A Credit Rating Question

[Cyder]

I'm looking to improve my credit rating, can someone more in the know tell me which of the following scenario's would be better for my credit rating?

Scenario A:

2 Credit Cards
£2000 limit - Balance £1000
£500 limit - £500 balance


Scenario B:

1 Credit Card
£2000 limit - Balance £1500
£500 limit - Closed

Scenario C:

2 Credit Cards
£2000 limit - Balacne £1500
£500 limit - Balance £0

Thanks

[cannedheat]

B - but ensuring that you make regular timely payments is probably a greater factor.

[FamilyDub]

I don't know if it's 'better', but scenario B has you using 75% of available credit (on those two cards), with scenario C has you using 60%.

Obviously, if you have overdrafts or other credit facilities, that will change the percentage of credit in use/available but using a lower amount makes more sense to me, anyway.

I'm no expert...

[Cyder]

I guess it makes sense to consolidate and have as little available credit as possible? Although as you rightly say it means I'd be at a higher percentage of total available credit.

I guess if the £500 card was closed then the temptation is removed!

[FamilyDub]

The irony with credit is, the more you need it, the less likely you will be able to get it...

If you are happy to pay them off, be aware that days have changed and it might not be as easy to get another one...

[P-Jay]

There's no simple answer to this because credit rating differ from lender to lender each putting a higher or lower importance on each one of the dozens of things the credit agency's give data on.

I'd pay at least £100 of the £500 limit card as 'on-limit' cards are a slight black smudge with some lenders.

Other than that,

In regards to the above it really depends on the underwriter and the type of credit you're looking for. For example some lenders and underwriters 'like' people with small balances against large limits on credit cards as a sign that that person has managed them well and the credit card company has given them a nice big limit to try to get them to use it.

Others don't like the same thing because it mucks with the affordability calculation. If you can comfortably afford £x extra per month on the current level of debt, that of course is a big plus, but if the potential client were to go mental and spend their credit cards to the limit then they couldn't afford the same amount each month is the affordability calculation fair and accurate? So base it on current levels, some on 'worst case' levels and some try to go somewhere in the middle.


Also, when I say 'underwriter' in 90% of the cases these days it's an automated system which has little or no human input.

To have the best credit rating, have some lending, but not too much, pay your bills on time, don't move house too often and make sure you're on the electoral roll, if you have a unusual address (IE not House Number, Street Name, Town, Postcode) like a rural house with a name that’s not on a normal street or flat that got a name like 'garden flat 2' or something it's worth ordering your credit file you'll often find you'll have 2 or 3 different credit file versions of yourself under slightly different versions of your address - you can have them amended to all match.

Edited by P-Jay on Tuesday 24th May 10:29

[Sarnie]

The key to a good credit score is not how little or much credit you have, it's how you manage it.

You could have £100k on credit cards, but if you make every payment and stay within the limits your score will rocket.

The best thing for you to do would be to keep Card B open, tranfer £250 onto the other card, giving you;

Card A : £1250

Card B : £250

Both cards are then well within the limits and now you have two payment behaviours for any other creditors to see in the future.

[mcflurry]

Sarnie said:

stuff

And pay more than the minimum payments on both cards, even if over by a small amount.
You get more points for a partial payment than a minimum payment IIRC

[Diablos-666]

Sorry to hijack but not worth starting a new topic.

I've had a credit card for a few months but hardly ever use it. I've used it a couple of times to pay for a PS3 and an Exhaust but i've settled the balance within a matter of days.

I could have just paid it out from my account but thought i'd use the credit card to help my rating. Would paying it straight off not actually help me then?

[Cyder]

Interesting stuff chaps.

Both cards are being paid at higher than minimum rate so I think I'll look at transferring some money from the £500 card and then continue to pay them off at a rate I can afford.
Thanks for the advice.

[BoRED S2upid]

I remember from another thread on the same subject that activity helps so in answer to the guy who used his card twice and paid off the balances straight away it would have been better from a credit score point of view if you have paid them off in three payments. Also little things like £2 a month to a charity by DD and never missing one is all good.

[Diablos-666]

BoRED S2upid said:

I remember from another thread on the same subject that activity helps so in answer to the guy who used his card twice and paid off the balances straight away it would have been better from a credit score point of view if you have paid them off in three payments. Also little things like £2 a month to a charity by DD and never missing one is all good.

I pay £5 a month to a charity, so that should help also then

[Sarnie]

Diablos-666 said:

Sorry to hijack but not worth starting a new topic.

I've had a credit card for a few months but hardly ever use it. I've used it a couple of times to pay for a PS3 and an Exhaust but i've settled the balance within a matter of days.

I could have just paid it out from my account but thought i'd use the credit card to help my rating. Would paying it straight off not actually help me then?

No, as your not actually using 'credit' in that instance.