What effects your credit score?

Buddy1234

My husband has recently checked his credit score on Experian and got a decent score of 999. We are hopefully going to be applying for a mortgage in the next few months and he has an old credit card with a £10,000 limit on it sat there. We used it about a year ago to balance transfer about £1800 and pay it off. Should he cancel it or keep it? He won't use it and doesn't need it anymore but is worried if he cancel is it will make his score go down. He has a credit card with a limit of £4000 that we use every now and then and pay off for everyday usage. I think he should cancel it he thinks not. What is the best in the eyes of a mortgage lender does anyone have any advice please?

MorningcoffeeIV

Ignore the score. It's not real and has nothing to do with getting credit.  Lenders look at how you manage credit.

If he only has a couple of cards, he should keep them and use them.

CliveOfIndia

"What effects your credit score?".

The answer is, "lots of things".  The weather, the wind-speed, whether there's an "R" in the month, if a butterfly flaps its wings in Paraguay.

Seriously, pay no heed to the score you see on your credit report.  A lender does not even see that score, it's nothing more than a marketing gimmick made up by the CRAs.

It tends to drop in response to any change in your credit circumstances - whether good, bad or indifferent.  It'll slowly rise over a period of stability.

A lender will score you internally, using their own proprietary lending criteria.  Ignore the meaningless score you see on your CRA report.

If you cancel the card it'll 99.99% certain make your CRA score go down, but that matters not one jot.  As per the previous reply, what's far more important is how much current debt you've got in relation to your income, and whether you're servicing that debt comfortably (i.e. making all repayments on time).

As far as credit cards go, it's good to use them regularly for planned, budgeted spending (food, petrol, etc.) and make sure you always repay in full every month without fail.  This will gradually build up a favourable credit history, which is what really matters.

SuzeQStan

I’ll tell you what affects your credit score - not having any credit.

some of the best advice we received before moving into and mortgaging our last house was to keep our old mortgage going even though we only owed £100 on it.  An ongoing credit agreement provides credit worthiness.

Move on to now and  we’ve had a double whammy this last month paying off our mortgage and around the same time a small

interest free loan on a phone.  Credit score dropped like a stone - over 300 points.

but it doesn’t matter really for us I suppose now the house is paid off. and I do realise this doesn’t help OP much - but you did ask what affects a credit score and we’ve found out big time this last month!

Nasqueron

SuzeQStan said:

I’ll tell you what affects your credit score - not having any credit.

some of the best advice we received before moving into and mortgaging our last house was to keep our old mortgage going even though we only owed £100 on it.  An ongoing credit agreement provides credit worthiness.

Move on to now and  we’ve had a double whammy this last month paying off our mortgage and around the same time a small

interest free loan on a phone.  Credit score dropped like a stone - over 300 points.

but it doesn’t matter really for us I suppose now the house is paid off. and I do realise this doesn’t help OP much - but you did ask what affects a credit score and we’ve found out big time this last month!

Your credit score is 100% meaningless

Whoever told you keeping an old mortgage open rather than paying it off was misinformed

You build a good credit record (not score) by using credit well - e.g. having a credit card and paying it off in full every month, having a mobile contract paid every month, being on the electoral register etc. Keeping debt going would actually harm your records

Your score dropping 300 points has literally zero effect on anything, including future lending 

MorningcoffeeIV

SuzeQStan said:

some of the best advice we received before moving into and mortgaging our last house was to keep our old mortgage going even though we only owed £100 on it. 

Truly shocking advice...

MattMattMattUK

Buddy1234 said:

What effects your credit score?

Largely the marketing department of the CRA and what they think they can flog you that month to "fix" or "improve" your made up credit score that no lender ever sees. 

SuzeQStan

MorningcoffeeIV said:

SuzeQStan said:

some of the best advice we received before moving into and mortgaging our last house was to keep our old mortgage going even though we only owed £100 on it. 

Truly shocking advice...

Could you expand?

SuzeQStan

Nasqueron said:

SuzeQStan said:

I’ll tell you what affects your credit score - not having any credit.

some of the best advice we received before moving into and mortgaging our last house was to keep our old mortgage going even though we only owed £100 on it.  An ongoing credit agreement provides credit worthiness.

Move on to now and  we’ve had a double whammy this last month paying off our mortgage and around the same time a small

interest free loan on a phone.  Credit score dropped like a stone - over 300 points.

but it doesn’t matter really for us I suppose now the house is paid off. and I do realise this doesn’t help OP much - but you did ask what affects a credit score and we’ve found out big time this last month!

Your credit score is 100% meaningless

Whoever told you keeping an old mortgage open rather than paying it off was misinformed

You build a good credit record (not score) by using credit well - e.g. having a credit card and paying it off in full every month, having a mobile contract paid every month, being on the electoral register etc. Keeping debt going would actually harm your records

Your score dropping 300 points has literally zero effect on anything, including future lending 

we kept a very small mortgage going until we got approved for our larger mortgage once we moved on the last occasion.  

And as I said in my post - I know that a 300
point drop in credit score means nothing for us.
Or anyone else.  But that wasn’t OP’s original question was it?

we have no missed payments in 10
years on anything, no debt, credit cards we regularly use and pay off each month in full - so the only change is the small loan and mortgage being now paid off.  

And the score dropped. Which is the title of the query from OP

Nasqueron

SuzeQStan said:

Nasqueron said:

SuzeQStan said:

I’ll tell you what affects your credit score - not having any credit.

some of the best advice we received before moving into and mortgaging our last house was to keep our old mortgage going even though we only owed £100 on it.  An ongoing credit agreement provides credit worthiness.

Move on to now and  we’ve had a double whammy this last month paying off our mortgage and around the same time a small

interest free loan on a phone.  Credit score dropped like a stone - over 300 points.

but it doesn’t matter really for us I suppose now the house is paid off. and I do realise this doesn’t help OP much - but you did ask what affects a credit score and we’ve found out big time this last month!

Your credit score is 100% meaningless

Whoever told you keeping an old mortgage open rather than paying it off was misinformed

You build a good credit record (not score) by using credit well - e.g. having a credit card and paying it off in full every month, having a mobile contract paid every month, being on the electoral register etc. Keeping debt going would actually harm your records

Your score dropping 300 points has literally zero effect on anything, including future lending 

we kept a very small mortgage going until we got approved for our larger mortgage once we moved on the last occasion.  

And as I said in my post - I know that a 300
point drop in credit score means nothing for us.
Or anyone else.  But that wasn’t OP’s original question was it?

we have no missed payments in 10
years on anything, no debt, credit cards we regularly use and pay off each month in full - so the only change is the small loan and mortgage being now paid off.  

And the score dropped. Which is the title of the query from OP

The score is a fictitious number that nobody but you ever sees, that is the only correct answer.

What causes it to go up or down is algorithms provided by the CRAs which you'll never see as they are commercially sensitive, but again, the fact it goes up or down is irrelevant as you are the only person who sees it.

Your separate point about the mortgage was already covered, it was bad advice, keeping the debt open at best, did nothing, and at worse, made your subsequent application a little less likely to succeed. Lenders take the data from your file (e.g. showing you have a long open debt) and use it on their own internal scoring systems to decide whether to lend and if so, how much to offer. This is completely separate to the fake score you see.

To reiterate - keeping a debt open was bad advice, it did not help you get a mortgage.

SuzeQStan

Yes I think everyone realised the credit score is something only the credit score holder sees. And I did address directly that in both posts previous to this one.

Martin himself mentions that longevity of financial product relationships makes a person more attractive for future credit agreements and financial products.  Do you dispute that?

your comment about our small mortgage being kept open till we got our new larger mortgage is a bit strange.  It is my experience and I’m sharing how it was for me.  

It’s odd that you would pass comment that a £100 regularly maintained over 20 years mortgage would have any bearing at all on our subsequent LTV 40% mortgage.  

According to you it was bad advice - according to MSE not so