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Credit rating poor?


carty23
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Hi guys,

Was just looking for a bit of advice.

I have just looked at my credit rating on Experian as I was thinking to apply for a 0% interest free credit card. Expecting my report to be excellent, Experian rated me poor with a score of 716. To say I'm shocked is an understatement, and was looking for some advice as I'm a little confused with what has returned on it.

The only 3 credit agreements on my report are:

1) My catalogue (with an outstanding balance of £90)

2) My current account with my bank (with an overdraft facility of £200)

3) My old T Mobile contract with £0 outstanding balance, as it is settled.

However, I have the following active direct debits:

*Breakdown cover with the AA - £20 per month

*Tesco Mobile Contract x 2 - approx £50 per month

*Car insurance - £39 per month

Are the above direct debits classed as credit? The only reason I ask is because my T Mobile was direct debit and that has appeared, and yet my tesco mobile contracts haven't appeared on my credit report, nor has my car insurance which I signed a credit agreement for, and I've had all of them nearly 2 years!

All my direct debits have been successful every month. The only thing I have missed a payment on is my catalogue - once 2 months ago (for £22) and once in November last year for £30 .. And the only reason I missed them was by accident because all my other bills are through direct debit.

I know lenders see a missed payment as a missed payment, but on both occasions I paid double the amount of my bill plus the charges as soon as I was notified by phone call that I had missed a payment. My catalogue has also increased my credit limit 4 times in increments from £300 to when I first took it out to what it stands as of now (£1500).

So, I'm a little confused as to why my credit rating is so poor. Is there anything I can do to improve it?

Many thanks

Edited by carty23
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There's no such thing as a 'poor' credit score. To some lenders they'll see you as a very good customer (i.e. they can make money out of you) whereas others want customers who have no negative history: missed payments, defaults etc.

Every company transmits credit history to different agencies: Equifax, Experian and/or Call Credit. Just because Experian have given you a particular score doesn't mean that the others will; Equifax may give you top marks. Your Tesco contracts may not be listed with Experian (they may be with Call Credit for example) or it might be that Tesco don't provide history to the agencies.

Try applying to the other agencies to see what they think about you. But remember it doesn't really matter what their score is of you, each lender will give you a different score depending upon the needs of their business.

The only way to improve a negative credit history is by responsible borrowing. The best site to look at is Money Saving Expert: I'm pretty sure they've got a video feature on there about this.

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I wouldn't worry, mine is 2* around 500 something and I am not stressing about it.

I am in no debt other than an easily manageable bank loan and I get a regular income to cover the payments on this.

Did you know such things such as not been registered on the electoral role and having to many people do a credit reference check can affect your score?

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You haven't listed a credit card there. I think some of it is to do with the fact that you may not have much of a credit history. Therefore you're an unknown quantity.

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I applied for a mortgage with a high street bank and they refused due to not passing the credit checks. However I went with another building society and they said my credit score was great, it all depends on the company and how much money they want to make from you.

I'd never missed a card payment and never been in debt at all and made early repayments on outstanding credit.

It's a bit of an unknown, everyones little magic computer box says different things so shop around.

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  • 4 weeks later...

Did Experian use the word 'poor'?

Credit scores are sometimes out of 999. Credit Expert, run by Experian, use the categories of very poor, poor, fair, good or excellent.

I am not sure your score puts you in the 'poor' category?

I think that you should apply for a credit card anyway. Even if you don't use it, you actually get points because you have available unused credit. You may only have a low limit, but just set it up to pay the full amount and buy a tank of petrol on it every month or so.

You just need to build up a history. Sometimes even taking something out on interest free credit and paying it back helps, even when you could have afforded to buy it outright. People who avoid using credit and have no history of settling agreements are actually penalised in scores- despite probably being very low risk.

I just looked at my latest report and it is 23 pages long! It records missed payments from up to 2 years ago, but only those in the last 12 months seem to effect your score. I have a score of 999/999 but it still lists about 3 missed payments tha happened about 18 months ago due to being human and messing up,

What you might also want to consider is that havng lots of searches during the last 3 months can also count against you. So, if you do apply for something pick the product carefully, rather than making multiple applications.

A lot of people get penalised because they move about a lot. Especially people know in London who rent. Whilst it is an offence to be dishonest about where you are registered for council tax, people with a tangible address history do also score more highly.

What appears on your credit report is down to the individual company, so not all of them appear. My main bank account doesn't, but my HSBC does. I messed up one month and I got a missed payment from one company and then HSBC recorded another 'missed payment' because something bounced- double whammy! British Gas record on my credit report, but EDF doesn't. It's an enigma.

Edited by DGP
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  • 1 month later...

People who avoid using credit and have no history of settling agreements are actually penalised in scores- despite probably being very low risk.

That's because lenders place potential profit above minimising risk - which is obvious when you look at what has happened to the global economy over the past 6 years or so!

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I ended up getting a credit card purely so I would have a credit score because of no score is bad as companies have no idea how could you are at paying off debt.

Be aware that companies that do a "hard check" on your credit score will leave traces which can reduce the score. So always ask if they are going to do a "soft or hard" check.

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I ended up getting a credit card purely so I would have a credit score because of no score is bad as companies have no idea how could you are at paying off debt.

Be aware that companies that do a "hard check" on your credit score will leave traces which can reduce the score. So always ask if they are going to do a "soft or hard" check.

Nearly all credit checks as part of a credit application will be a 'hard check' however once a hard check has been done, the company can then do further 'soft checks' without damaging your credit score. This would typically happen for complicated applications like mortgages etc where circumstances could easily change in the time frame between giving a decision in principle and actually releasing the funds.

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