Credit Score Impact

admac21

Hi, I have a question about how big an impact (if any) closing a mature current account with a £1000 overdraft (which I'm comfortably out of) would have on my credit rating?



Background:

I've recently graduated from university and now have a decent full time job. I've been with RBS for over 10 years (parents set up my account) and with their student account I have an interest free overdraft of £1000 which I can keep for a further 2 years. I'm now comfortably out of the overdraft so thinking a high interest current account will be more beneficial than a large overdraft and seen Nationwide offering 5%AER for 12 months; on top of which I can get a £100 bonus through another thread for switching. The reason I'm asking the question is that one of the conditions for the bonus is that I close the old account and use their switching service. My partner also might switch meaning between us we could easily get £300 with the reffer a friend scheme, so quite tempted to take the offer but worried about any negative impact on my credit score as may be looking to buy a house in the relatively near future.



Thanks

[Deleted User]

None

The scores and ratings are made up.

It may make you look ever so slightly more favourable to lenders though as you've in essence freed up £1000 of overdraft credit

[Deleted User]

Fear not. You don't have a score. The pretend one you get from the CRAs don't count.

Lenders will look at the data on your credit files.

Established accounts can be a positive for many lenders. I'd consider keeping it since you have limited history.

admac21

Thanks for the quick replies. I know the scores are made up, but don't some lenders refer to these made up scores from CRAs to make decisions? I don't get why such a big deal is made about them if they don't matter.

To get the bonus I have to close my old account as part of the switch, so I guess I'm trying to weigh up which option is more beneficial the £100-£200 switching bonus or keeping an established account that I likely won't use after switching, so that lenders may see me more favourably for a potential future mortgage. As far as I can tell I will still get the 5%AER in either case.


With that said it'll be at least a year before I've saved enough for a deposit, so I would have a years history with Nationwide by then, I'm not sure if that's considered a long enough time to be seen as a positive.

[Deleted User]

admac21 wrote: »

Thanks for the quick replies. I know the scores are made up, but don't some lenders refer to these made up scores from CRAs to make decisions? I don't get why such a big deal is made about them if they don't matter.

No. None.

Some lenders may ask CRAs to create a score based on their own criteria, but none see or use the generic pretend ones.

CRAs make a big deal of them because they know people like numbers that fluctuate. It keeps customers returning go the sites and allows them to sell score improvement services.

A new current account isn't a big deal and I doubt it would have a significant impact, but for the sake of a few quid, I would stay where you are.

[Deleted User]

If you're looking to take mortgage with Nationwide as well then I would switch the account - they offer better rates for members as well as cashback on some mortgages