How long for credit score to improve? My story!

JW26

Evening everyone,

I was wondering if someone could help/reassure me on a few things please. I have a credit rating with Experian of 662 which is classed as poor, this is due to stupidly taking out a few credit cards and loans in a short space of time I assume. I have never missed a payment or had any CCJ or debt problems and have about £5000 available credit across 3 credit cards, with one of them having a balance of £4000 with a £4500 limit. I also have a loan outstanding for £2000 which I have never missed a payment on.

The lines of credit were taken out over the last couple of months to help with some unexpected problems but with a recent pay rise I should have all cards and loan paid off by April/May 2020. I have done and will always pay at least the minimum balance each month, sometimes more if I can afford it. Starting now though it will be more than the minimum each month to get it cleared before the summer next year.

My question was roughly how long can I expect my credit rating to be poor? I don't understand how it is so poor as I have never missed any payments but I am now going to work to put it right. I plan on moving out in 12-18 months and worried my mortgage rate wont look too great with my bad credit score (that's if I get one!). Or should it all be cleared up by then having paid everything off in full?

Any help or reassurance will be massively appreciated!

Thanks in advance,
JW

[Deleted User]

Your standing with lenders will improve with every day you demonstrate good account management.

Your CRA score may go up or down (generally down as you clear the debts), but you don't need to worry about that, as it has nothing to do with lending criteria.

Lenders will only be looking at how you manage your credit, so keep on getting the debts down. Make sure you focus on the highest rate debt first.

[Deleted User]

Your credit score/rating is neither here nor there.

What you do with your accounts and how you manage them is all that matters.

Ben8282

Your credit score is meaningless.
Your ability to obtain further credit will improve as the debt reduces although from what you say you have not been experiencing any difficulty in obtaining credit so there may not actually be a problem at all.

Nebulous2

Reducing utilisation and indebtedness should help you look better to lenders. Are all the credit cards on 0% promotions?

Moving out of family home or out of rented?

If you don’t have any adverse such as late / missed payments then it may simply be be that you had very little history and a sudden spike in borrowing concerned them.

Fundamentals will be important for a mortgage. Decent deposit, stable income, on the electoral roll and affordability.

yksi

You have high utilisation - that is, you're almost maxed on what you are allowed to have - and that is a good chunk of the "reason" for your "score". Just keep in mind that the score is not what you want to focus on, it's only a vague indicator, and yes, it's probably also down to the recent applications. Their impact will fade over time.

You are presently not a good risk for lenders, however. You didn't mention your income, but you have a persistent credit card balance, and lenders can see it when you apply for things like loans or mortgages, or car finance, or even for pay-by-the-month insurance and phone contracts.

But considering the past is the past and it can't be changed, you are doing everything correctly. Forget about the word "poor" and just keep chipping away. Pay the minimums on all cards and put all spare money onto the one with the highest APR interest rate, as it's better bang for your buck (and I hope that if you're still using credit for day to day purchases, you're only using the lowest % card!). Accept any increases that you might be offered (and actually, go into each credit card online and apply for an increase - they might say yes). Don't spend any of the extra increases, but they will lower your utilisation ratio if you can get them.

You might want to think about 0% transfer offers. Your credit club here on MSE can show you what you might be approved for. If you get one, do the transfer to the highest % card first and then make sure you don't use that high % card anymore.

gionnetto

JW26 wrote: »

I have a credit rating with Experian of 662 which is classed as poor, this is due to stupidly taking out a few credit cards and loans in a short space of time I assume.

You've answered your own question! As time goes by, if you keep making at least the minimum payments, your score will go up.

[Deleted User]

gionnetto wrote: »

You've answered your own question! As time goes by, if you keep making at least the minimum payments, your score will go up.

But take no notice of it.

Any lender worth their salt won’t look at it or care so neither should you.

JW26

Thank you for all responses, i didnt know the actual score meant so little and was just an indicator!

As long as something unforeseen doesn't pop up or my circumstances change (touch wood) i will no longer need to use any available credit i have. I will now just be paying off what i have already used and should have 0 debt in 5/6 months.

Am i safe in saying the fact i have never missed a payment or paid late and the fact i will have everything paid off next year should mean that in 12-18 months when i look to buy my first home i will be in an ok position in the eyes of lenders? I know its difficult to say but im just worried my sudden credit score drop and high credit utilisation at this specific moment will cost me when i look for a mortgage in the future?

I would guess the fact i have and will pay everything on time is a positive in their eyes? Just wasnt sure if they would look back at these past few months and not like what they see

[Deleted User]

You’re still focusing on the score dropping despite saying in your first sentence that it was meaningless as advised here.

JW26

Ok, take out the “my sudden credit score drop” and re-read.

What im trying to say is if i stick to the plan i have to pay everything off in 5/6 months will lenders look back at these last couple of months in say 12-18 months time and look at all this negatively? Or will they see i have paid everything off in a timely manor and not used my credit again since and look at it positively?

Im just worried i wont be able to get a mortgage in a year or so because i have a high utilisation rate and have taken out quite a few lines of credit in a short space of time.

I also got rejected for credit on a football season ticket so had to pay the full amount up front which wasnt ideal. Surely getting rejected for credit isnt a good sign?