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Score dropped after recommended credit usage
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Otuama
Posts: 12 Forumite

Hi all,
I'm pretty confused.
I've had a credit card for a few years but have only just started using it in the last 2-3 months.
It has a limit of £1k.
I use it for most things and pay it off gradually throughout the month.
I started using it to improve my score.
Near the end of the month I make sure I have £100 on it - so 10% of my credit utilisation ratio.
I have a very good score on all 3 credit companies - Experian for example is.... or was until today 983. It's been this for about a year.
I was expecting it to rise but instead it's gone down to 968.
Not a happy bunny.
Does anyone know why this would be? Maybe I'm misunderstanding something.
One thing I am thinking is..... am I being a moron?
If anyone can help with all this that'd be great.
Thanks
I'm pretty confused.
I've had a credit card for a few years but have only just started using it in the last 2-3 months.
It has a limit of £1k.
I use it for most things and pay it off gradually throughout the month.
I started using it to improve my score.
Near the end of the month I make sure I have £100 on it - so 10% of my credit utilisation ratio.
I have a very good score on all 3 credit companies - Experian for example is.... or was until today 983. It's been this for about a year.
I was expecting it to rise but instead it's gone down to 968.
Not a happy bunny.
Does anyone know why this would be? Maybe I'm misunderstanding something.
One thing I am thinking is..... am I being a moron?
- At the end of the month I make sure I have £100 showing for the credit agencies..... Maybe I'm sorting this too late - does anyone know what date Barclaycard send this info?
- So, when the month rolls over, I still have £100 in there - I essentially always have 100 in there. Should I be paying off this £100?
- I have a DD for the full amount set up but even though I have just over £100 used on the card, the DD is saying it will be collecting £0.
If anyone can help with all this that'd be great.
Thanks
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Comments
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The credit score is just a made up figure by the credit reference agencies. No lender gets to see your credit score and they follow their own rules as to whether they will loan you money. You could have a "score" of 999 but earn £14,000 a year and struggle to get anyone to lend you money.0
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What financial institutions are interested in is your credit history and your affordability. So basically responsible use of your credit card and no late payments, not overstretched with other loans, no multitude of recent credit applications etc.
I’m not sure why you’re leaving £100 on it, which you are likely to be paying interest on, when paying it off in full every month equally shows a responsible use of credit.
All shall be well, and all shall be well, and all manner of things shall be well.
Pedant alert - it's could have, not could of.0 -
Hi - Welcome to the forum.
You have misunderstood the score. As above it's pretty useless.
The only thing Experian should be used for with the score is if it dramatically drops to say 150, then check for fraudulent accounts opened in your name. Aside from that their score is as much use to you with lending as a score I may give you.
Neither I nor Experian provide lending, therefore our opinions are pointless.
Continue to pay off your CC in full and on time every month. This is demonstrating good behaviour with current lending facilities you have, future lenders will look at your 'history' not your 'score'.I’m a Forum Ambassador and I support the Forum Team on the Budgeting & Bank Accounts, Credit Cards, Credit File & Ratings and Energy boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
If you can't be the best -
Just be better than you were yesterday.0 -
I’m not entirely convinced that paying it off in cribs and dabs through the month and then leaving £100 on it is actually demonstrating responsible credit worthiness.1
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Leaving a running balance is daft and the made-up score probably reflects that as it indicates that you are not paying it off in full every month.
If you spend 10% of your available credit and clear it every time it'll look better not doing so and paying interest.
The various CRAs may treat your usage differently, so don't rely on their numbers for anything, check the report details.0 -
Credit score aside, I am not sure why you are paying it off through the month and why you are leaving £100 on it at the end of the month?
As you spend, the spends will get added to your account. At a certain point each month, everything on the account will get added to a statement/bill, which you will be asked to pay by a certain date. After this point, anything you pay into the account will go to paying off this bill. This will reduce the DD that is taken - which is why it is saying that the DD will take nothing.
You don't need to make sure there is a certain minimum percentage of utilisation, really, the lower it is, the better.
Set up a direct debit to pay the full amount (on the statement) off, make sure this amount is available in your current account at that time and that's all you need to do.Statement of Affairs (SOA) link: https://www.lemonfool.co.uk/financecalculators/soa.phpFor free, non-judgemental debt advice, try: Stepchange or National Debtline. Beware fee charging companies with similar names.1 -
Hi all, thanks for the replies.
As is apparent, I don't know what I'm doing or have taken in information wrongly.... or the wrong information.
I now use the credit card as my default payment method.
I read somewhere (or watched a video) that a good balance to be sent to CRAs is 10% of your limit - this is done near the end of the month.
So, around the end of the month (let's say 24th), make a payment to bring your credit usage to around 10%.
So that's what I've been doing - and in order for me to keep track of my credit usage, every week I transfer what I've spent into another account - so I don't think I have more money than I actually do.
I've got a DD set up for the full amount but because I pay the CC off every so often, that's obviously eventually going to cancel the DD.
And me keeping £100 in the account..... well, that's my bad (I'm a berk). I did with the idea to always just pay the whatever I spend over the £100 target and near the end of the month I'll always have that £100 in there for the info to be sent to the CRAs..
But, even though I'm not actually incurring interest on that, that's obviously having a detrimental effect.
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My question is this:
Let's say I spend £400+ /mth on the credit card. I leave that money in my current account (or transfer it to my temporary account until the end of the month).
The direct debit is taken around the 28th.
Clear Score received (or at least updated) my information on 27th
TransUnion says the 30th
Experian - I can't seem to find the date.
If I wait for the DD to be taken, the information of my having a £400+ balance has already been sent to the CRAs
So in their eyes I'm using 40%, not 10%...... which can have a detrimental effect on the credit score / report.
I can't seem to rack my head around this - Am I talking a load of bol***ks? I can't tell nowadays.
Thanks
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You have completely missed the point again, with apologies for being blunt and you are massively overthinking this.
The financial institutions don't care about whatever number the different agencies tag onto your name.
They use their own internal scoring criteria to decide whether to offer you further credit or not.
They care about whether you have missed payments.
Your affordability - which is not going to be based on whatever percentages you think they are working on.
Whatever any companies are showing about you in terms of missed payments.
Any financial associations with others which could affect your risk.
How many recent hard searches there have been/other credit applications you have made.
Any fraud markers
And regardless of any of the above, whether they think they can make money off you or not. You could have a perfect score according to the credit agencies and a financial institution could still decline you as a customer simply because you are not the demographic that particular offer is being targetted at.
I may have missed one or two points but basically the rest is just fluff.All shall be well, and all shall be well, and all manner of things shall be well.
Pedant alert - it's could have, not could of.5 -
If you want your utilisation rate to be under 10% (which is a good idea), would it not be easier to spend less than £100 on it each month and keep your current account at £300 plus outgoings for the month (£200 buffer plus £100 to pay off your credit card bill by direct debit)? You are making it very complicated. I had the highest available scores for years just putting my petrol on one of my cards and paying it off with the direct debit (I only use the other for spends abroad or in case my main bank has technical issues). (Not that the score is used for anything, but it's a good indicator of how a credit card/loan company will view you)
You could also see if they will increase the credit limit so that you normal monthly spend that you pay off in full is less than 10% of the limit.
Statement of Affairs (SOA) link: https://www.lemonfool.co.uk/financecalculators/soa.phpFor free, non-judgemental debt advice, try: Stepchange or National Debtline. Beware fee charging companies with similar names.0 -
kimwp said:If you want your utilisation rate to be under 10% (which is a good idea), would it not be easier to spend less than £100 on it each month and keep your current account at £300 plus outgoings for the month (£200 buffer plus £100 to pay off your credit card bill by direct debit)? You are making it very complicated. I had the highest available scores for years just putting my petrol on one of my cards and paying it off with the direct debit (I only use the other for spends abroad or in case my main bank has technical issues). (Not that the score is used for anything, but it's a good indicator of how a credit card/loan company will view you)
You could also see if they will increase the credit limit so that you normal monthly spend that you pay off in full is less than 10% of the limit.
Note also that the score is NOT an indication of anything, it does not indicate how a lender will see you, a thin credit file could be 999 with monthly mobile payments on time but no lending history but lenders will be less likely than someone with a score of 700 but with extensive good credit historySam Vimes' Boots Theory of Socioeconomic Unfairness:
People are rich because they spend less money. A poor man buys $10 boots that last a season or two before he's walking in wet shoes and has to buy another pair. A rich man buys $50 boots that are made better and give him 10 years of dry feet. The poor man has spent $100 over those 10 years and still has wet feet.
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