Can your credit rating drop if your good with finances?

Soldato
Joined
30 Sep 2005
Posts
16,526
Here's a strange one,

I had one credit card and a small loan. Over the past few months I have been paying the loan off in big chunks and it's now paid and settled. I also swapped my credit card over to a 0% one before cancelling it, and I've then been paying off large chunks each month. So basically I've gone down to just having one credit card with a couple of grand on it.

Seems my credit rating has dropped from 997 to just over 900?

I'm not too bothered at this stage as my motivation for getting these paid is to then divert my surplus into mortgage overpayments ready to move house in a few years.
 
Last edited:
Caporegime
Joined
30 Jul 2013
Posts
28,822
Loads of things can affect it, including things like cancelling credit cards.


But don't get too hung up on the number. If it had dropped down to 100 i'd be more worried.
 
Associate
Joined
14 Dec 2017
Posts
2,040
Location
Aberdeenshire
Could be the number of hard searches in a small amount of time?
After a few month it’ll start going up again, after about 6 it should be back to where it was.
 
Soldato
Joined
25 Nov 2002
Posts
3,495
Depending on where you get your credit rating from the reason is probably:

1. An increase in the number of credit applications (ie. you now have ONE in the last 6 months)
2. If your new 0% card has a lower limit than the old one, your overall credit utilization will have gone up, and if that's more than a certain percentage, it'll hit your credit rating.
 
Soldato
OP
Joined
30 Sep 2005
Posts
16,526
Depending on where you get your credit rating from the reason is probably:

1. An increase in the number of credit applications (ie. you now have ONE in the last 6 months)
2. If your new 0% card has a lower limit than the old one, your overall credit utilization will have gone up, and if that's more than a certain percentage, it'll hit your credit rating.


ah, that actually makes sense as the 0% card only has enough room to hold the balance transfer. The original card had loads of room left, whereas the new one was at 99% before I made a couple of payments. Even though my overall level of credit has drastically reduced.
 
Soldato
Joined
15 May 2007
Posts
12,804
Location
Ipswich / Bodham
Being a slave to a largely arbitrary number is absolutely pointless. The credit companies have successfully 'gamified' this rating so now people really care when they shouldn't, and are acquiring all sorts of data to sell more effectively as a result.
 
Soldato
OP
Joined
30 Sep 2005
Posts
16,526
Being a slave to a largely arbitrary number is absolutely pointless. The credit companies have successfully 'gamified' this rating so now people really care when they shouldn't, and are acquiring all sorts of data to sell more effectively as a result.

well it's the debt number I'm more concerned about :D
 
Caporegime
Joined
30 Jul 2013
Posts
28,822
Being a slave to a largely arbitrary number is absolutely pointless. The credit companies have successfully 'gamified' this rating so now people really care when they shouldn't, and are acquiring all sorts of data to sell more effectively as a result.

I get a free update from Barclaycard every 3 months, but I don't pay much notice to it, it's generally between 997 and 999.

For affordability of things like Mortgages and the like, it only one small factor.
 
Pet Northerner
Don
Joined
29 Jul 2006
Posts
8,023
Location
Newcastle, UK
also by cancelling a card your overall usage of credit goes up (assuming you have a balance on the remaining card), which i believe has an impact on socre.

But 900+ is a great rating, nothing to worry over :)
 
Soldato
Joined
28 Oct 2006
Posts
12,456
Location
Sufferlandria
For affordability of things like Mortgages and the like, it only one small factor.

I don't think credit rating has any effect on affordability?
Affordability is based on income and outgoings and will determine how much you can borrow. Your credit record might effect whether you get accepted for the mortgage or not.
 
Caporegime
Joined
13 Jan 2010
Posts
32,495
Location
Llaneirwg
Yeah these things swing all time

Closing account can go download
Opening account usually down
Application down

But as others have said, anything in 900 is nothing to worry about otherwise no one would open any accounts!
 
Soldato
Joined
10 Sep 2003
Posts
4,942
Location
Midlands
I fell into this trap by canceling an unused card, and couldn't get a big enough balance transfer offer on my other one a few weeks later. Now I leave a card with 5k limit with 0 balance active, which reduces my debt utilisation.
 
Caporegime
Joined
26 Aug 2003
Posts
37,491
Location
Leafy Cheshire
As above, i keep a number of large balance cards with nothing on them just so my credit utilization stays low, even if i need to use a card in an emergency.

My experian “score” seems to change with the wind however. So far this year its been 999, 991, 999, 991 and now 999 again, with no hard searches or applications in that time. That said, the experian “score” as meaningless as it is, at least makes more sense than the other agencies who always seem to score me as a 3 or 4 out of 5 which goes against what experian think (and what my experiance of getting good credit rates shows).

In short, I don't think the “score” is particularly relevant at all. As long as you are managing your money/debt correctly, on time, and the affordability fits, then you’ll be accepted for the better credit deals more often than not.
 
Associate
Joined
11 Jul 2011
Posts
754
Some lenders don't even view your credit score as a decision maker. Its classed on how you pay back things and your credit behaviour what they are interested in the most. For instance the high % lenders won't lend to you if they see you pay everything off each month etc. But if you are like that then you wouldn't be looking for a loan from sharky loans etc :D
 
Caporegime
Joined
20 Jan 2005
Posts
45,613
Location
Co Durham
Yes, if you spend almost up to your credit card limit and pay it off every month you will have a higher rating than somebody who doesnt use their credit card at all.
 
Soldato
Joined
6 Oct 2004
Posts
18,300
Location
Birmingham
Average age of account is a factor as well according to MSE, a long running account shows stability of finances, closing down an old account and opening a new one is obviously going to bring that average down significantly
 
Back
Top Bottom