Overdraft on credit file

dane1986

Hey guys, I am currently working on building my credit file because were hoping to get our first mortgage next year. I currently have £3500 overdraft limit with my Lloyds bank account. Will it affect my credit score if I was to occasional dip into it? I get paid enough to clear what I would use each month, just trying to figure out if I would have a positive or negative impact etc. All help be great.

[Deleted User]

It doesn't matter if it affects your score - but don't use it as it doesn't send a good message.

Regular use of an overdraft is a good way of indicating to lenders that you struggle to get through the month on your income.

Willing2Learn

dane1986 wrote: »

… I am currently working on building my credit file because were hoping to get our first mortgage next year. I currently have £3500 overdraft limit with my Lloyds bank account. Will it affect my credit score if I was to occasional dip into it? I get paid enough to clear what I would use each month, just trying to figure out if I would have a positive or negative impact etc...

Ignore your credit score as lenders neither see nor use it.

I think it looks bad to lenders when you 'dip' into your overdraft. It makes it look as though there is a cashflow problem and that there may be money problems...

dane1986

Thanks for the quick replies, I get that the score is meaningless. So would I be best off not using it but keeping it, or getting rid of it completely?

[Deleted User]

Keep it but don't use it.

Willing2Learn

I think that having an unused overdraft demonstrates to lenders that you can successfully manage your money and your budget.

Edit: Wow - zx81 beat me to it again!!

dane1986

OK guys thanks for the quick response. As I have used a bit this month, when I get paid next Friday il make sure not to dip into it again.

Thanks

Ben8282

Try to establish which date each month Lloyds report the balance. It should be relatively easy to establish an approximate date by comparing the reported balance with the daily balances throughout the month.
You say that your salary clears the overdraft each month which is very good. If you do need to dip into the overdraft try to get it back in credit/keep it in credit on the reporting date then the use of the overdraft will never show.

dane1986

That what i have started looking at now. I think its the last working day of the month, but will take another month or 2 to clarify.