Personal Credit Rating - how does it work?
Discussion
Z064life said:
How does credit rating work? What are the various factors involved?
I have an overdraft of £100 about to be paid off in surplus (this OD has been existing for a few months). Does this have an effect on my credit rating? If so, how big?
Thanks
believe Experian and Equifax both provide guidance on their websites. They will also both provide your credit record for a tiny fee. Well worth getting a copy!I have an overdraft of £100 about to be paid off in surplus (this OD has been existing for a few months). Does this have an effect on my credit rating? If so, how big?
Thanks
HAving an overdraft of any size will not harm your credit rating per-se as long as you stay within it.
As soon as you go over it, it is usually recorded with the credit reference agency as you have technically acted outside of the terms of the agreed lending. This will harm your credit rating.
Having an od, is a form of credit and thus, in one respect actualyl HELPS your credit score becuase you have open credit agreements that your are managing.
On the other side of the coin, these current commitments are looked at when you apply for further credit For example how this could affect you -
If you had huge overdrafts on say several accounts even if non of them are used, and at the same time you had quite a low salary and applied for a loan for example, you MAY be denied owing to the fact that potentially you could over commit yourself.
So basically, only have overdrafts you use and manage correctly, and they will do you no harm, even good.
Remember that regardless of anything, credit agencies don't make the descision, it's down to the lenders, your credit score and report are just a tool for the lender to use.
I'm not in this business at all, this is just what I've learnt from looking into it myself.
For proper advice as already said, go to the 3 credit reference agencies home pages. The agencies are Experian, Equifax and CallCredit. They have tonnes of FAQ's etc and it's all good reading.
Thanks
JC
As soon as you go over it, it is usually recorded with the credit reference agency as you have technically acted outside of the terms of the agreed lending. This will harm your credit rating.
Having an od, is a form of credit and thus, in one respect actualyl HELPS your credit score becuase you have open credit agreements that your are managing.
On the other side of the coin, these current commitments are looked at when you apply for further credit For example how this could affect you -
If you had huge overdrafts on say several accounts even if non of them are used, and at the same time you had quite a low salary and applied for a loan for example, you MAY be denied owing to the fact that potentially you could over commit yourself.
So basically, only have overdrafts you use and manage correctly, and they will do you no harm, even good.
Remember that regardless of anything, credit agencies don't make the descision, it's down to the lenders, your credit score and report are just a tool for the lender to use.
I'm not in this business at all, this is just what I've learnt from looking into it myself.
For proper advice as already said, go to the 3 credit reference agencies home pages. The agencies are Experian, Equifax and CallCredit. They have tonnes of FAQ's etc and it's all good reading.
Thanks
JC
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