How much will my credit rating go up/down is a very common question and one that is often tricky to answer. But here are some guideline numbers from Experian that may help.
These are only indications – your credit score may not go up or down by this much. They assume nothing else has changed on your record. They also apply to single issues. If you have two defaults already, getting a third won’t be as bad … and if one of your three defaults then drops off, your score won’t improve as much as if it was the only one.
If your main concern is wanting to get credit at a good interest rate, what matters is how each lender will assess your credit history. They don’t actually use the calculated credit scores! Some lenders mind a lot about things which don’t make a difference to your credit score. So I’ve added some notes about how lenders tend to think about these situations.
How credit utilisation affects your score
“Credit utilisation” shows how much of the credit limit that you are using at the moment. So if you have a limit of £5,000 on a credit card, your utilisation would be 20% if your balance is £1,000 and 80% with a balance of £4,000.
Credit scoring gives you extra points if you are using a low amount and deducts points if you have a high utilisation:
- if your balance is under 30% of your limit, you gain 90 points.
- a very low balance is even better – less than £50 or zero will gain an extra 60 points – so that’s the boost you get if you clear your balance each month.
- using over 90% of your limit loses you 50 points.
- a very high balance of over £15,000 will lose an extra 50 points.
The size of the limit itself also affects your score, but not by as much:
- A high limit of over £5,000 adds 20 points to your score
- A very low limit of less than £250 loses 40 points.
Is it the utilisation for each card or overall that matters?
It’s both! So getting the utilisation for one card below 90% – or even down to zero – won’t have major effect on your credit score if you have large balances and over 90% utilisation on your other cards.
What do lenders think about credit utilisation?
Most lenders don’t like you to have maxed out your credit cards, it suggests that you are struggling, so why would they want to lend you more? Do some lenders prefer you to have a balance, not clear your card each month? That may be an urban myth…
Lenders usually have an extra piece of information here that doesn’t show on your credit record – your income, because you will typically have been asked for this on your application. If you have one credit card with a low limit and you are using most of it but your income is high, you can probably get car finance at a good price. But if you have borrowed a lot compared to your income you are going to struggle to get offered more credit at a good rate.
The effect of missed payments, defaults and CCJs
- A missed payment on a bill or debt would lose you at least 80 points.
- A default is much worse, costing your score about 350 points.
- A CCJ will lose you about 250 points. For most CCJs, there will already be a debt with a default on your record, so this hit is in addition to the harm caused by the default.
It doesn’t matter how large the size of the problem debt is. A £25 mobile bill has the same effect as not being able to make the repayments on a loan of ten thousand pounds.
These problems are seen as less serious if they are older. Once a default is more than two years old, the negative effect falls to 250 points, then when it is over 4 years old it drops a bit more to 200 points.
These hits to your credit rating aren’t reduced when you start to pay the debt, or even when it has been fully repaid… see below.
What do lenders think about defaults?
Lenders vary a lot in their attitude towards defaults:
- high-cost lenders such as payday loans and guarantor loans won’t automatically reject your application if you had a default a couple of years ago, even if it hasn’t been repaid – they are targeting people with bad credit;
- you may be rejected by some best buy balance transfer deals if you have any defaults or missed payments, even if these are old and repaid;
- some mortgage lenders will reject people with any defaults, repaid or not, but others may offer a reasonable rate of interest if your defaults are old and they have been settled for more than a year.
Two things that DON’T affect your credit score that may surprise you
- checking your credit score – this doesn’t affect your credit score and lenders can’t see that you have done this either.
- paying off a debt that has defaulted. Most people don’t believe this, but it’s true… your credit score only looks at what has gone wrong in the past, not how you are trying to put it right. But of course, repaying the debt prevents any chance of getting a CCJ, which would mess up your credit score for another six years… See Will paying a default improve my credit rating? for details.
Some small wins
- Having a credit card account for more than five years adds 20 points to your score. But if you are trying to decide which card to close, I would always keep a card with a better interest rate, even if it isn’t so old as 20 points is such a small amount.
- Being registered to vote is a simple way of adding 50 points to your score.
- Paying your car insurance in monthly instalments can increase your score by 20 points. But before you think this is an easy way to get a small boost, check up what you will be charged by your insurer. See Avoid insurance rip-offs – most people are paying over 26% interest to pay monthly, with some firms charging over 50% so this can be incredibly expensive!
What about Equifax and TransUnion?
This article has been all about Experian’s credit score calculations.
Equifax and TransUnion (the new name for Call Credit, often referred to be the name of their free report, Noddle) are the other two major credit reference agencies in Britain. They have broadly the same approach as Experian.
The size of the credit score changes will be different though, because their credit scores have a different maximum:
- Experian’s maximum score is 999
- Equifax’s maximum score is 700
- TransUnion’s maximum score is 710.
So a 500 score on Experian is poor but it’s good on Equifax. And a change to your score for any particular factor is going to be smaller on Equifax and TransUnion than Experian.
If you think this is bonkers, I agree…
If you are wondering which is the “best” score, read Experian or Equifax – which is better?.
What should the default date be?
Improve your credit score for a mortgage
17 ways to check credit scores – find the best
jon says
hi i a few defaults and all had gone of my credit rebort but still have one left well be 6 years old in next month as I am checking it on noodle and total money free credit report will my credit score start increase after that day ?
and also during the last 6 years I have got row credit card the last one is less than one month old .and all my defaults was less 2500£
many thanks
Sara (Debt Camel) says
If that is your last default, your credit score should jump. You may not see this the day after, as the reports you mention are only updated every 30 days, so your records may have been changed but you won’t see this until you next new report.
“I have got row credit card ” did that mean to say two credit cards?
A new credit card will harm your credit score for a few months. make sure you repay the balance on time and in full to get the maximum benefit from this.
jon says
yes tow credit cards.
the last default is an 270 £ over draft will that makes any difference?
Mandy says
Hi Sarah,
In this article, you have not included the impact of hard credit searches on credit scores. Does the credit score reduce with each search? What happens when the search is 6 months old; is it true that it is no longer counted? Are you able to do write something similar to what you have written above for credit utilisation and defaults, showing the number of points lost and what happens as time progresses?
Thanks.
Sara (Debt Camel) says
I don’t know the exact numbers. Hard searches don’t affect your score after 6 months, but I think they stay on your credit record for a year. Some lenders may care more about them than others.
jamie barden says
Hello. Not sure if I’m posting this in the correct place but here goes!
I have one creditcard with a 12k limit and its current running at 98% use. If i was to clear the card am i right in thinking i’ll potentially gain 90points for going under 30% and an additional 60points for clearing the card. Your site says using over 90% will lose you 50points. Would i also gain those lost points back? Bringing the total to 200points? Looking forwar to your reply. Great website. Its really educated us.
Sara (Debt Camel) says
Do you have other credit cards as well?
LOVI KANG says
Hi sara
I moved to my current address in july 18 and today a letter came from credit reference agency saying electricity bill not paid for this address from jan-till may18 .. and on letter says if not paid then may affect ur credit ability..
so will this have any affect on my credit file as i live on this address now but from july onwards please
Sara (Debt Camel) says
I assume this letter was not addressed to you by name. If it wasn’t, it can’t ever affect your credit record, there is no black listing of addresses these days.
LOVI KANG says
Hi sara , i am thinking to apply thru natwest and want to make sure one thing on employment status .. on their website it says 6 months continous employment ..
So my wife started her job on 1-june-2018 , can we apply on 1-nov-2018 or jot please but she will be out of her probabtion pwriod by that time ..
Or does it has to be after 6 months i.e on 1 dec
Thanks
Sara (Debt Camel) says
Apply for what?
LOVI KANG says
O sorry ,,
Apply for mortgage .. i am main applicant with last 3 years income
But my wife only started her job on 1 june and they saying it has to be six months continous employment .,; so just wondering if we culd apply on or after 1 nov ..
Sara (Debt Camel) says
Wait the extra month. You need to comply with the letter of the conditions for mortgages.
BUT I would never recommend anyone applies for a mortgage directly to a lender. Talk to a good broker such as London & Country or Habito.
LOVI KANG says
Thanks sara ,, no it was not addressed to me
On the top it says the legal owner
JayA says
I’m toying with the idea of leasing a car for 2 years with 3 months up front payments. Do you know whether leasing has the same impact on your credit score as a loan?
Sara (Debt Camel) says
I would assume so. Leasing is an expensive option usually as you are paying for the early, high depreciation on the car.
Marcia H says
Hi Sara,
I have a Paypal credit account that will be 6 months old in October. I’ve worked hard to get it mostly paid off, it will be before the 6 month mark. Once it’s paid, can I have it removed from my credit report? If so, what is the process and if not, would closing it be better for my credit rating than having it open and unused?
Sara (Debt Camel) says
It will remain for 6 years from the date it is closed (assuming you didn’t default on it). You can’t get it removed any faster.
Closing it is marginally worse for your credit score BUT it may mean that some lenders are more likley to lend to you, as some don’t like you to have too much unused credit.
Marcia H says
Thanks so much for letting me know that Sara. I’ll continue to keep it within 10% usage after learning about credit utilisation from you! Seeing my credit score rise is motivating.
M
I Price says
Hi,
I had a CCJ registered against me that I did not know about until discovering it on my credit file. I have successfully had it set aside after paying the fees and defending it. It has also now been removed from all credit reference agency files – however, my credit score has not returned the percentile it took from my score upon the CCJ’s initial entry. I have called and written to equifax – who have said ‘The score will take a while to build back up and that they cannot overide the ‘automated calculation’ – but surely this cannot be the case can it? As this is technically now giving a score based on a CCJ that has been advised by law to be struck from all records and not held against me!
Sara (Debt Camel) says
How big a difference are you talking about? Has anything else changed on your credit record, eg have any additional problems been added or has your limit utilisation increased for credit cards? The debt the CCJ relates to -does that show on your credit record?
Ian Price says
The dip appears to be around 80+ points in the month CCJ was recorded on to my file. The record has now been removed, but no points have gone up. Nothing further changed as far as I can see.
Sara (Debt Camel) says
That is quite a small drop for a CCJ – was your credit record already poor? Do you have other CCJs? If there were already a lot of problems, it can be hard to disentangle the effect of changing any one part.
Ian says
I don’t really have credit, so yes – poor. Went from 360ish to 250ish. But as I say, I would expect to see whatever the percentage dropped – go back up, regardless of any other goings on (except if the relative up was compounded by other factors that month, which is not the case).
Emma says
I have just run an Experian credit file report and found large credit card balance I settled 18 months ago, still on my file as an outstanding balance. I have asked my bank to correct this and backdate it to the date it was settled. How much of an impact will this have on score?
Sara (Debt Camel) says
Reducing your balance outstanding improves your record by reducing your utilisation. If you haven’t been making any payments in the last 18 months, have you got late payments markers on your credit record? Getting rid of these will produce a large improvement!
Do check your Equifax and Callcredit records as well as Experian.
Andrew Lammas says
Hi
I have had a default on my file and it has in last few days just gone over 6 years do I have to apply to my credit file for it to be taken or does it drop off automatically – I have just ordered a new report and its still on there
Sara (Debt Camel) says
Assuming your new report shows a default date on the debt which is over 6 years old, it will have dropped off. the reason you can still see it is because you are using a credit report that only takes snapshots of your credit record, not real time. So you are looking at the state of your credit record a few days or weeks ago. This will get corrected!
Simon says
Hi Sara,
Over the years I have managed to accrue a fairly substantial number of credit cards (9) with a total credit limit of £55,000
At the moment 7 cards have zero balances, 1 card has approx £3,000 at 0% being paid off monthly, and the final card is used for grocery spending etc and is paid off each month.
I’m looking to apply for a mortgage within the next few months and was wondering how much of an effect (negative) it would have on my file to close the bulk of my ‘unused’ credit card accounts.
There probably isn’t an answer for this but is there an ‘ideal’ amount of credit that someone should hold ie x% of annual income and a balance of less than 30% of that limit being used? Thanks for your time.
Sara (Debt Camel) says
The ideal amount of credit is zero. Not counting cards that you just use and pay off in full every month.
In your case I suggest you should be closing a lot of your unused cards. Mortgage lenders don’t like you to have huge amounts of unused credit. Aim to get credit limit down to 12k or so. So you are using less than 30% of your total availanle limit. Keep the cards which have the best interest rate in case you do need to borrow on them. And if they are about the same interest, keep the older accounts.
And overpay the 0% card each month if you aren’t already doing so.
Simon says
Thanks for the reply Sara, much appreciated.
I’m currently overpaying on the 0% card to get it to zero as quickly as possible.
Would you recommend reducing the credit limit on the ‘grocery’ card – it has a limit of 10k or so and we spend between 600-800 per month on it and pay the balance in full each month. I’m basically trying to minimise the negative effect (if any) that closing accounts and reducing my credit limit will have on my credit file with me looking to apply for a mortgage in the next 3 months or so.
Sara (Debt Camel) says
My guess. Is. Your credit score is great? If it isn’t, what problems are there?
Simon says
The current scores are 520 with Clearscore and 983 with Experian via MSE credit club.
There’s no CCJ’s, always paid each month so no late payments, etc.
Sara (Debt Camel) says
520 isn’t bad but it’s not a great Equifax score, have you looked at that report to see why it isn’t higher?
When you are getting a mortgage, your credit score doesn’t actually matter, what matters is any previous problems with credit which a mortgage lender may also see as problems. So look at the Clearscore report in detail and make sure there aren’t any problems in there. Also check Noddle to see what your CallCredit record is like.
Mortgage lenders will NOT like huge amounts of unused credit. 55k if your balance in3k is ridiculous. What if you bought the house and decided to furnish it and put a new kitchen in on your credit card? I am serious that you need to close some unused card accounts to get this down and any temporary hit to your credit score should be unimportant if the rest of your credit record is great.
Simon says
I’ve had a high utilization rate recently and have now paid this all off, although the current credit report is still showing c 26k of balances, which will reduce down to 3k when the next report comes out – I’m assuming this high level of (now paid off) debt is part of the score issue.
Many thanks for all of your help and time, I’ll close the unused accounts and check my other reports as you suggest. Thank you ever so much.
S.J says
I had a debt relief order in 2015 which I believe does not come off my credit report for 6 years. Included within this debt relief order was a debt that is still showing as outstanding on my report. I have since liaised with issuing party and they have advised that they have updated their files and have marked this as no longer outstanding. Will this show on my next credit report and will this increase my existing score ?
Sara (Debt Camel) says
It can take a few weeks for a correction by a lender to show through to your credit report.
this is very unlikely to improve your credit score. With the DRO still showing and the debt itself showing with a default, the fact the balance is down to zero will not affect the headline credit score. BUT it may make some lenders more prepared to lend to you.
Bonnie says
Hi Sarah.
I was wondering if it’s possible somehow to get a default removed from your credit rating? If I offered to pay the full sum in one amount, what would the chances of them agreeing to remove it… slim probably but will it be worth a try? I’m 22 and i do not want debt hanging over my head til I’m 28. It’s devastating because I have always been responsible with credit and money.
It was my account the debt is to … but my mum was the one using it. It’s a complicated situation and I can’t exactly report my own mum for fraud… we also live at the same address so yeah…. any advice? Would the company have to report it as fraud if I tried explaining it, or would they simply not believe me and ask for proof?
Thanks
Sara (Debt Camel) says
If you just pay it, there is no way they will agree to remove the default.
The only way this could happen would be if you reported it as fraud and told the lender the crime reference number. Even then it may be complicated as you are at the same address.
If you pay it in full now, your credit score won’t improve, but after a while as the default gets older, there will be more lenders that are prepared to lend to you.
I’m sorry, no good choices for you.
kate says
Hi there, how much many points will be added to my credit score once i pay off a default?
Sara (Debt Camel) says
This article looks at your situation@ https://debtcamel.co.uk/defaulted-account-credit-score/
Sarah says
My husband had five defaults registered in 2012/2013, all settled, and two we eventually got removed as it was deemed as irresponsible lending by ombudsman- none of the three remaining defaults (all under £500) however are showing on my husbands credit report and it’s showing as good however Santander have rejected our mortgage decision in principle because of adverse credit. Any ideas what’s going on?
Sara (Debt Camel) says
Have you checked your credit reports from all three credit reference agencies? See https://debtcamel.co.uk/best-way-to-check-credit-score/
Sarah says
No we haven’t – my mistake, it was 2014/15 they were registered. I will get him to check – I was hoping to be able to get a mortgage now everything was over 3 years old and now that we’ve got a 15% deposit to put down. :(
Sara (Debt Camel) says
You may well be able to get a mortgage if all the debts have been settled for a while – but do check all three CRAs. If there are problems showing but they have been settled, you need to talk to a mortgage broker, not go direct to a lender.
Nat says
Hi Sara,
I am hoping to apply for a mortgage early next year as a first time buyer, I’d like to think of myself as generally money savvy but I had a shock when I checked my credit reports. Hoping you can pick out where I’ve gone wrong/how I can improve over the next 6-12months!
I have three credit cards; two of which have zero balances – anxious about closing £0 balances in case utilisation is negatively impacted. All three cards are destroyed and unused.
Card 1: £0 balance, £3000 limit, over 5 years old
Card 2: £0 balance, £900 limit, 18months old
Card 3: £2,000 balance, £2,500 limit. Opened June this year: 0% balance & money transfer to ‘consolidate’’ – I pay above the minimum payment each month.
I also have a car on finance with a £2,000 balance and a small £100 utility default from early 2016 (mix up with the final gas bill when I moved out).
I have no missed payments, no other loans & no other adverse credit, yet my credit rating seems extremely bad (very poor on all three credit sites) – could I be missing something or does this sound correct for one old(ish) utility default, a low balance car loan and my credit cards/credit utilisation? And if correct, is there anything I can do to improve this to support my mortgage next year?
Thanks,
Nat
Sara (Debt Camel) says
The biggest problem from the ones you have mentioned is the default. Have you repaid this debt? That won’t increase your credit score but will make it easier to get a mortgage – some high street lenders have a policy that they are happy with defaults over 3 years old that have been settled for more than a year. When you apply for a mortgage go through a broker, not direct to a bank.
The other problem is your high utilisation rate on the consolidation card. It’s not over 90%, but if you could get it down to under 30% that would give a boost to your credit score. It’s a good idea to limit discretionary spending anyway in the run up to getting a mortgage as your bank statements will be looked at, so plan a frugal few months (including Christmas) and throw the cash saved at that credit card.
Also having opened an account in the last 6 months is always negative, but that will pass – do not make any more credit applications!
Teng says
Hi, I am applying a first mortgage. By checking Experian it is 699 with a CCJ settled one year ago linked to one of old address. I never know this debit because moved from this address 4years ago Called to court they said it seems like parking company debit £370.
No credit card
No loans
My question is: Is it will be ok to apply a mortgage if I paid off the debit.
Another question is: Is any possible to increase my credit score in my case.
Thank you
Sara (Debt Camel) says
It is a shame you paid the CCJ and didn’t apply for a set aside to get it off your credit record, but nothing can be done about that now.
There is no way to increase your credit score significantly until the CCJ goes – but it isn’t your headline credit score that matters for a mortgage, it’s what the lender thinks about your situation. I suggest you talk to a good mortgage broker and see what they say
Kim says
Hi – this was a really useful article, thank you. In addition to this how do pay day loan applications affect your score do? Kind regards Kim
Sara (Debt Camel) says
They don’t affect your headline credit score at all – assuming they are all paid on time of course.
But they are flagged up as payday loan on the copy of your credit record that other lenders can see, and some lenders will regard them as an indication of financial problems and refuse to lend to you. Most mortgage lenders will not consider people who have had payday loans in the last year.
Village Idiot says
Hi,
I have a 4 year old default, and a 5 3/4 year old default that is about to drop off of course.
I also have high card utilisation and arrears on a number of accounts. The arrears are being dealt with, and am successfully avoiding any new defaults, but because these are the priority there’s nothing much going to happen soon about the card utlisation.
I’m wondering what the impact of arrears and arrangements to pay are, compared to defaults, and what is the best path to improving my score, assuming I can only act sensibly from now and slowly repair those arrears. The arrears picture will be better from February but a couple are going to take longer because they involve bigger numbers (e.g. mortgage).
It is realistic to have no arrears in a year’s time, so when the newest default drops off in two years, I’m wondering what my credit score would look like with no defaults, probably still high card utilisation and no arrears in 12 months – but lots before then?
Thanks
Sara (Debt Camel) says
Sorry that is impossible to guess. Mortgage arrears are a priority debt and you need those on an agreed repayment, even if it means getting your other debts down more slowly.
I can’t tell if avoiding new defaults is sensible. Sometimes it’s just best to bite the bullet and accept your current situation in unsustainable and go for a DMP with defaults for all your non priority debts.
But if things are getting better overall and nothing is getting worse, then time is the great healer of credit record problems and. in a few years, things will look much better. I just can’t tell if that will be next year or not.