Overdrafts

JayToukon · 26 May 2010 at 22:07

Does anyone know if being in your overdraft has a negative on your credit rating? Inparticularly for students with a student account.

Strife212 · 26 May 2010 at 22:08

Moley · 26 May 2010 at 22:09

Not if it's an agreed overdraft. Going over your overdraft limit counts as unauthorised borrowing and your bank is likely to make a note on their own systems but it shouldn't get to a credit reference agency unless you default.

Burnsy2023 · 26 May 2010 at 22:14

If it's an agreed overdraft, it's more likely to have the opposite result.

Fenris · 26 May 2010 at 22:16

Moley said:
Not if it's an agreed overdraft. Going over your overdraft limit counts as unauthorised borrowing and your bank is likely to make a note on their own systems but it shouldn't get to a credit reference agency unless you default.

Partly right, if you go over your agreed overdraft limit your internal credit score is effected, this determines internal stuff like overdrafts or loans with that bank etc, however it doesn't have massive impact on your credit report as a whole.

JayToukon · 26 May 2010 at 22:44

Cheers everyone.

PMKeates · 26 May 2010 at 23:05

It depends what you consider your "credit rating" to be. If you earn £10,000 pa and have a £3,000 credit card and a £2,000 overdraft, then being in that overdraft will affect your ability to get further credit, as lenders may be reluctant to increase your income:credit ratio below 2:1 if you are using, say, 90% of your currently available credit. However, utilising the overdraft will build a history of you managing credit and as such will work to improve your rating long-term.