Paid off credit card & credit score gone down??
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pruey
Posts: 17 Forumite
Hi Everyone,
I've recently paid off my balance and closed a credit card account, so I no longer have any credit cards. I dont understand why this would decrease my credit score?? Would anyone know why? I would have thought the less credit I have the better this will look to lenders. I've been trying to improve my credit score and I've been strict at paying off my car loan and then my credit card ready for applying for a bigger mortgage for moving house. It has been going really well and I'd climbed into the 'excellent'credit score band, but since I've paid off my credit card and closed the account its dropped to 'very good'. Any advice would be appreciated.
Reagrds,
Simon
I've recently paid off my balance and closed a credit card account, so I no longer have any credit cards. I dont understand why this would decrease my credit score?? Would anyone know why? I would have thought the less credit I have the better this will look to lenders. I've been trying to improve my credit score and I've been strict at paying off my car loan and then my credit card ready for applying for a bigger mortgage for moving house. It has been going really well and I'd climbed into the 'excellent'credit score band, but since I've paid off my credit card and closed the account its dropped to 'very good'. Any advice would be appreciated.
Reagrds,
Simon
0
Comments
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The credit scores tend to drop as a result of any change. It's not used or seen by anyone but you.
Just ignore it, as it's a very poor indicator of credit worthiness, as you've seen. Lenders will view your reduced debt more positively, even if the CRAs don't.
However, in order to maintain a good credit history, get at least one credit card, use regularly and clear in full each month.0 -
Deleted_User wrote: »The credit scores tend to drop as a result of any change.
Just ignore it, as it's a very poor indicator of credit worthiness, as you've seen. Lenders will view you more positively, even if the CRAs don't.
It's not used or seen by anyone but you.
So when I go to a bank/building society to apply for a mortgage, do they to their own credit checks or do they use the main credit agencies score that I see?0 -
They look at the data on your files and use that to evaluate you. The CRA score is just a gimmick for you.0
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They look at the FACTS and not the score. So they see that you have paid off credit card so less liabilities and use that rather than simply your score is XXXSo when I go to a bank/building society to apply for a mortgage, do they to their own credit checks or do they use the main credit agencies score that I see?
The score is a marketing ploy to get people to buy monitoring services, probably less so now but it was initially. So your score goes down for a variety of reasons. If you want your score to go up, go bankrupt, everything will be wiped and you will get a 999 score - of course the bankruptcy will mean you have a hard time getting a mortgage, but your score will be high. That's how stupid the score is and why many people say simply ignore it.0 -
Oh i see, so I didnt need to be worrying so much about getting my score up. If I've got no borrowing apart from existing mortgage this should still look very good to a mortgage lender then?
I was considering getting a new credit card but just have minimal spending onn it and pay balance off every month to see if this would bump score up, but from what been said I'm probably not going to gain much from it anyway.0 -
You'll gain history from using a credit card in the way that I described.
Don't worry if it knocks your score down.0 -
Oh i see, so I didnt need to be worrying so much about getting my score up. If I've got no borrowing apart from existing mortgage this should still look very good to a mortgage lender then?
I was considering getting a new credit card but just have minimal spending onn it and pay balance off every month to see if this would bump score up, but from what been said I'm probably not going to gain much from it anyway.
You'd gain the fact that you can show to lenders you can borrow and repay credit if you repay it in full each month,
Why did you close the other card down?0 -
You'd gain the fact that you can show to lenders you can borrow and repay credit if you repay it in full each month,
Why did you close the other card down?
because I have paid it off and no longer need it. I thought not having any loans or credit cards would look better in front of a mortgage lender.0 -
Having a credit card and using it and paying it back in full each month shows that you are responsible with credit.
Which in the eyes of some lenders looks better than those that have no credit available to them at all0 -
Don't worry the made up score will most likely go up once the clocks go back0
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