to be updated by a lender to the CRA.