Advice from my bank manager has lowered my credit score

Jimmy_Boy · 9 June 2017 at 2:52PM

Hi,

I'm trying to get my credit score healthy in preparation for taking out a loan or mortgage.

My score with Experian is 999, and my score with ClearScore (which uses Equifax data) was 494 out of 700, and I wanted to try and improve this.

I had a meeting with my bank manager asking for his professional advice on what steps to take in order to try and improve my Equifax score. He advised that two accounts I have (one, 1 year old, the other 9 years old) are dormant and this would go negatively towards my score so advised me to close them. Based on his advice I gave him the green light to do so.

Fast forward one month to where this change has gone through the appropriate systems and updated my score, my score has dropped from 494 to 434, with 1 negative (I had no negatives previously) saying my oldest credit account is not very old.

Looking more closely at the details held for me I notice some issues (which I intended to raise as a dispdute), about the information held about me.

Under 'Current Accounts' I have 0 entries (used to have 2 before advised to close them). Also have one credit card listed with a limit of £2000, but I reduced the limit to £500 (again on the advice of bank manager), but this is not showing on the ClearScore system.

So... I suppose my question is, can/should I see if my bank accounts that where closed can be re-opened? and theoretically my score go back up to the 494 (or there abouts) as it was before?

Secondly, my main current account (which I had the overdraft removed from, again based on advice of bank manager) is not listed. This account is approximately 25 years old and is managed well, but is not going towards my credit score. I THINK I have never had any missed payments on this, but cannot be 100% sure. Should I concentrate on getting this account listed in my credit report and not worry about the other 2 mentioned above?

Any advice welcome.

PS. Have about 6 weeks max before I need to make my application for a loan or mortgage.

Placitasgirl · 9 June 2017 at 3:17PM

No, it won't be possible to reopen or resurrect the formally dormant bank accounts now that they have been closed.

Do also bear in mind that your credit score will have no bearing on your loan or mortgage application; it's a number (some say completely irrelevant) that only you can see.

What counts when applying for any type of credit is the state of your credit file; so late payment markers, missed payments/defaults etc. Also bear in mind that most of these credit reports run a month behind and changes in personal or financial details are not reflected immediately.

Candyapple · 9 June 2017 at 3:22PM

Wow, can't believe you were given such advice! I hope you put in a complaint to the branch about this rubbish manager so that he doesn't ruin anyone else's credit history.

Firstly, credit scores are meaningless, a tool used only by the credit reference agencies as a marketing tactic to get you to buy their premium services. No other company sees them except for you.

Your 2 accounts that you had would not have been considered as dormant - they would have been active and giving you the green zeroes every month. And why on earth he advised you to reduce your only credit card limit from £2k to £500?? Why??

You won't be able to re-open the accounts you've closed - they are closed done and dusted. If you wanted to re-open a new account you can do this - however you will be starting from scratch so the history will only be noted from the day the account is opened. Also to be noted that by applying and opening new accounts - your credit score is going to drop even further :rotfl:

As for your oldest account, you could possibly write to the bank and ask for them to report the data back to the credit reference agencies - however given your short timescale I don't think it will be added on time, let alone make a difference.

I honestly can't believe you were given such bad advice 6 weeks before a mortgage application. Shocking!

I would go as far as saying if you are declined for a mortgage, you may want to seek legal advice as to obtaining compensation from the bank for this manager giving you such bad advice that has led to your application being declined because now you will only be seen as having 1 credit account with a dismal £500 limit.

Jimmy_Boy · 9 June 2017 at 3:57PM

He advised me to reduce the credit limit on the credit card from £2000 to £500 based on the fact that it looks better to the banks because you are not reliant on a larger amount of credit (words to that effect anyway).

I'm not too happy to be honest and hope this doesn't go too badly against me, as I was doing well before I took this "professional" advice.

One further question, is this the start of my credit report on a downward spiral, or has this just been an unfortunate error, and will essentially even itself out now.

Thanks for your comments.

System · 9 June 2017 at 5:46PM

Its only on a downwards spiral if you:

a) Get defaults for not paying your bills
b) Apply for loads of credit in a short period of time
c) Max out your credit cards and have a high level of borrowing in respect to your income.
d) Use payday lenders.

Whatever the stupid number does on the screen on the Equifax, Noddle, Noodle, Clearscore or whatever website does is neither here nor there. The sooner you get it into your head that they're meaningless and it is in fact the contents of the credit file that matter the better off you'll be.

Thrugelmir · 9 June 2017 at 9:01PM

All that's happened is that your credit history has been rescored on current activity. The CRA's have no background to the changes. Therefore take a negative outlook. Within a few months your "score" will improve upwards. In addition any Company looking at you record will rate you higher themselves.

Don't get hung up on immediate changes. Credit history is for the benefit of business not you the consumer.

Ben8282 · 10 June 2017 at 3:14AM

You really have been given some odd advice here.

Jimmy_Boy wrote: »

He advised me to reduce the credit limit on the credit card from £2000 to £500 based on the fact that it looks better to the banks because you are not reliant on a larger amount of credit (words to that effect anyway)..

This is just one example of wrong thinking. How does having a large amount of available credit make you reliant on a large amount of credit? In order to be reliant on a large amount of credit, you would have to be actually using large amounts of credit.
The thing is, irrespective of the validity or otherwise of what was said to you, a credit limit of £2000 on a credit is not a large amount of credit in any sense. A £2000 credit limit is pretty low on a mainstream card. A £500 credit limit makes it look as if you hold some sort of low limit credit builder card and the lender will not increase it. Furthermore, it will not be apparent from your credit files who reduced this limit; you or the bank. In fact, they would probably think it was the bank as they probably would not imagine anybody would actually reduce their credit limit to £500 for the simple reason that a credit card with a £500 credit limit is not really fit for purpose.
If the credit limit had been really high, say in excess of 50% of your annual salary, then perhaps an argument could be made in favour of reducing it in case a potential mortgage lender should be concerned that you would suddenly max it out and be unable to meet your mortgage repayments as a result. But a £2000 credit limit is nothing.

Regarding the current accounts, as you must have seen your credit files prior to obtaining this advice, you surely would have known that the third account was not being reported and that closing the other two would result in no current accounts being shown.

However, all is not lost. The two current accounts will now be shown as closed accounts which, assuming that they were correctly conducted, will show a stable current account history.

You start your original post by saying that your Experian score is 999, their maximum, but your Equifax score was significantly lower than the Equifax maximum. Guess what. My Experian score is also 999 and my Equifax score is also significantly lower than the Equifax maximum. Yes, really.
But do you know what? I couldn't care less. I think I know why though (although of course I could be completely wrong ....). I believe it is because Experian show my quite old mortgage account with a low balance indicative of a very substantial equity. But Equifax don't show the mortgage at all because the lender doesn't report to them. So could the difference in your case be accounted for by something similar? Do the Experian and Equifax reports both show exactly the same set of credit accounts?
Although the credit scores are in themselves meaningless, the fact that Experian score you 999 is strongly indicative that nothing really untoward such as ccj's, defaults or more than the very occasional late payment will be found in your credit files. To be successful in your mortgage application, you really just need to make sure things stay that way and avoid any large balances; the less debt you have the better.

Superscrooge · 10 June 2017 at 12:52PM

Does the fact that Experian give you their highest possible score and Equifax give you a low score not indicate how useless these scores are for measuring your credit worthiness?

Last November one CRA rated me as 'excellent' whilst another rated me as 'poor'. Both held the same information on my credit file.

Ignore your score. Concentrate on your credit history

Pixie5740 · 10 June 2017 at 2:12PM

Are you planning on applying for a mortgage with Equifax?

surreysaver · 10 June 2017 at 4:31PM

Bank Managers don't manage banks, they manage sales. A Bank Manager would be the last person I sought advice about my money from.

Jimmy_Boy · 10 June 2017 at 9:47PM

Hi Guys.

Thanks for the words.

I am aware that the score is just an indicator, and that different providers will give you different scores, hence Equifax being quite a bit lower. But my thinking was, that score will be based on historical information held against me, different providers using different data / calculations, and a higher score will inherently mean my history looks better when potential lenders look at my credit file, so no harm in trying to focus on getting a higher score, but I take on board what you guys are saying.

With regards to my 2 current accounts that were closed as advised by bank manager, and the one current account that is not listed, I was hopeful that if I could get my current account that is not listed and 25 years old recognised on my credit file, this would go positively towards me, as currently I essentially have no history of an active current account now and this is going against me. The only 'Active' thing on my file is an 10 month old credit card with a £2000 limit, now reduced to £500.

Yes, I have looked at my credit report before and did notice my 25 year old current account not listed, but naively didn't put too much weight on it, as my score was pretty good. It was something I intended to address but didn't put it as a high priority. Why? Because I am not 100% sure I have had no missed payments or anything on that account in the past 6 years that would look bad, so thought rather than take a chance and add it to my credit file, only to then realise there were some negative aspects to that account which look bad, best just to leave it.

I am probably getting more anxious about this whole thing than I ought to be, but as I get older I find I worry more! ha

To put things into perspective...
I earn £23k a year, have saved £18k into an ISA in the last 30 months, and am in the process of right to buy from my council. I estimate to be able to purchase my flat in the range of £28k - £34k. With that in mind, I am looking to get a loan of approximately £15k over a 5 year term (will know the finer details when the valuer's valuation paperwork arrives).

I am actively using my credit card every month to a total of about £50 and pay this in full within 2 days of getting the bill, so hopefully this will look good.

I suppose my question ultimately now is, should I look at getting my 25 Year old current account added to my credit file in the hope it will be visible by the time I need to make my application, or is it not going to make much difference when a lender is looking at it and just to leave it for the moment.

Thanks for your advice guys. (Should of asked here first! doh!)

Advice from my bank manager has lowered my credit score

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