Credit Score

[Joey Propane]

So I just signed in and did my monthly credit score check to see it's plummeted 150 points and gone back into the "Very Poor" category... Which is completely bizarre as I haven't missed a single payment for anything in the last 8-9 months. I was previously at just under 690 and was hoping it would have climbed a little closer to the 720 needed to be in the "Average" group.

It's just blown my mind how it can drop so much, so quickly, for no apparent reason. I did get a new credit card with Capital One for the sole purpose of helping to build up my credit score again and in the 2 months i've had that the minimum monthly payment had cleared fine and i've paid extra off each month. So what the hell gives?!

Does getting a credit card automatically knock your score down as they assume your going to default if you have poor credit rating?:mad:

[Nifty]

Might be that you have too much credit available. People who have a lot of debt available are more likely to use it all and get themselves into trouble. Riskier.

[Joey Propane]

I doubt it, I only have a £5 overdraft on my bank account and the credit card has a £200 limit... hardly enough to get in too much trouble with. :p


EDIT: I emailed customer services at Credit Expert anyways. If it's just a case of them changing the way they calculate scores the "% number of people who have a lower score" should have stayed close to what it was before, but even that's changed.

I can't imagine being accepted for a credit-building CC (the whole point of it) would apply such a hit, especially considering the fact it's been paid off in full each month along with my phone contract. :s

[Nifty]

Hang on. You're not clearing the full balance? Just the minimum? That might be it.

[Joey Propane]

Last I checked credit card companies don't like it when you pay the full amount each month as they don't make money on it otherwise (in interest). :/

[Nifty]

Read this MSE guide?

(http://www.moneysavingexpert.com/loans/credit-rating-credit-score#improve)
Also:

http://www.moneysavingexpert.com/cards/bad-credit-credit-cards


Q. What's the best card to rebuild my score? If you can't get a card with decent rates or special deals, it's time to look at rebuilding your credit rating. One of the best ways to do this is by getting the right sort of credit card.

By getting any kind of credit, and operating it perfectly (i.e never missing payments, always staying within limit), you can either build up a credit history from scratch, or remedy a tarnished one.
There are two main paths, depending on how bad your rating is in the first place. Before going any further though, there is a vital golden rule...




Strictly repay EVERY month, in FULL, so there's no interest cost.


Borrowing new debt on any of these cards will be hideously expensive and should be avoided at all costs. However, cleverly using one (or even two) of these cards for six to twelve months, spending a little every month and paying it off, can help clean up a muddied credit history, or build one from scratch.

[Allsopp]

Its dropped because you have taken out a new card.

Credit scoring will decrease each time a credit check is made against you so if you applied for alot of cards those companies would then do a credit check to see if they would be willing to offer you a product and each search can lower you score.

Repaying a credit card in full each month DOES NOT mean that your credit rating will improve. to increase your credit score you have to borrow money and pay it back but if you aint incurring interest its not going to help your credit score

[Joey Propane]

Interesting, I guess I might as well clear it completely and see what happens next month... If this really is the culprit it seems an excessive amount to damage my score for such a small amount of used credit. :/


Cheers for that though. :thumb:

[Allsopp]

You'd be surprised how many people i've had to argue with about their credit score and that they should always be given a card when they earn 500K+ a year. If your paying off the card in full your making very little for the CC provider and also not really borrowing money. The people that pay cards off in full each month use them for teh rewards like cash back or teh extra protection you get with a credit card, not because they need to borrow money.


If you keep up your repayments etc your score will gradually go back up but dont do any more applications for credit else you will see it drop or remain the same and not recover

[Joey Propane]

That was the plan all along, to keep the credit card in a constant state of "borrowing", paying the minimum agreed payment and letting the interest roll onto the next month and paying it then. That's the technique I heard from a few sources. When I got my £2k finance loan from Black Horse last year my credit score didn't change even close to this much, that's why I find it so confusing. When I applied for the card my score dropped from 688 to 651, I expected that.... since then i've done what I thought/read was right to do with this kind of credit card, kept everything else sweet and 2 months later my score dives?

I'll wait to see what the customer service team say first, maybe it's just a mistake on the system.

[Sniperdude]

if you keep making credit checks on yourself you will damage your credit rating

your requesting a credit check monthly

[Allsopp]

That was the plan all along, to keep the credit card in a constant state of "borrowing", paying the minimum agreed payment and letting the interest roll onto the next month and paying it then. That's the technique I heard from a few sources. When I got my £2k finance loan from Black Horse last year my credit score didn't change even close to this much, that's why I find it so confusing. When I applied for the card my score dropped from 688 to 651, I expected that.... since then i've done what I thought/read was right to do with this kind of credit card, kept everything else sweet and 2 months later my score dives?

I'll wait to see what the customer service team say first, maybe it's just a mistake on the system.

I work in customer services for a Credit card company.

Also as sniper points out dont do checks each month as that wont help. Why are you checking your score so much? Are you looking to get a mortage? If so i would just continue how you are dont check your score for awhile and it will hopefully start to increase. Dont take any more applications on creditcards phone contracts etc as they all do searchs.

[Joey Propane]

Checking your own score through Credit Expert doesn't count as a "credit check" and doesn't affect score, at least it hasn't up until now (like I say I check monthly and never seen it drop like this, until now it's been steadily rising).

[Allsopp]

Checking your own score through Credit Expert doesn't count as a "credit check" and doesn't affect score, at least it hasn't up until now (like I say I check monthly and never seen it drop like this, until now it's been steadily rising).

On there it should show who has done a credit search on you take a look and see what companies have done one then you will be able to see whats going on better

[k3vst3r]

its possible CC is doing their own searches on you to determine whether to increase your credit limit or keep it same

[Allsopp]

when being checked for increases the check doesnt leave a footprint a interal scoring system is used tho the credit file is looked at but it doesnt show as a check so wouldnt affect the credit score

[k3vst3r]

when being checked for increases the check doesnt leave a footprint a interal scoring system is used tho the credit file is looked at but it doesnt show as a check so wouldnt affect the credit score

strange i saw my CC quite few searches every few month on my report

[Joey Propane]

Only credit search in last 12 months was Capital One when I applied for the card 3 months ago (just checked), which as I said gave me the 30~ points hit to my score at the time.


Anyways, i'll wait to see what they say when I get a response, at the very least it should be helpful info for anyone else who is interested in how scores are calculated and affected.

[Allsopp]

Only credit search in last 12 months was Capital One when I applied for the card 3 months ago (just checked), which as I said gave me the 30~ points hit to my score at the time.


Anyways, i'll wait to see what they say when I get a response, at the very least it should be helpful info for anyone else who is interested in how scores are calculated and affected.
Is it cap one your waiting for a response from? They wont give you a answer that will explain everything as i wouldnt if you contacted the company i work for.

Available credit, outstanding payments, payment history, credit searches all have a effect and they wont be able to provide a breakdown of it. If its credit expert that your waiting for a reply off i would expect a generic reply stating the things above and maybe afew other things but again they wont have a asnwer that you will go away thinking "ah so thats whats going on/happened"

[Allsopp]

strange i saw my CC quite few searches every few month on my report

I would contact that company and ask them why they were searching so much as previously stated each search is detrimental to your credit score.

[Joey Propane]

Is it cap one your waiting for a response from? They wont give you a answer that will explain everything as i wouldnt if you contacted the company i work for.

Available credit, outstanding payments, payment history, credit searches all have a effect and they wont be able to provide a breakdown of it. If its credit expert that your waiting for a reply off i would expect a generic reply stating the things above and maybe afew other things but again they wont have a asnwer that you will go away thinking "ah so thats whats going on/happened"

Yeah it's Credit Expert I contacted. I have to give 'em props in the past they've been very good with answering questions, no cookie-cutter cut'n'paste generic responses so far. I just asked if there was anything that isn't actually showing in my report that may be affecting the score (seen as what IS showing certainly doesn't relate to such a dramatic and sudden drop) or if they've changed the way they calculate scores.

[Allsopp]

Yeah it's Credit Expert I contacted. I have to give 'em props in the past they've been very good with answering questions, no cookie-cutter cut'n'paste generic responses so far. I just asked if there was anything that isn't actually showing in my report that may be affecting the score (seen as what IS showing certainly doesn't relate to such a dramatic and sudden drop) or if they've changed the way they calculate scores.

They are based in Nottingham so bout 20 miles from me and seeing as i will be after a new job in the new year theres a good chance i and many others i work with will be probably trying for jobs there lol

[Joey Propane]

Good luck mate, obviously I dont know how they treat employee's but as customer for a year and a half I can't fault them. :thumb:

[KarlHungus]

if you keep making credit checks on yourself you will damage your credit rating

your requesting a credit check monthly

My go compare quotes show up on my credit report, i've ran about 700 of these in the past 12 months!!

[Aaron]

My go compare quotes show up on my credit report, i've ran about 700 of these in the past 12 months!!

Really?! :eek:

[Joey Propane]

Finally got a response back from Credit Expert team, turns out it was a overhaul of the way they calculate scores:


Dear Mr Propane

Thank you for your email, which we received on 01 November 2011.

- Changes in credit score

I confirm that we have introduced a new score card, however, this did not come into operation until the day after your email was sent. The initial change in score you were aware of appears to be due to the new balance appearing on your Capital One card.

A new scorecard was introduced on 2 November. It applied to all customers, to more accurately reflect the criteria which lenders are using in the market place. There is the chance that your Experian score will change again. This doesn?t change how lenders will see you, and the score continues to be an indicative guide of how lenders are rating you when you apply for credit.

Kind regards

Jo Beck
Customer Service Representative

Customer Support Centre
Experian

So now my credit reports shows the following as factors that are having a negative effect on my credit score:


-The value of your highest credit limit indicates a higher risk.

-You have recently opened 1 or more new credit accounts.

-The usage of your available credit indicates a higher risk

-The age of your accounts indicates lenders are likely to view you as higher risk

Points 2 and 4 are obviously hits I have to suffer in the first few months of opening the account, but it's quite useful to know that it does seem to be better to keep even a credit building CC as low as possible (as I said before the limit is only £200, which is nothing compared to the £2k finance loan I paid off without a single missed payment and multiple phone contracts i've had).

I'll take the CC back down to around £20-50 (I think it's at around £115-120 atm) and see what that does next month.

[Nifty]

I wonder if it's that your highest credit limit is not high enough? They aren't specific about it being too low/high just that it indicates a higher risk!

[Joey Propane]

Could well be. It's not really a major concern right now as i'm not planning on applying for any kind of credit (I dont need it fortunately), I just wanted to know why it dropped (funny that if I waited 1 more day and checked I would have seen the new layout and "negative factors" and not needed to bother). But I have a new job lined up for the new year and once i'm settled in and have my finances all sorted i'd like to catch up to the rest of the world and start driving, so finance or a loan would be handy.

Fortunately Capitol One seem pretty generous when it comes to credit limit increases an i'd imagine it wont take long for them to notice that I do pay each month more than the minimum payment (my step dad recently had his go up from £600~ to just over £1300 and he was terrible for paying on time).

[Nifty]

Could well be. It's not really a major concern right now as i'm not planning on applying for any kind of credit (I dont need it fortunately), I just wanted to know why it dropped (funny that if I waited 1 more day and checked I would have seen the new layout and "negative factors" and not needed to bother). But I have a new job lined up for the new year and once i'm settled in and have my finances all sorted i'd like to catch up to the rest of the world and start driving, so finance or a loan would be handy.

Fortunately Capitol One seem pretty generous when it comes to credit limit increases an i'd imagine it wont take long for them to notice that I do pay each month more than the minimum payment (my step dad recently had his go up from £600~ to just over £1300 and he was terrible for paying on time).

Someone who is bad at paying on time is exactly the kind of person they want to give more money to. Banks make naff all out of people who pay back 100% every month without fail. It's the late payers they want ;)

[Mr. Grapes]

Ok I haven't read the entire thread, but here's an extra war story.

me and the wife had a credit card from a well know high street holiday company which we opened when we planned our honeymoon as it meant we could accrue points which could go towards the cost of the honeymoon. it had a limit of like 5K or something which was great as we were spending a lot of money on stuff for the wedding etc. we basically bout the entire wedding through that card and got most of our holiday money as cashback from the card. we had a Direct debit for the full amount every month and never missed a single payment.

after a couple of years we get a letter saying they are reducing our credit limit to £600 'because they have to be responsible lenders'
riiiiight so people who pay their balances off in full every month are high risk?

so what happend was the limit was just slightly higher than our typical monthly spend, causing us one month to go over the account limit due to the way the billing cycle worked... (the bill was £400 but in between that and the payment date, we spent more than £200 or whatever) thereby pushing us into the 'no longer perfect peyers' zone.
so they implied we were bad customers (or rather unprofitable ones) so engineered a situation which they knew would be self fulfilling.

we have since cancelled the card and now use an AMEX card as a joint daily card which now get us waaaaay more benefits than the old one did.

anyway, point being, wile always paying in full won't tarnish your score, the CC companies don't like it so it won't necessarily help it either. It might be an idea to leave *SOME* balance on your card from month to month but only a token amount so that the amount of interest you're paying is like less than a pound or so

[Joey Propane]

Aye that's the plan of attack I mentioned above, keep enough on there so they can charge a quid or so but not enough so that i'm seen as using "half my available credit" (literally that £200 is the only credit I have now, I dont even have an overdraft on my bank account).

[Mr. Grapes]

good call ;)

[BUDFORCE]

Last I checked credit card companies don't like it when you pay the full amount each month as they don't make money on it otherwise (in interest). :/

MATE, seriously, dont care about what they like and dont like, dont let them make money off you like that. I have 2 credit cards, one of which I rack up every month with bassically all my bills/puchases, I then pay it off every month, in full and because of they way it works I then earn vouchers for teh store the card is from - AND IT DOESNT COST ME A PENNY.

In fact, in theory, while the money that you would have spend normally, is still sitting in yoru account until halfway through the following month, you are actually gaining interest on your money. And - this will also improve your credit rating.

You could argue that I am infact a credit card companies WORST kind of customer because they dont make any money of me, but seriously mate **** them, they are rich big fat cat capalist companies that would take you to court in a heartbeat if you didnt pay up and they can afford it.

Also, credit expert are a shabby company, and I dont know of any finance companies that use that company as a reference (at least any half decent ones). If your that concerned try looking on experian mcuh much more widely used and recognised credit refrencing agency.

[BUDFORCE]

Oh I can also confirm, from workign in finance for years, that paying off your credit card is full will improve your credit rating and leaving a balance on so you haev to pay interest only costs you money and doesnt make your credit rating any better then paying it off in full - if that makes sense.

[Mr. Grapes]

Bud... totally off topic, but what's that i7 6000K in your sig?

[BUDFORCE]

Bud... totally off topic, but what's that i7 6000K in your sig?

Oh what you've never heard of them, its a secret super special CPU that aria only give to their best customers, its highly rare and saught after ;)

(slaps self in forehead for typing error in forum sig)

[BUDFORCE]

Also (sorry for spamming up the forums) but readign back some more posts I can also clarify some more things for you.

The higher your credit limits on yoru cards the better. What lenders tend to do, is look at what money you have potential access to and how you are using it. So for example if you are looking at 2 potential clients, both have credit cards, both have never missed a payment, 1 has a limit of £400 one has a limit of £10,000 - the one with the higher limit would immediately be the stronger as that person has potentiall access to more money, but has never use it irisponsibly.

Now, the other thing to consider is depending on what loan you are applying for they may also look out your outstanding debts. So if you have a credit card with a limit of 10k, but only have say 200 on it, that would look better then someone with 10k near their limit. Also particularly with credit cards, if you have 3 high limit credit cards, with low balances, you would look better then someone with just 1 in the same state. Laons are ok, but nowhere near as good as unused high limits on credit cards, also if someone has alot of loans whereby the payments are costing them a good proportion of their income, that actually looks very bad.

Also, another thing to watch out for, is I beleive previously posted is, if you have recently taken out alot of finance or credit cards, this also looks bad lenders liek to see that you have had it for a while and used it properly.

Also, if you have a mortgage (and obviously never been late paying) this also improves it (alot actually).

Tehre other thing you gotta watch, is you need to check all the addresses youve lived at for teh past 5 yeasr, as they may all be checked. What sometimes happens is people dont pay off bills at an old address and that company will register a defaul there - infact this sometimes happens genuinly without the person even knowing. Nearly happened to me once where an electric company send me a bill 6 months after I had switched suppliers.

To sum it up though, to get a good credit rating just get a credit card or two, pay them off so it doesnt cost you money, and obviously dont miss any payments. The higher the limits you can get on them also the better. OHHHH and also, make sure you are on teh eletorial/voters role at your address, alot of finance companies wont lend to you if you are not.

[Mr. Grapes]

lol... don't sweat it ;)

[Jamenx]

Your credit rating does not go down by paying off your cards in full each month, nor does it get better based on how much interest you pay to finance companies. Your credit rating is their for lenders to access how much risk they take in lending money to you.

[Joey Propane]

Another quick update. Now my account has updated for this month and the Capitol One CC is now a couple of months old it's been removed from my "list of factors negatively affecting your score" (under "new credit account opened") and my score has jumped up 50 odd points. I also cleared most of the outstanding balance last week so when it updates again next month another negative factor ("percentage of available credit used") should disappear as well.

[Joey Propane]

Another update for the argument of how to properly use a Credit Card....



Capitol One sent me a letter saying they are increasing my limit from £200 to £1200 on my birthday (20th Jan), that's a nice birthday present. :D