What effects your credit score?

MorningcoffeeIV

SuzeQStan said:

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?

Absolutely. As would anyone who understands lending, but Martin was never the best on credit files.

He was probably trying to say that keeping long running bank accounts and credit facilities is a good thing - which they are.

What he should have said is that it's a terrible idea to keep a debt that you can clear, as it makes you look higher risk than you actually may be.

SuzeQStan

interest bearing financial relationships with accounts in good standing are very attractive as far as credit and lending are concerned

Nasqueron

SuzeQStan said:

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.

So there is no use in worrying about what affects the score then?

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?

I don't pay any attention to what Martin recommends, he is not a qualified financial advisor. Having a long history with a financial product like a credit card, paid in full every month is great but your last 6 years of history are all that is available

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.  

I am simply pointing out that correlation does not equal causation. 

Keeping an old debt open for a period did not help you get a mortgage

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.  

Because it didn't help in anyway. Best case, lenders ignored it, worst case they saw a long standing unpaid debt and questioned why you couldn't repay it

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

It's highly likely you misunderstood the MSE advice. MSE is about saving money, the site would never recommend keeping an old debt, which you are paying interest on, open. That is not how you build a credit history

Answers in line above, I suspect you simply misunderstood the advice of having long held credit with keeping an old debt open

Nasqueron

SuzeQStan said:

interest bearing financial relationships with accounts in good standing are very attractive as far as credit and lending are concerned

I'm afraid that is incorrect. Having a debt open for a long time, paying interest on it, makes you look like you can't afford to pay it back which makes it look less attractive to lenders. Lenders don't look at someone who is paying lots of interest on a debt and think "hmm, that looks like a good person to lend to as we might make money from them" - indeed, quote the opposite. Someone who appears, based only on the data on their file, to be struggling to clear debt to the extent they are paying interest is actually a much higher risk to the lender as they may not get their capital back. Indeed, under the responsible lending rules, most prime lenders would not risk that at all as they might find an irresponsible lending complaint coming where they have to pay back interest/wipe the debt etc

Lenders certainly make money from such people, but no mainstream lender would deliberately give credit to someone with a history of struggling to pay back debt, in the hope of making more money from them by hoping they don't pay it back. 

SuzeQStan

Are you a qualified financial advisor?

SuzeQStan

And for about the 4th time - I’m not worried about the credit score!

Nasqueron

SuzeQStan said:

Are you a qualified financial advisor?

I don't claim to be, though I do have one yes

Please don't use the appeal to authority fallacy either

Keeping an old debt open, even if it's just £100, rather than paying it off, is bad, period. 

SuzeQStan

Nasqueron said:

SuzeQStan said:

Are you a qualified financial advisor?

I don't claim to be, though I do have one yes

Please don't use the appeal to authority fallacy either

Keeping an old debt open, even if it's just £100, rather than paying it off, is bad, period. 

What does that mean?

SuzeQStan

@Nasqueron - So I looked up what that means and it’s inaccurate - I mentioned something Martin said on a recent show and surely that shouldn’t be that much of a surprise or out of place on MSE forum.

we kept our low value mortgage going for probably about 6 months in the run up to our move and new mortgage.  I don’t think that was in any way ‘bad’ - It wasn’t an old debt - it was a mortgage within its term - we had made occasional overpayments resulting in low amount during term.

Did it help the mortgage situation for us - according to you it didn’t and who knows you could be right.

but what I do know is that my meaningless credit score dropped like a stone this month after paying off my small interest free loan and mortgage.  Nothing else changed financially for
us whatsoever.  I’m not bothered - but it is interesting. Hence my contribution.