Overdraft?

SamM70

Hi, I've been trying to get some information about the impact an authorised overdraft has on you credit score and am finding a lot of mixed info so am wondering if someone can clarify things for me. We have a joint account with an overdraft of £1990 which has not been anywhere near in the black for at least 10 years.  We are now in a position to pay it off and cancel it.... We have been told if we cancel the overdraft it would have a detrimental effect on our credit scores. Is this right?
Thanks. 

[Deleted User]

Probably, though it wouldn't matter as your credit score has nothing to do with lending criteria.

Keeping it shows lenders that the bank trusts you with credit.  On the flip side, if you think you have too much available credit, you could close it, but there's rarely any need.  If you've been in it for a long time, the bank may decide to reduce it themselves.

The key thing is to stay out of it.

Jamesyb123

Overdrafts are always useful for an emergency maybe consider reducing it down to a smaller limit. Emergencies are better of on 0% credit cards also some fees on overdrafts are extortionate, so see if the bank offers interest free some do it for up to £300 I believe. 

SamM70

Deleted_User said:
Keeping it shows lenders that the bank trusts you with credit.  On the flip side, if you think you have too much available credit, you could close it, but there's rarely any need.  If you've been in it for a long time, the bank may decide to reduce it themselves.

The key thing is to stay out of it.

The only thing that flags as high risk on my husbands credit report is the fact he has £11000 of used credit over 5 accounts, 8500 of this is the car and 1700 is the overdraft.
6months ago his credit score was down at 615 (we had a wake up call when we tried to trade in the car) and we have managed to get it up to 782, We just don't want anything to reduce it when we are working so hard to rebuild it!
Staying out of the overdraft is going to be a challenge in itself but one we will do if needed!
Thanks

SamM70

Jamesyb123 said:

Overdrafts are always useful for an emergency maybe consider reducing it down to a smaller limit. Emergencies are better of on 0% credit cards also some fees on overdrafts are extortionate, so see if the bank offers interest free some do it for up to £300 I believe. 

Unfortunately ours doesn't, its a daily charge... If we reduce it does that have an effect on the score, have seen some posts saying it does??
Thanks

[Deleted User]

SamM70 said:

Deleted_User said:
Keeping it shows lenders that the bank trusts you with credit.  On the flip side, if you think you have too much available credit, you could close it, but there's rarely any need.  If you've been in it for a long time, the bank may decide to reduce it themselves.

The key thing is to stay out of it.

6months ago his credit score was down at 615 (we had a wake up call when we tried to trade in the car) and we have managed to get it up to 782, We just don't want anything to reduce it when we are working so hard to rebuild it!

The score still isn't important.  It can be whatever you want it be - it makes no difference to lenders. Paying off a debt will lower your score but that doesn't make it a bad thing to do. 

You need to reduce your debt and start building a better history that doesn't show so much reliance on lending.

Jamesyb123

SamM70 said:

Jamesyb123 said:

Overdrafts are always useful for an emergency maybe consider reducing it down to a smaller limit. Emergencies are better of on 0% credit cards also some fees on overdrafts are extortionate, so see if the bank offers interest free some do it for up to £300 I believe. 

Unfortunately ours doesn't, its a daily charge... If we reduce it does that have an effect on the score, have seen some posts saying it does??
Thanks

@Deleted_User said the score is irrelevant but what is relevant is that you have been in an overdraft for many years which won’t look good on your history

Notnewnotold

Deleted_User said:

SamM70 said:

Deleted_User said:
Keeping it shows lenders that the bank trusts you with credit.  On the flip side, if you think you have too much available credit, you could close it, but there's rarely any need.  If you've been in it for a long time, the bank may decide to reduce it themselves.

The key thing is to stay out of it.

6months ago his credit score was down at 615 (we had a wake up call when we tried to trade in the car) and we have managed to get it up to 782, We just don't want anything to reduce it when we are working so hard to rebuild it!

The score still isn't important.  It can be whatever you want it be - it makes no difference to lenders. Paying off a debt will lower your score but that doesn't make it a bad thing to do. 

You need to reduce your debt and start building a better history that doesn't show so much reliance on lending.

I genuinely don't know how the regulars on this bit of the board have the patience to keep repeating, probably 20 times a day, that YOUR CREDIT SCORE ISN'T IMPORTANT.

Those pesky CRAs really have something to answer for with their advertising... just astonishing how many people are taken in by this nonsense... and then post without reading the first prominent sticky here. And then ignore when they get told that it doesn't matter in a thread...

But I guess I'm not a very patient person. Or perhaps the sticky needs its title changing to 'Your score is irrelevant, please don't ask us about it!' (Ok not going to happen, I know). Anyway, kudos to those of you that stick with it day in and day out...

stewartwilliams

My £2200 Lloyds overdraft, that I had been using for quite a while, only going into the black a couple of times, and which I paid off a month ago, never appeared on any credit report.

SamM70

So I get that credit score isn't important.... Now.

 I still don't know if it would be more benefit to my credit file to pay off the overdraft and cancel it or keep it. 🤷‍♀️

[Deleted User]

If they allow you to keep it, keep it.  Unless you can't control your spending, in which case close it. 

If you don't have any immediate credit needs in the next few months, you could consider lowering it to a thousand or so.