Credit Score big hit recovery time

Willing2Learn

camelise wrote: »

Thanks Willing2Learn. On the day of a lending application, are you able to explain to the lenders what the searches were related to and your reasoning for opening such bank accounts, or is it purely a algorithmic risk factor that you have no negotiation in influencing?

How a lender scores you depends on the independent risk and lending criteria used by the lender. If I was going to be making an application for major credit (such as a mortgage), then I would personally wait 6-12 months so that the searches get older or drop off from the file.

camelise

Thanks all for your advice. I guess my concerns were brought about by regularly checking my credit scores across the various CRAs and watching the score drop drastically, from an excellent to a poor score within a month, which was very scary as I'm hoping to get on the property market in the next couple of years. It's concerning that what you would think would be minor factors (such as opening new bank accounts) can have such a major impact on score, and potentially outweigh the positive work created by good credit card and repayment habits. I now understand the imaginary number that a credit score is and that one can make their own score up. But I don't think I'll ever relax not fully knowing what risk a lender is going to attribute to me. Cheers.

boo_star

camelise wrote: »

So on the day of a mortgage application, I'll be gambling not knowing what risk will be attributed to me. I am young but believe I have a good credit history (albeit a relatively short one) where I have paid off all credit in full monthly, kept utilisation low and never had a late payment.

But applying for credit is always going to be a "gamble" to at least a certain extent (less so if you use a broker though admittedly.) You can never be certain that you'll get accepted and certainly your fictional CRA score won't help at all.

The credit scores that the CRAs have given me indicate that they currently think I'm rubbish simply because I opened a couple of accounts to take advantage of their interest rates and allow my money to grow (without looking for credit).

You shouldn't give a fig what a company that doesn't lend money thinks about how companies that do lend money might view you.

I see the point you're all making, and appreciate the advice, but haven't been reassured that I can go into a bank tomorrow and get a good mortgage with a good rate, and don't know when that date would ever come if I'm led to believe I shouldn't trust CRA scores. I hope this makes sense. It all sounds like a big gamble to me.

The problem as has already been explained to you is there is no definitive answer. Some lenders (possibly most) wouldn't care two hoots about you having two hard searches for current accounts when you're applying for a mortgage product if you applied for it today, others may take a more cautious view. You're essentially asking how long a piece of string is.

[Deleted User]

It’s always a “gamble” since all lenders criteria’s are different and commercially sensitive and not available to the general public.

Just FYI - your “score” will drop (probably drastically) when your mortgage broker or provider runs their searches and when the mortgage account is added to your credit files.

But again, that doesn’t matter.

Don’t work to improve your score - work to improve/maintain your history.