How much will my credit rating go up or down is a very common question. But it’s often tricky to answer! 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!
And confusingly 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.
Contents
How balances and credit utilisation affects your credit score 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. All the numbers in this article for Experian:
- 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. There is one exception here – if you pay a CCJ in full within 30 days, it will be deleted from your credit record.
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 a while.
Four small wins
Once you have big problems on your credit record such as defaults or CCJs or an IVA, only time will get rid of those “black marks”. You can’t speed this up and often the key thing is to stop any new problems being added.
But here are some small ways to boost your credit score:
- Stop applying for credit! Not making any credit applications for 6 months adds 50 points to your score.
- Keep a credit card for more than five years. This adds 20 points to your score. But if you are trying to decide which card to close, always keep a card with a lower interest rate – that’s more important than 20 points on your credit score.
- Register to vote. It’s a simple way of adding 50 points to your score.
- Pay for car insurance in monthly instalments. This can increase your score by 20 points. But do check what your insurer charges. See Avoid insurance rip-offs – many people are paying over 26% interest to pay monthly, with some firms charging over 50% so this can be incredibly expensive!
Three things that DON’T affect your credit score – are you surprised?
- 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.
- Someone else at your address having bad credit. You are only financially linked to someone you have a joint loan, mortgage or current account. If you aren’t, it doesn’t matter how many letters from debt collectors arrive if they aren’t for you. Have a look at your credit reports – those problem debts won’t be showing.
Equifax and TransUnion – the other two credit reference agencies
This article has been all about Experian’s credit score calculations.
Equifax and TransUnion are the other two major credit reference agencies in Britain. They have broadly the same approach as Experian, but their credit scores have a different maximum (if you think this is bonkers, I agree!):
- Experian’s maximum score is 999
- Equifax’s maximum score is 700
- TransUnion’s maximum score is 710.
So a change to your score for any particular factor is going to be smaller on Equifax and TransUnion than Experian. And a 500 score on Experian is poor but it’s good on Equifax!
The very big lenders like the major banks all report to all three credit reference agencies. But smaller ones may only report to one or two. So you may find that your scores and reports are very different on different reports.
If you are worried about your credit score you must check all three credit reference agencies. Luckily you can do this for free, see The best ways to check your credit score.
Improve your credit score for a mortgage
Experian or Equifax – which is best?
What should the default date be?
Andrea says
Hi Sara, quick question.
In 2013 I ran into financial difficulties and I had a £2,000 of student free overdraft with hsbc. I couldn’t pay it back at the time and the bank closed my account and sold my dept to a dept collector. After a while I started receiving letters and early 2015 I cleared the debt. I could have done it much earlier, but I just didn’t know what to do.
Now my partner and myself have had a mortgage for two years and there was no problem at all to get one back in December 2017.( my partner had a full time contract at the time.)
Now we are both bank staff and we were just about to remortgage when our financial advisor said that the bank offering the mortgage with an excellent rate is not sure as one of us has a questionable credit report.
After doing my checks on Experia I found out that my credit score was just “fair” and still show the past activities.
What’s the chance of getting a decent deal now? Could it be that “Santander” would still offer that rate?
Kind Regards
Andrea
Sara (Debt Camel) says
Hard to say. You need to ask your IFA or a mortgage broker. You should always be able to get a fix with your current mortgage lender.
viva says
hi
Sara
my question is lower finance damage my credit file , this 2010 JJB SPORTS account, they don’t have default in my account , still they damage my account, laster year write off this account still , they damage my account, I call and complain , normaly all creditrs remove all defaldt this Lower finance damage my credit file, I am lost somuch money in this creditors, can I claim ??
thanks please advice me
Sara (Debt Camel) says
Did you repay the balance or did they write it off, if they wrote it off, why did they do this?
Joe Bloggs says
My IVA is due to drop off my report in Oct 2021. How many points should my score go up by?
Sara (Debt Camel) says
Hard to tell. Has your IVA been settled?
Have you checked all the debts in it have default dates on or before the start of your IVA – see https://debtcamel.co.uk/repair-credit-record-iva/ ?
Joe blogs says
Hi. It was settled early in 2017 and so still has to do the remainder of the 6 years before dropping off (which is Oct 2021). All defaults are on or before the start of it. There’s been none to date since.
Sara (Debt Camel) says
ok, so I suggest you get yourself a LOQBOX and save using that for the next year. You won’t be refused this because of your poor credit record and it’s set up so the monthly savings look like the repayments on a loan – see https://www.loqbox.com/en_gb/. Then when that ends, get a credit card for bad credit and use it each month and repay it full every month.
Do that and you should end up with a very good credit score in Oct 21!
general zod says
Hi Sara,
Years ago when I was young and stupid I didn’t pay a mobile phone bill due to living abroad. Now i’ve always just ignored it and my credit score isn’t to bad at the moment equi (413) and I have been told by the bank that this could effect me getting a mortgage now the past as its a default. Now its due to be removed in the next couple of month as the 6 years have passed. Will banks no longer be able to see that ive had a default in the past? So what I’m saying is have I got away with it relatively unscathed?
Sara (Debt Camel) says
A lender cannot see a default that has dropped off.
You aren’t yet out of the woods though as a debt collector may pop up threaten court action. By the time they do, it may be stateute barred, but you will have to argue that, if you ignore letters from debt collectors you may get a CCJ.
Louise Webb says
I have 2 settled defaults that are 6 years old in May 2020 and June 2020. I have 1 credit card which I pay in full every month. My credit score is currently 551 with Experian. Realistically, when is it likely that I will see an improvement to my credit score?
Sara (Debt Camel) says
If there are no other problems you haven’t mentioned, then end of June! Perhaps you could come back and say what happens?
PS dont make any new credit applications before then.
shuang chen says
HI,
I am applying for car finance just now, and I have a default amount of 2431 pounds since September of 2015, it is quite older now, can you give me a suggestion, should I pay them back immensely( but I do not have enough money), or pay monthly? is it will help for my credit score goes higher and get the better car loan? Thank you so much.
Sara (Debt Camel) says
if you pay it now your credit score won’t improve but lenders are much more likely to lend to you – they don’t only look at your credit score, they also look at your debts.
if you don’t pay it or set up a payment arrangement, you may get a CCJ which would be worse for your credit score.
best advice is
a) talk to a debt adviser such as national Debtline on 0808 808 4000 and
b) borrow as little as possible for a car as it’s going to be at a very high interest rate.
DM84 says
Hello,
I am looking for advice. I’m really down about my credit report at the moment as I had 2 defaults that came off this month but nothing has changed. I suspect its due to a loan I had where I lost my job and ended up on an arrangement to pay. I hold my hands up to 2 missed payments. I then entered an arrangement to pay which could only be set up for 3 months, I would need to contact them to discuss another arrangement to pay every 3 months. Anyway I noticed my monthly payment went up from just 1 pound to the original amount of 274 pound. I was now in work so I thought great I do not need to do anything, except they now started to report every payment as missed and not on an AR marker.
I took it the FOS but they did not see it my way and it was not upheld. I am disappointed and absolutely gutted to think that I would have had a clean record this month but instead this loan will be on my file till August 2025 as I paid it off in Aug 2019.
Is a 6 month marker on my credit report effectively a default?
If so should I ask for a default to be applied as at least it will get rid of my 6 month late markers and puts the date to April 2017 when I first became 3 months in arrears? I know its a lot to read but I feel sick at the thought of not being able to buy a house this year with a small deposit where I might need 5 times the amount I have saved. Can anyone help please?
Sara (Debt Camel) says
I took it the FOS but they did not see it my way and it was not upheld.
What were you asking FOS to do? How long ago was this?
If the only thing wrong on your credit record are an arrangement to pay on a loan that has been repaid, I am surprised your credit score hasn’t increased. What is your score? Has it changed from last month when the defaults were still there? What report are you looking at?
DM84 says
I was asking the FOS to remove the missed payments and change them to AR. They received 4 months worth of payments for 274 pounds on my payday and they all went down as missed because they say my arrangement had ended. The adjudicator agreed with the loan company so I asked the ombudsman to have a look. The ombudsman says “He has commented on more recent items which have happened subsequent to his complaint but I don’t have the business records for that period. However, I have no reason to believe it has made any subsequent errors.”
It just seemed he’d spotted one error I made so didn’t bother to check the rest.
My score with experian is 577, 280 with Clearscore and 477 with CKarma. The last default came off on the 8th January and not showing on any accounts now. Maybe it just needs more time. I am also using more than 75% on 3 credit cards of each around 1000 limits.
FOS Decison Ref is DRN4939921
Sara (Debt Camel) says
I doubt you can make another complaint about your credit record then as FOS has already looked at it.
Getting your credit card utilisation down to under 30% and then down to zero will help your credit score.
DM84 says
Thank you for responding,
I’ve been a nightmare with credit in the past but have learned from my mistakes, such a kick in the teeth when I pay everything but just fell on hard times.
I’ve tried twice going down different avenues with the FOS (Irresponsible lending) but I cant persuade them.
Could I ask if you think it would be better to ask the loan company to issue a default from 2017 or should I wait to do this in 2023 as it would wipe it off my record nearly 2 years earlier than the reported missed payments? Is this something they will even consider?
Sara (Debt Camel) says
In a few years many lenders won’t care about an arrangement to pay that has been repaid several years ago. They may care more if you get it defaulted now So perhaps wait until 2023.
Naomi says
Hi, I’m not a financial expert but I might be able to reassure some people.
My credit rating on all 3 reports is poor. I have otherwise healthy financial habits, (credit cards under £2k, no payment plans or loans) but have an active default from 2016 (I was renting at the time and had a mix up with a gas bill. The amount was small – which makes it more frustrating, but a default is a default regardless of amount).
Anyway, this year I purchased a home, on my own (no partner or help from parents) with just 5% deposit on a £100k flat. (if you live in London, consider moving. There’s cities out there just as nice). It’s not a mansion but it’s a first step – with a normal mortgage (not a special ‘bad debt’ mortgage), from a high street provider. My rate is a little higher than my friends (around 3%) but the £400pm mortgage I pay is much less than my previous rental payments, so I am now able to put more towards the credit card or savings to upsize in future years.
So even if your report isn’t where you want it to be, it might still be possible sooner than you think! Good luck :-)
Sara (Debt Camel) says
Thanks for the info! You say this default was “active” – had you repaid it? If yes, how long ago?
Naomi says
Hi Sara,
It’s active in that it’s still showing on records. It is dated Feb 2016 but I didn’t notice it until I reviewed my credit files in 2018 (in the run up to my mortgage applications). I didn’t actually repay it until Feb 2019 (the month I applied for mortgages), mainly because I was in a lengthy ombudsman dispute then about it which unfortunately ended up being pointless. I don’t think repaying made a difference in the eyes of the lenders I approached, but it was only £169.
DM84 says
Thank you Naomi,
That is very reassuring. I am only looking to purchase a house for around 70,000 so this gives me hope. I’ll probably have 7000 by the time i’m in a position to buy and will have my credit card debt under 30% or zero. I also earn over 40k a year.
Plan ahead, pay off CC debt, save as much deposit as I can and hopefully in 6 months buy the house. Will keep debtcamel informed of success or failure in 6 to 9 months. Fingers crossed.
Thanks again Sara & Naomi
Danielle says
Hi Naomi,
That is really reassuring – thank you. As I am in a similar position.
Could you please confirm who your mortgage is with?
Thanks,
Danielle
Naomi says
I went with Principality building society, simply because they accepted my 5% deposit (this might be a Wales only incentive but deffo worth checking). I also got offers in principle from Santander and Natwest but they required 10% deposits. I didn’t check anyone else so there may have been others who may have accepted.
I think very few mortgage lenders actually care about our credit scores, the score is more of a guide for us than them. They will look into everything themselves – debt amounts, dates, regular repayments, recent activity, utilisation – and use actual common sense. Or, they seemed to with me anyway.
A lot of lenders have PDF guides floating around the internet of their lending criteria, these documents are meant for brokers but can be found with a good google by anyone. This will give you an idea of how strict a specific lender is. I saw a few that basically said ‘any applicant with a default would be a straight rejection’, but some others said they would take applicants with defaults ‘case by case’ or that defaults over 3/4 years would be acceptable, and so on.
Good luck!
Sara (Debt Camel) says
best advice is to go through a broker! They will know what lenders are more likely to accept you.
keats says
I have 3 credit cards, one has a balance of £0 (£3600 limit) and one has a low balance of £300 (to be paid off in full this month) (£4000 limit), my other card is currently being used to pay my other 2 cards debt and overdraft off so has £4900 balance (£9500 limit – recently upped by the company from £5500). Over the last 2/3 years I’ve been working hard on trying to create a decent credit score so when I apply for a mortgage I will be in the best place possible to do this. I have no real savings yet so any mortgage application is a little way away yet. I have kept 3 cards open so my total credit utilisation is below 30% with the view that I will close one (the £3600 one) of them when the total balance of these becomes less than 30% for the 2 remaining cards and then the £9500 one once the debt has been cleared. As a boost to my score is it worth a)increasing my £4000 card to £5000 limit so I get the high limit boost (this will be the only card I have when I’ve paid the other one off) – this is my oldest card and has a low % on transactions and b) for now should I buy some petrol and pay it off in full each month? Will doing this impact the score in a positive way or will it make no difference
Sara (Debt Camel) says
You are obsessing too much about your score. That isn’t that important for a mortgage, what matters most is no credit record problems and low debts and a good deposit.
Are you paying interest on the 4900 balance card?
keats says
Hi Sara, thanks for responding – no current interest on the 4900 card and i aim to pay this off before any interest kicks in.
Sara (Debt Camel) says
Great. That and clearing your overdraft are what matters.
Don says
Hi,
I’m after some advice, basically I was ill advised to agree to an IVA that was approved in February 2014 (so approaching 6 years). The reason I was ill advised is that my house was up for sale as my partner and I had broken up and he wouldn’t pay anything towards any bills etc so I sought advice to get me through until the house sale went through which was a few months later. When the house was sold, the Insolvency Practioner paid the creditors with my half of the sale proceeds and I was then sent the remaining proceeds. At this point the IVA was completed in August 2016. I obviously had a number of missed payments, but no defaults or anything else leading up to the point when the IVA was approved. I have two credit cards which I’ve had with zero balances from before the IVA, plus I was able to get a mortgage which I’ve never missed a payment for. My credit rating is basically Fair across the board with the credit reference agencies and I could get credit if wanted I think, but my question really is what the likely impact to my credit file of passing the six year mark of the IVA being approved and it being wiped from my credit file. I’d like to remortgage for a better rate and bring down the term if possible, but obviously wanted to wait until I could get the best interest rate. Any advice would be greatly appreciated!
Sara (Debt Camel) says
An IVA in your situation was a very bad idea :(
Once the IVA goes from your record, your credit score should be good. Probably great if you are using those old credit cards and repaying them in full each month. If you aren’t doing this, you should, after 6 months your score should be very good.
from the point of view of a re=mortgage, you will always have to answer Yes to a question asking if you have had an IVA or ever been insolvent. But many lenders won’t care, especially as all your debts were repaid in full. but do go through a broker, not direct to a lender.
Christopher says
Hi there,
I recently returned from living abroad so have started with a credit rating of 0. I have managed to get this up to 178 in a few months and have recently got 3 credit cards with low limits which as of this month have all been paid in full. Realistically if I pay everything off in full every month how long will it be to get my rating up to a good enough level to get a decent car loan or lease? 3 months from now maybe?
Thanks in Advance
Sara (Debt Camel) says
At least 6. Getting three new lots of credit was a mistake, 1 or 2 would have been better.
Naomi says
Hi,
I recently discovered a CCJ (whilst applying for a mortgage) that I had no idea existed. It was for a parking ticket in January 2018 that I didn’t know I had, and all of the letters RE it went to an address I had moved out of a week earlier, so I never got them. I have applied to have the CCJ set aside and have a court hearing in 2 weeks for this. My question is…if I’m successful, how quickly will the CCJ be taken off my credit history? And if I am successful, will this have any kind of negative affect on my score? Thanks
Sara (Debt Camel) says
I don’t know how long it takes to update your credit records. The CCJ should be removed, there is no underlying debt on your credit record so it should go without trace.
You will then have to pay the parking ticket or fight a new court case.
Good luck with the hearing.
Naomi says
Hi,
Thanks for replying so quickly. Presumably the original fine owed will still show on my record until I pay it/fight it?
Sara (Debt Camel) says
I doubt you can see the original fine on your credit record – normally only the CCJ shows. Have you looked?
Naomi says
I haven’t recently – I will. But to be fair I don’t recall seeing it, because otherwise I would have known what the CCJ was for….I had no idea! Do you have any idea how likely it is that the judge will set it aside if I can prove I didn’t live at the address they sent the letters to?
Thanks
Sara (Debt Camel) says
Sorry, I don’t comment on court cases, you can talk to National Debtline on 0808 808 4000 or post on the Legal Beagles forum (https://legalbeagles.info/forums/forum/legal-forums/court-claims-and-issues) if you want.
Lee says
Hi ya
A few years ago I entered a DMP with stepchange you helped me a lot, however my understanding was they would agreed with the creditors a repayment plan. They did this however 5 of the creditors have marked the accounts as default which has massively affected my credit score. I am wondering if there is anyway of having these removed or status changed as I believed they would not be set as default as a repayment plan was agreed. All debts are paid off and cleared now and my plan finished with stepchange in January 2019. But now looking at mortgages but have another 2.5 years until the defaults fall off the report.
Edward goddard says
Hello,
I have recently won a affordability claim against Bamboo loans. In that loan I have defaulted. As I won a claim could I ask that the defaults get removed from my credit rating?
Many Thanks
Edward
David Johnston says
I have had a satisfied ccj on my credit report since October 2014 and it’s due to drop off my report this October will it make much difference in my score once it comes off
Sara (Debt Camel) says
Yes it will! Unless there are a lot of other problems on your credit record there should be a big improvement. Could you come back and say how much it does change?
Phil says
Hello,
I have a default on my credit file, which has affected by credit score possibly by around 300 points.
Is this 300 point deduction for a default final. I had a score where I managed to start doing everything right and my score increased from poor to fair. By the end of the year they took a chunk of points off because of this default, thereby by preventing me from having a fair score instead of poor score. It seemed as if they took 300 points off when the default was added, but took more points off at the end of the year for the same default, effectively hammering me for 100s of points. This happened at the end of every year until about year 3/4. Can the reference agency do this? I have researched and it mentions they can only reduce your score by a set amount, and further late payments or non-payments will not adversely effect the score anymore, and at the same time, paying it off doesn’t improve the score either.
Sara (Debt Camel) says
One default only has one effect on your credit score.
What else was happening on your credit record, were you applying for new credit? Using a lot of your credit card limits?