How long does credit score take to repair?
How long does credit score take to repair?
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anonymous-user

Original Poster:

83 months

Friday 8th April 2022
quotequote all
I recently paid off the balloon on my PCP because it was £9,800 and the car jumper up in value to £17,200.

My credit score has been knocked massively from 955 to 439!

Will this take long to repair?

Edited by Prank Sinatra on Friday 8th April 08:48

AC43

13,603 posts

237 months

Friday 8th April 2022
quotequote all
If it's classed as a default, a marker can remain on an Experian score for six years. I had this with a store card I took out randomly to get a discount on two suits. I used it once, paid all but £15 off, forgot I had it, moved house twice and boom, had a marker. Never again.

In your case, though, it doesn't make sense. If I were you, I'd sign up to Experian pronto and have a look as to exactly what has happened. That's a massive drop. Surely paying off credit is a good thing not a bad thing?

And there is some sort of appeals process, I think, if they've got something seriously wrong.

https://www.experian.co.uk/consumer/guides/default...

Chris Type R

8,938 posts

278 months

Friday 8th April 2022
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I'm struggling to understand why paying off a balloon payment would be impactful. Are you sure it's not because of any other changes ?

ETA: I think you can get your Experian report for free via MoneySavingExpert - https://www.moneysavingexpert.com/creditclub/

ChocolateFrog

34,954 posts

202 months

Friday 8th April 2022
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6 or 7 years IIRC.

Mine is only just recovering from a disputed electric bill, they wouldn't take me to court but only too happy to slap a default on my credit history.

anonymous-user

Original Poster:

83 months

Friday 8th April 2022
quotequote all
Reading online it’s something about when you close a credit account. There is a negative impact for about 3 months. Then it should bounce back in 3-6 months.

Strange. Well that’s my understanding anyhow.
I guess it could be taken as you’re not seeing a full agreement through to the end but then how can you when you hit 36 months in my case and you have a choice of: buy it, hand it back, part exchange it, or re-finance it.

Simpo Two

92,708 posts

294 months

Friday 8th April 2022
quotequote all
I'd rather have money and a low credit score, than no money and a high credit score.

Your score fell because you became a creditor not a debtor..

Think of the BBC quiz 'Pointless'. 0 is actually good spin

LooneyTunes

9,370 posts

187 months

Friday 8th April 2022
quotequote all
Simpo Two said:
I'd rather have money and a low credit score, than no money and a high credit score.

Your score fell because you became a creditor not a debtor..

Think of the BBC quiz 'Pointless'. 0 is actually good spin
Not always the case that it’s better.

MIL recently struggled to get a contract mobile phone as a result of having no credit history (house paid off years ago, no credit cards, all household bills dealt with by FIL, etc).

Driver101

14,451 posts

150 months

Friday 8th April 2022
quotequote all
Why would paying off debt have a negative impact on a credit rating?

I don't understand why it would have the slightest negative impact, but to knock it that badly looks like something has gone wrong.

PH User

22,154 posts

137 months

Friday 8th April 2022
quotequote all
LooneyTunes said:
Simpo Two said:
I'd rather have money and a low credit score, than no money and a high credit score.

Your score fell because you became a creditor not a debtor..

Think of the BBC quiz 'Pointless'. 0 is actually good spin
Not always the case that it’s better.

MIL recently struggled to get a contract mobile phone as a result of having no credit history (house paid off years ago, no credit cards, all household bills dealt with by FIL, etc).
Yeah it's a bit more complex than that, you can have money but be unable to get credit when needed.

Simpo Two

92,708 posts

294 months

Friday 8th April 2022
quotequote all
PH User said:
Yeah it's a bit more complex than that, you can have money but be unable to get credit when needed.
Fair point, if you have to buy something that's only available by monthly DD. The System won't let you just buy a yearsworth in cash, that would be too simple.

PH User

22,154 posts

137 months

Friday 8th April 2022
quotequote all
Simpo Two said:
PH User said:
Yeah it's a bit more complex than that, you can have money but be unable to get credit when needed.
Fair point, if you have to buy something by monthly DD. The System won't let you just buy a yearsworth in cash, that would be too simple.
It's not just about having to use credit, good credit gives you flexibility and allows you to make the most of your cash.

Dimebars

1,078 posts

123 months

Friday 8th April 2022
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My previous high credit score (with all agencies) took a drop when my mortgage was paid off in December in the process of moving house

My new mortgage is now live on my reports so it should recover shortly I hope

L1OFF

3,766 posts

285 months

Friday 8th April 2022
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I paid the wife's car "balloon" payment (as in my name) and it made no difference to my credit score on Experian and my mortgage term came to an end the following month, again no change in credit score.

OMITN

3,043 posts

121 months

Friday 8th April 2022
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Eek!

Must get my remortgage application through this weekend ahead of paying off the PCP balloon in May..!

Muzzer79

13,039 posts

216 months

Friday 8th April 2022
quotequote all
Driver101 said:
Why would paying off debt have a negative impact on a credit rating?

I don't understand why it would have the slightest negative impact
A lot of people pay off debt in bulk in order to take out more debt.

I think that credit scores work on a principle that a large amount of debt doesn't just disappear and it's unusual to have a sudden bulk influx of money to enable being debt free.

Therefore if you pay off a large loan, it assumes you will either take another larger one out as part of debt consolidation or as part of an 'upgrade' purchase - i.e a newer car.

Simpo Two

92,708 posts

294 months

Friday 8th April 2022
quotequote all
PH User said:
It's not just about having to use credit, good credit gives you flexibility and allows you to make the most of your cash.
Well yes, if you can think of something to with it that will pay more than the interest you're paying. Personally it's not a plank I care to walk.

PH User

22,154 posts

137 months

Friday 8th April 2022
quotequote all
Simpo Two said:
PH User said:
It's not just about having to use credit, good credit gives you flexibility and allows you to make the most of your cash.
Well yes, if you can think of something to with it that will pay more than the interest you're paying. Personally it's not a plank I care to walk.
Ha ha, don't worry, I've had a few drinks as well laugh

Simpo Two

92,708 posts

294 months

Friday 8th April 2022
quotequote all
PH User said:
Ha ha, don't worry, I've had a few drinks as well laugh
Suitcase of money works every time hehe

When I think 'finance' (as in borrow) I think of all the people I'm paying to work in nice warm office blocks playing with computers.

I think this dates from the time when I wasn't sure when the next job would come in. So I kept a large reserve and always bought things outright - so if times became hard I had an asset to sell. I absolutely hate overheads, it's money you have to earn to stand still. If I'd had a cosy PAYE job with a guaranteed cheque every month, well, then you can afford to squander, because you know it will be magically replaced.

matjk

1,112 posts

169 months

Saturday 9th April 2022
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Mines drop a lot this year , paid mortgage off early and stopped using credit card as I get 1% cash back on my debit card. It makes no sense but they like to see you with lots of credit and managing to keep afloat , having 10 million in the bank doesn’t impress them because they don’t know , earning 100k a year doesn’t help as again they have no clue , it’s a funny game

SDM94

29 posts

68 months

Saturday 9th April 2022
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As you’ve cleared the debt your average overall debt age has maybe fallen?