Why has my credit rating not improved significantly?!
Pandora00
Posts: 4 Newbie
Hi All,
I am new here and am wondering if any of you will be able to give me some guidance/insight into my predicament.
Many years ago, I was an irresponsible young lady and made some fatal financial decisions which now make up my credit score. Essentially, I didn’t keep my side of the agreements and constantly missed payments.
For the past four years, I have been working really hard to rectify my past errors. I’ve paid back all historical debt and have tried to slowly claw back trust from lenders. Four years on I have top purchases, balance transfers and travel credit cards as well as a PCP agreement and have never missed any payments. My credit score however, has never really managed to rise above poor and more recently has dropped by more than 100 points. This is due to the fact that I have made several applications for loan/car finance as I want to change my car because my PCP agreement is coming up.
Those recent applications were either declined or I was offered a very bad rate. I am confused by this and don’t know what to do. Also, is anyone able to tell me whether I have any chance of ever having a good credit score if this is indeed what I need in order to just get credit at the best rates without issues. Has anyone ever been in this situation and then came out the other side. I feel disappointed because I have really hard but, to no avail it seems...
I am new here and am wondering if any of you will be able to give me some guidance/insight into my predicament.
Many years ago, I was an irresponsible young lady and made some fatal financial decisions which now make up my credit score. Essentially, I didn’t keep my side of the agreements and constantly missed payments.
For the past four years, I have been working really hard to rectify my past errors. I’ve paid back all historical debt and have tried to slowly claw back trust from lenders. Four years on I have top purchases, balance transfers and travel credit cards as well as a PCP agreement and have never missed any payments. My credit score however, has never really managed to rise above poor and more recently has dropped by more than 100 points. This is due to the fact that I have made several applications for loan/car finance as I want to change my car because my PCP agreement is coming up.
Those recent applications were either declined or I was offered a very bad rate. I am confused by this and don’t know what to do. Also, is anyone able to tell me whether I have any chance of ever having a good credit score if this is indeed what I need in order to just get credit at the best rates without issues. Has anyone ever been in this situation and then came out the other side. I feel disappointed because I have really hard but, to no avail it seems...
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Comments
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As someone will no doubt come in and say, the way the scores are calculated are pretty useless. The content is what's imortant. If as you say, you'd had a clean bill of health of late, you wil lbe viewed better by lenders, than just after your troubles irrespective of what your score is.
The key thihgs:
Are you on the electoral roll
Do you have any defaults, when from, how many and are they settled
Do you have any CCJs and are they satisfied and from when?0 -
Cant say much more than what hasn't been said, just focus on the information (not the score) being correct.0
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Although everyone will say a score is useless - it isn't really useless.
The thing is, these companies try mimic algorithms that companies use. A lot of people end up calling these scores meaningless because every company has a different algorithm for accepting/rejecting.
This is true, however it is unlikely, keyword "unlikely", that you would be given a poor credit rating while Halifax has you as "Very Good". Of course, you can never guarantee being rejected or accepted based on even just having a "Very Good" rating.
The banks etc create their own "score" if you like and based on a combination of the score and certain stipulations they may add ontop of it (e.g. total debt < £x, uk residence >= 5 years etc) which they will use to decide if they accept you.. The credit reference agencies won't know the fine details of these to verify if you'll be accepted - which is why people end up calling it "useless" - but they are still a good indicator of what your financial health because it uses valid metrics that everyone uses, just slightly differently.
If you have a poor credit rating, it could indicate that (excluding things like missed payments/applications):
a) You have a lot of borrowing compared to your income
b) You utilise a lot of your available credit
If you look at your report, it should tell you information about your financial arrangements to help you understand why they have scored you as they have.0 -
Exactly - just look at the report and data, NOT the scoreAlthough everyone will say a score is useless - it isn't really useless.
It is
The thing is, these companies try mimic algorithms that companies use. A lot of people end up calling these scores meaningless because every company has a different algorithm for accepting/rejecting.
Correct - hence them being useless
This is true, however it is unlikely, keyword "unlikely", that you would be given a poor credit rating while Halifax has you as "Very Good". Of course, you can never guarantee being rejected or accepted based on even just having a "Very Good" rating.
It can happen as they will have their own eligibility for you, so what you're good for someone else will be poor for another - it has happened
The banks etc create their own "score" if you like and based on a combination of the score and certain stipulations they may add ontop of it (e.g. total debt < £x, uk residence >= 5 years etc) which they will use to decide if they accept you.. The credit reference agencies won't know the fine details of these to verify if yo'll be accepted, but they are still a good indicator of what your financial health is seen as and not totally useless.
Not at all - someone who is made bankrupt will get a score of 999 - does that show they are good with money really?
If you have a poor credit rating, it could indicate that (excluding things like missed payments/applications):
a) You have a lot of borrowing compared to your income
b) You utilise a lot of your available credit
If you look at your report, it should tell you information about your financial arrangements to help you understand why they have scored you as they have.0 -
Four years on I have top purchases, balance transfers and travel credit cards as well as a PCP agreement and have never missed any payments. My credit score however, has never really managed to rise above poor and more recently has dropped by more than 100 points. This is due to the fact that I have made several applications for loan/car finance as I want to change my car because my PCP agreement is coming up.
Those recent applications were either declined or I was offered a very bad rate. I am confused by this and don!!!8217;t know what to do.
Assuming there are balances on those cards that is a heck of a lot of borrowing. Quite clearly lenders are concerned about the amount of credit you have and are using especially given the history of the 2 years preceeding the period above. There are affordability tests that are applied to new loans/finance and it may be that you've reached a point where your level of current debt means you are now failing these.0 -
Stop making finance applications
Post:
Salary (approx)
Combined total credit limits of all your cards
---are these paid off in full every month or balance left (not a promotional card like 0% balance transfer)
Any other debt like overdraft in use
Amount on PCP and how much left to pay
You might be better speaking to the bank your salary goes into if you need to pay off the PCP (do you really NEED a new car, can you not pay off the existing one and run the older car)?0 -
Thanks everyone.
GM1880 - I am on the electoral role even though clear score tells me I’m not. No CCJs and no outstanding defaults. All my historical debt has been paid off and doesn’t show on my report.
Letitbe90 - I think you’re spot on! There’s no way they would have given me the credit they have based on my score... but maybe it is just getting out of hand now...
Tarambor - I didn’t think it was too much debt but maybe you’re right...
Nasqueron - yes I have stopped the applications now as I’ve realised they are seriously hurting my score. I should know better anyway. I don’t know why I applied so much.
Salary; £65k
Total credit limit; £30.5k
£3.7k on mbna 0% until jun-19 (will be paid off by jun-19) if not before
£1.5k in Halifax 0% until jun-20 (will be paid off next month)
Amex is paid off in full every month
No balances on other cards.
PCP: £5k left to pay. 3x £167 monthly payments left plus balloon payment of £4.5k to be paid in August. I wanted a slightly bigger car because I have a Ford Fiesta and have a child. It’s not entirely unsuitable but would like a bit more space. Main reason for changing it is because the pcp deal is coming up and I can’t really afford to part with 5k. My plan is actually to buy the car and sell it myself as I think I can make money from it. I can’t just buy it to keep it.
I’m also moving home and am worried that I will not be able to get car finance at all due to change of address...0 -
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You don’t think so !!!? What do you think is the reason for the sudden drop? Thanks
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You don’t think so !!!? What do you think is the reason for the sudden drop? Thanks
Change of wind direction? The temperatures dropped again? You wore odd socks one day?
Seriously - stop focusing on the score as it's irrelevant.
I do sincerely hope you're not paying Equifax or Experian a monthly fee for their services.....0
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