Credit report question

[SixTwoSix]

doing a search on a record doesn't make your credit rating worse/better. the number of searches has no bearing what so ever.

Yes, yes it does. Hard searches, such as those you get when applying for a credit facility of any kind will be have a negative impact if there are too many in a short space of time.

e.g. let's say i start a new job earning very good money but I'm on probation for 24 months. i would fail to get credit because the job isn't as secure as it could be.

Nope, they have no employment information about anywhere you've ever worked.

if you only make the minimum payments that isn't exactly good either.

Again, they don't know if you've made the minimum payments, half the balance or the whole balance each month, all they know is that your account was "satisfactory" for that month.

if you pay in full all the time that would give you a good rating.

Only gives you a good rating in the sense that your credit utilisation would be lower.

However this is catch 22 as if you have a lot of available credit, some places see this as a risk as you could just take it all out at once.

Common thought is to have about a 20/30% utilisation ratio of available credit.

 

[Haggisman]

Only gives you a good rating in the sense that your credit utilisation would be lower.

It's also not necessarily a good criteria in that if you're paying in full each month, the lender isn't making any money from you.

This is where the lender's own criteria come in - if they want a safe debtor, then this is a good thing, if they want a more risky debtor to make money from, then this may actually have a negative effect on your chances of being accepted

 

[SixTwoSix]

It's also not necessarily a good criteria in that if you're paying in full each month, the lender isn't making any money from you.

This is where the lender's own criteria come in - if they want a safe debtor, then this is a good thing, if they want a more risky debtor to make money from, then this may actually have a negative effect on your chances of being accepted

Yup...very specific to the lender. I know when applying for a mortgage you generally shouldn't have used all your credit but also shouldn't have all credit available. It's recommended to be in about 20-40% utilisation of credit.

 

[robfosters]

Yup...very specific to the lender. I know when applying for a mortgage you generally shouldn't have used all your credit but also shouldn't have all credit available. It's recommended to be in about 20-40% utilisation of credit.

So if you have a credit card with a £1200 limit, you should keep your balance between £240 - £480 for maximum credit score gain?

 

[Haggisman]

Yup...very specific to the lender. I know when applying for a mortgage you generally shouldn't have used all your credit but also shouldn't have all credit available. It's recommended to be in about 20-40% utilisation of credit.

Strange, I was told to make sure everything was paid off before applying!

 

[Semple]

You should only be interested in what is on your credit file rather than the number (rating) the CRA's give. This is just a grading on their scale of what your credit history is like. I always see a number of threads on the MSE forums where people have been refused credit even though they have good credit scores.

 

[robfosters]

I wish they had taught this stuff at my school. Not enough financial education is given imo.

 

[SixTwoSix]

So if you have a credit card with a £1200 limit, you should keep your balance between £240 - £480 for maximum credit score gain?

Sort of, it's not an exact science and differs between lenders.

On a basic scale, the thought is that if you have say ~£10k credit available, none of it used, get a mortgage, you might then use all the credit to do the house up and put yourself in financial hardship.

On the other end of the scale, if you're using all of your £10k credit before you apply, you might struggle with repayments, therefore you won't get the mortgage.

This is massively simplified of course.

Strange, I was told to make sure everything was paid off before applying!

It seems the most obvious and logical, credit is a funny game though.

You should only be interested in what is on your credit file rather than the number (rating) the CRA's give. This is just a grading on their scale of what your credit history is like. I always see a number of threads on the MSE forums where people have been refused credit even though they have good credit scores.

Yup, don't get hung up on score, mine is terribly low and has been since bankruptcy 8 years ago. I now have 5 credit cards, about 10% credit utlilisation and about £16k available to use. My score is always poor to average when I check my file. The details in the file are much more important.

 

[Psycho Sonny]

This is absolute rubbish, CRAs don't keep employment info. A high number of searches in a short period does mess up your rating

When you apply for a loan the company providing the loan will ask you what your job is.

They will also ask you when you started or how long you have been in the job.

If you state you started recently. They will ask you if your on probation, etc. Or how long the contract is or if it's permanent.

If you say your on probation then guess what? You will fail to get credit.

Obviously your employment info doesn't show up on a credit report. But it's one of the questions they will ask when you apply for credit and whilst they are doing a credit check.

 

[TheStarkFactor]

The credit scores provided by the various credit reference agencies are mostly irrelevant as each and every lender uses their own eligibility criteria, so Experian may say you have an awesome score, but you can still be refused by the lender if you don't meet their criteria.

In my experience they're not even useful as an indicator of credit worthiness, but I guess other peoples mileage may vary.

I have only really ever used my credit report to check for identity fraud when my wallet was lost/stolen and to also double check previous accounts had been marked as closed.

 

[robfosters]

When you apply for a loan the company providing the loan will ask you what your job is.

They will also ask you when you started or how long you have been in the job.

If you state you started recently. They will ask you if your on probation, etc. Or how long the contract is or if it's permanent.

If you say your on probation then guess what? You will fail to get credit.

Obviously your employment info doesn't show up on a credit report. But it's one of the questions they will ask when you apply for credit and whilst they are doing a credit check.

I don't know how true it is, but someone once told me as well that disabled people on disability benefits are looked upon quite favourably by credit companies as their income is often quite sizeable and more guaranteed than someone in employment.