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Could I go from very poor credit rating to good in one year?
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Rainbow_Ninja
Posts: 3 Newbie
About 6 years ago, I became a single mum and had resulting negative credit events. My score is now very poor. The things affectin my score are three settled default accounts, one open default, maxed out credit cards, and applying for multiple credit accounts in the last three months.
However, I have successfully challenged the open default and it is being removed. The three old defaults will be gone in one year (it will be six years since the first default). I have actually paid off the credit cards; it just hasn’t registered yet; and the new credit accounts were high interest current accounts for savings. I have automated all my regular payments and budgeted to use less than 1/4 of my credit limit for the next year.
My question is: with this information, is it possible that my credit score will jump massively in a year’s time?
However, I have successfully challenged the open default and it is being removed. The three old defaults will be gone in one year (it will be six years since the first default). I have actually paid off the credit cards; it just hasn’t registered yet; and the new credit accounts were high interest current accounts for savings. I have automated all my regular payments and budgeted to use less than 1/4 of my credit limit for the next year.
My question is: with this information, is it possible that my credit score will jump massively in a year’s time?
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Comments
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Hi,
Ignore your credit score. A lender neither sees nor uses your credit score. A lender will score you independently against their criteria and policies using the data held in your credit files added to the data you submit in your credit application.
Once your defaults are removed from your credit file, lenders will view your history more positively.I work within the voluntary sector, supporting vulnerable people to rebuild their lives.
I love my job0 -
It depends.
Seeing as no one has access or insight to lenders internal scoring algorithms it’s difficult to say0 -
Yes, it's entirely possible that your score will jump massively. Unfortunately, that means not one jot, as lenders neither use nor see your score. What they do look at it your credit history.
Any defaults will be viewed less than favourably, but once they're either settled or removed, things will start to improve. But ultimately there is no magical overnight fix for a tarnished history. What you should aim to do now is to work on building up a history of responsible credit usage - one of the simplest ways is to use a credit card for everyday purchases and make absolutely sure to pay it off, in full and on time, every month without fail. Any other credit agreements ( e.g. mobile phone contracts etc. ) that are also serviced correctly will likewise improve your history.
It takes time, but after, say, a year to 18 months or so, you should find that lenders are more prepared to offer you credit.
But ignore the "score" completely - you'll notice it goes down in response to any change in credit circumstances, whether good or bad.0 -
Thanks everyone
Nearly every advice site tells you to look at your credit report on the three main sites to help improve your credit rating. This is what I have done. As I said, I have automated billing in place and the credit cards will be used to do food shopping and paid off in full every month. These things are all taken care of.
I was just wondering if it is possible to jump in credit rating a huge amount if you have several years of good credit history and old defaults all come off in one go?0 -
Rainbow_Ninja wrote: »Thanks everyone
Nearly every advice site tells you to look at your credit report on the three main sites to help improve your credit rating. This is what I have done. As I said, I have automated billing in place and the credit cards will be used to do food shopping and paid off in full every month. These things are all taken care of.
I was just wondering if it is possible to jump in credit rating a huge amount if you have several years of good credit history and old defaults all come off in one go?
Yes, it's important to check your credit reports, and make sure that the information contained in them is factually correct. It's this information that any potential lender will look at, and they'll run that data through their own internal algorithms to see whether you fit whatever profile they happen to prefer lending to - each company will be different. They may well come up with their own internal credit score (which will be totally confidential, and only they can see). But every company will have a different "ideal borrower profile", and no-one will know what that is.
But what they can't see is the "score" allocated by the Credit Reference Agency.
It's important to check all 3 of your files, because not all lenders check - or report to - all 3 agencies. Some will use all 3, some may only use 1.
But building a credit history takes time. If "Bank A" refuses you today, it's unlikely they'll accept you tomorrow. They may well accept you in 6 or 12 or 18 months time when you've managed to build up a bit more of a positive track record.0 -
Rainbow_Ninja wrote: »Nearly every advice site tells you to look at your credit report on the three main sites
Yes, this is correct, but looking at the content of those reports, i.e. your credit history, not the scores that the CRAs generate.Rainbow_Ninja wrote: »I was just wondering if it is possible to jump in credit rating a huge amount if you have several years of good credit history and old defaults all come off in one go?
If all your old defaults drop off in month X, then a potential lender looking at your credit history in month X+1 will judge you without knowledge of those prior defaults.0 -
Your history is going to look a lot better when those defaults drop off. As from going from "very poor to good" in a year? I doubt it. But rome wasnt built in a day!This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com0
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With the defaults gone, the hard searches for the new credit accounts less recent, credit cards at 25% utilisation and presumably no adverse payment history showing and the credit cards being paid in full every month, in the absence of any other adverse information or account conduct then things should be looking reasonably good.0
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