ChatterBank0 min ago
Credit rating- quick payments and late payments
5 Answers
Hello, I have two questions and would must appreciate any advice:
I am now in a position to pay off a debt i have with MCS (boy do they make you feel like a criminal for having debts! their phone manner is disgusting!! anyway, i digress...). Will this have any positive (or immediate) effect on my credit rating?
I have another loan taken out for further education. There is a specific pay back date each month. Every now and then I miss it because i send the money back to the UK from another EU country I live in. But never more than two days late. Does this have a negative effect on my credit rating.
I know my credit rating, because of these student debts, is terrible and I was curious to know! Thank you!
I am now in a position to pay off a debt i have with MCS (boy do they make you feel like a criminal for having debts! their phone manner is disgusting!! anyway, i digress...). Will this have any positive (or immediate) effect on my credit rating?
I have another loan taken out for further education. There is a specific pay back date each month. Every now and then I miss it because i send the money back to the UK from another EU country I live in. But never more than two days late. Does this have a negative effect on my credit rating.
I know my credit rating, because of these student debts, is terrible and I was curious to know! Thank you!
Answers
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Late payments are shown in your credit file and will show up in credit searches. They will reduce the probability of getting credit with most lenders. The more defaults the lower the end of the market you will have to go to. As you can imagine the lower end of the credit market have the highest rates and charges.
They have a system where each payment due is scored so say over the last 12 months you had a credit agreement and you paid it on time every time, it would look like this:
000000000000: All good
but if you are late sometimes it would look like this
000010001000: Not bad but late on occasion but not too late.
000112200010: Somtimes late somtimes in arrears over a month;
etc etc. or every loan for the last 6 years. So any searches are looking for all 0. Yur prior warnings are irrelevant to your credit record, they may serve to keep you current lender at bay.
To get an A1 credit record you need all 0 for 6 years. Just get a bit more organised, one way is you pay 2 months at once when you are flush then you will always be ahead.
(pedants I was using a system I once saw, now doubt there are variations)
000000000000: All good
but if you are late sometimes it would look like this
000010001000: Not bad but late on occasion but not too late.
000112200010: Somtimes late somtimes in arrears over a month;
etc etc. or every loan for the last 6 years. So any searches are looking for all 0. Yur prior warnings are irrelevant to your credit record, they may serve to keep you current lender at bay.
To get an A1 credit record you need all 0 for 6 years. Just get a bit more organised, one way is you pay 2 months at once when you are flush then you will always be ahead.
(pedants I was using a system I once saw, now doubt there are variations)
An excellent post, as usual, from R!Geezer. However I'd offer a word of caution with regard to his advice to pay two months at once, to 'get ahead' with your payments.
With some of the regular payments I make to various creditors that strategy will work, but others have their computer systems configured differently. So, for example, instead of making four separate weekly payments towards my electricity bill, I made a single payment, covering all four amounts, on 'week 1'. Unfortunately the electricity company's computer regarded this as the first regular weekly payment, plus an additional voluntary payment. So, when I didn't make any payments for the next few weeks, they stated that I'd defaulted on my agreement with them because no payments had been made on the due dates!
Chris
With some of the regular payments I make to various creditors that strategy will work, but others have their computer systems configured differently. So, for example, instead of making four separate weekly payments towards my electricity bill, I made a single payment, covering all four amounts, on 'week 1'. Unfortunately the electricity company's computer regarded this as the first regular weekly payment, plus an additional voluntary payment. So, when I didn't make any payments for the next few weeks, they stated that I'd defaulted on my agreement with them because no payments had been made on the due dates!
Chris
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