Credit score dropped - how long?

SDavies84

Hi everyone, just wondered if someone could advise who has gone through the same. My credit score isn't great, it was just in the "Fair" band. I have just completed on a house purchase and needed a £5000 loan to cover moving costs/new boiler etc. I was successful, but the application for credit made my score drop about 50 points. Does anyone know if it will go back up again after I make some payments and how long (in their experience) this may take? It does seem a bit mad if you're successful it has such a negative impact! Thank you for any advice

elsien

Your credit score is not relevant.
Your credit worthiness is based on your credit history, affordability and individual lenders criteria. Nothing to do with a random number made up by each agency.

Mark_d

Your credit score will have dropped due the the hard search, and also because you have an unsecured loan.  The drop due to the hard search will disappear once the credit report shows that your loan application was successful - so when you have made a few repayments on time.  After maybe a year of on-time loan repayments, this track record will increase your credit score and you could have a better score than before your house purchase.

elsien

Mark_d said:

Your credit score will have dropped due the the hard search, and also because you have an unsecured loan.  The drop due to the hard search will disappear once the credit report shows that your loan application was successful - so when you have made a few repayments on time.  After maybe a year of on-time loan repayments, this track record will increase your credit score and you could have a better score than before your house purchase.

And what matters is the history. The fact that the OP is repaying the mortgage on time. Not the random number that has been associated with it.

The random numbers may occasionally have some use - if they plummet suddenly for no clear reason you might want to check your credit files to see if there’s anything untowards on there that you weren’t aware of and need to deal with. 

The credit history and ability to repay are the only bits any lender will ever be interested in.

s://forums.moneysavingexpert.com/discussion/6450574/what-your-credit-score-really-means-please-read-first-before-posting-about-a-credit-score-issue#latest

Mark_d

elsien said:

Your credit score is not relevant.
Your credit worthiness is based on your credit history, affordability and individual lenders criteria. Nothing to do with a random number made up by each agency.

I don't agree that the credit score is not relevant.  Whilst the actual number might not matter, it is NOT a random number.  It is a measure of the quality of your credit history, although it might not be the same measure as used by a lender.

If your credit score drops, it suggests that your credit report does not look as attractive as it did previously.  Maybe some banks won't care that you have an unsecured loan on your report, but it might matter to other banks.

Whilst the quality of your credit history is important, it is not the only think a bank uses when they're making a decision to lend.  Banks also consider your amount of disposable income, the stability of your income, how much money they're likely to make from you in future ....etc.

elsien

Which is why I mentioned affordability , and said the score could have some use if it randomly plummets and you don’t know why.

SDavies84

Mark_d said:

Your credit score will have dropped due the the hard search, and also because you have an unsecured loan.  The drop due to the hard search will disappear once the credit report shows that your loan application was successful - so when you have made a few repayments on time.  After maybe a year of on-time loan repayments, this track record will increase your credit score and you could have a better score than before your house purchase.

Ah, that's great thank you for the advice! I've worked hard on trying to build it up, but needed the loan so I could actually move into my new house! The alert did say that the reason it had gone down was because of the new credit application. I made this on Sunday and was accepted straight away. If I made an early repayment (just for one month) would this make a difference to bring it back up quickly? I'm guessing probably not as more payments would need to be seen...

Mark_d

I don't think there's a way to increase your credit score quickly.  But you should try to space out making any new credit applications.  For example, if you want a new mobile contract now I'd suggest going with Smarty rather than ID Mobile, as Smarty don't do credit check.  Maybe don't try to open a new current account for a good few months...

CliveOfIndia

Mark_d said:

If your credit score drops, it suggests that your credit report does not look as attractive as it did previously.

This is not true.  Your score will drop in response to any change in your credit circumstances, whether good, bad or indifferent.  It's not a measure of your credit-worthiness, it's simply a measure of stability.

As Elsien correctly states, if you see a sudden drop for no apparent reason - i.e. you're not aware of any changes in your credit circumstances, you haven't taken out a new credit card or recently cleared a loan - then absolutely you should check to make sure there's nothing untoward being recorded on your file.

But all a lender is interested in is your credit history - are you using credit responsibly, not over-stretching yourself and always repaying what you owe on time.  They will use their own internal systems to score you, but their own (confidential) score bears no resemblance whatsoever to the generic score you see on your CRA report.

Nasqueron

Mark_d said:

elsien said:

Your credit score is not relevant.
Your credit worthiness is based on your credit history, affordability and individual lenders criteria. Nothing to do with a random number made up by each agency.

I don't agree that the credit score is not relevant.  Whilst the actual number might not matter, it is NOT a random number.  It is a measure of the quality of your credit history, although it might not be the same measure as used by a lender.

If your credit score drops, it suggests that your credit report does not look as attractive as it did previously.  Maybe some banks won't care that you have an unsecured loan on your report, but it might matter to other banks.

Whilst the quality of your credit history is important, it is not the only think a bank uses when they're making a decision to lend.  Banks also consider your amount of disposable income, the stability of your income, how much money they're likely to make from you in future ....etc.

The credit score is meaningless, you can use it however you like but it is 100% NOT the same measure as used by a lender. While it may not be random, at best it's a calculated guess by the credit agency on how they think a third party will rate you.

It is never seen by a lender.

It is never used by a lender.

Use it as an indicator that something has happened on your file that you may need to investigate if something appears that you didn't apply for.

The rest of your comment (in bold) is fine but that applies to your credit record/history, NOT the score. Lenders will take the data on your file only and assess it based on their own scoring system, they do not even get the number you see, so whatever your score is, is moot.