How much will my credit rating go up or down? That is a very common question. But it’s often tricky to answer!
This article has 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 after six years, your score won’t improve as much because there are still two remaining.
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. Lenders don’t actually use the calculated credit scores! So I’ve added some notes about how lenders tend to think about these situations.
Contents
How balances & credit utilisation affects your credit score
“Credit utilisation” shows how much of the credit limit that you are using at the moment. 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 are from 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.
Does overdraft utilisation matter?
Experian doesn’t factor this into its calculations. Some lenders may… But this is a number which for many people goes up and down a lot every month, so a snapshot at any point in time may not be that interesting.
The effect of missed payments, defaults & 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 many CCJs, there will already be a debt with a default on your record, in this case a CCJ then increases the harm to your credit record, but not by as much as 250 points.)
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 – a CCJ is deleted completely if you pay it in CCJ in full within a month of the judgment.)
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 installments. 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!
There is also Experian’s Boost facility, which started in 2020. That can add up to 66 points to your Experian Credit Score – but it isn’t clear how many lenders will actually use this new Boost data.
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 1000 {but confusingly Clearscore, which reports on Equifax’s data and score, still uses Equifax’s old way of calculating which has a maximum of 700)
- TransUnion’s maximum score is 710.
So a change to your score for any particular factor is going to be smaller on TransUnion than Experian. And a 500 score on Equifax is poor but it’s good if you are looking at a Clearscore report!
The major lenders like the big banks report to all three credit reference agencies. But smaller lenders 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 should 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
How to use a credit builder card
What should the default date be?
NICO says
Hi Sara – I recently won a claim against Capital 1, part of the settlement was that all negative credit marks would be removed. Seems Capital 1 have just removed the whole account. Is this what should happen please or should the account remain and it just look like I have paid on time throughout the account being active? I had a default on this account but that seems to have lessened the score and now its gone (with the whole account) my score seems to have hardly changed? Any thoughts please?
NICO
Sara (Debt Camel) says
Do you have other defaults or problems on your credit score?
NICO says
Hi – no other defaults, just 3 or 4 late payments. Do you think the credit card from C1 should be there and be 100% perfect or removed completely pls? Thanks
Sara (Debt Camel) says
so what is your credit score now and what report are you looking at?
NICO says
Clear – 224 – no rise yet but hoping this weeks update may reflect the DEFAULT removal
Credit Karma – 410 – no rise yet but hoping this weeks update may reflect the DEFAULT removal
Experian – 597 – did go up 389 this week.
Thanks
NICO
Sara (Debt Camel) says
So that is a major change in your Experian account. I would expect an improvement to the other two if the Cap One default showed on them all. There is obviously some difference between your ClearScore and Credit KArma accounts, so some problems aren’t showing on the CK report.
FOS normally says negative marks should be removed, but if a lender wants to do that by deleing the record, then that is fine.
Robert Carrick says
Hi Sara,
I hope all is well with you.
I have just received a letter to say that I’ll be registered on the Electoral Roll on 1st Dec. But this will now won’t be reflected on my credit file until prob Jan 2022 I think. I have just started building my footprint in the UK as I’m from Ireland and am now on CRA’s (since this week with a Bank Account). But as can imagine my scores are not that high and being on the electoral roll would boost this. Do you know of any way I can expedite the process by doing or contacting anyone? Thanks again for help!
Sara (Debt Camel) says
Most councils have 2 or 3 months in Sept-December in which they don’t update the Electoral Roll.
This is a weird anomaly but I am afraid there is no way you can speed this up.
Robert Carrick says
Thanks again Sara – you’re so helpful !!!
Do mortgage lenders such as NatWest etc generally give mortgages to first time buyers (I’m Irish and only just 1 month on Credit file) without being on the Electoral roll on the CRA’s?? I have the success letter from council to prove I’ve been accepted but not on it till 1st Dec. My partner (English) and I have 15% deposit and over 100K combined income but struggling to even get an AIP. Any advice would be super.
Cheers!
Sara (Debt Camel) says
I suggest you need to talk to a good broker.
Jimmy says
Hi Sara,
Sorry if I’ve missed this in the previous threads but I have a question around defaults.
I have 1 default that is due to come off in 2 weeks (so the 30th of September 2021). I have no other defaults.
I do have a CCJ that has been satisfied (was for 1000£) which is 2years and 10 months old at the time of writing. I know this has a negative effect which will lessen over time.
With my default coming off soon do you have an idea of how much points I will gain ( or not ) with Experian once the default is removed ?
I know I can get the answer in 2 weeks shortly after it is removed but would prefer to know earlier so I can financially plan :) any advice would be appreciated.
Many thanks
Sara (Debt Camel) says
That depends a lot on the rest of your credit record. Do you have other payments arrangements or missed payments showing? A high credit utilisation? No active credit at all? Etc
Jimmy says
Hi Sara,
Sorry I didn’t get a notification for your reply but thanks for your speedy response!
I have had a amazing turn our around since the default has fallen off. From 600 to now 890. Although the its not all about chasing scores its allows me to see im gradually getting better rates.
I now have NO defaults or any other markers aside from a CCJ which is now 36 months old. Still a pain in the back side but at least some high street banks are considering me!
Thanking you for your time!
Elle says
Hi everyone, I’ve just had the adjudicator agree with me for an account that includes my one and only default (I have no other negative markers) Thanks to this site, I have cleared nearly all of my debts, and have a 6k refund due from 118 – which will clear my final loan- final loan is and has always been in good standing I’m only paying it off so I’m debt free as seems sensible even tho it causes no problems. I have no credit cards, no overdraft, no car finance, no credit lines, nothing! I am ECSTATIC it has taken me YEARS to get to this point so thankful to Sara.
My credit score on Experian is currently 585 which I am assuming is because of the default -any idea how much can I expect the credit score to increase after the default is removed please? And considering all the above do people think I may be able to get a mortgage next year? Thank you so so so much
Sara (Debt Camel) says
How old is the default?
Your chance of a mortgage will depend mainly on your deposit and the affordability if there are no negative marks on your credit record. But it is good to have some active accounts… the final loan, how large is the balance, what are you paying each month and what is the interest rate on it?
Elle says
Thanks for your quick response Sara
Default is from 2018
Re a mortgage it’s less about what I’ll get as that will obviously depend on deposit size etc my query was more do I have a chance of being approved for one now that I have no negative markers as before this I was thinking I didn’t stand a chance with the default :( hoping credit score is going to improve a lot after this goes!
Current Loan 4K left, always been in good standing and will continue to be, £150 a month but I’m paying it off when I get my refund I don’t want anymore debts. 46.87% apr
Thanks again
Sara (Debt Camel) says
So at a guess if this is your only negative point showing your score may go up c 200-250 points.
That’s a very expensive loan – it will save you interest by paying it off now.
But it is, regrettably, good to have some open credit when you apply for a mortgage/ You can probably get a credit builder card now, see https://debtcamel.co.uk/credit-builder-cards/. Use it once a month for something small ; less than a 25% of your credit limit – and set it up to repay by direct debit in full every month, so you never get charged interest.
Lee H says
Hi, I had two defaults and a DRO which were added to my credit file on 9th November 2015. Is a DRO similar to a CCJ in how it impacts your credit score? I was expecting to see a big increase in my credit score today, but it has increased by only 50 points. How soon should I expect to see a bigger impact on my score?
Sara (Debt Camel) says
Does the new report show that the defaulted debts have dropped off? That the DRO is no longer there/
Lee H says
Thanks for the super quick reply. The DRO is still on my credit report for today on Experian and Clear Score. Even with that small increase on my Experian score it has only brought it up to 379.
I have no other missed payments, defaults or derogatory marks on my score. I do have 3 credit cards with a low credit limit and am using 71% of my available credit limit? I understand this may hurt my score a bit. But I didn’t think it would be this low. I have also had two hard searches since May 2021.
Sara (Debt Camel) says
Well I suggest waiting a couple of days. Then also check the Insolvency Register has been correctly updates, see https://debtcamel.co.uk/end-dro/
Using a 71% of low limit credit records is not good – can you stop using them and over pay them a bit for a few months?
Lee H says
Will do. Thank you very much.
Would you suggest once they have been paid off to close those accounts?
Sara (Debt Camel) says
How large are the limits?
Lee H says
So I have 2 at £250 and 1 at £400. I also have one at £2500
Sara (Debt Camel) says
I would be inclined to close the two small ones once they are clear. You don’t need more than a couple of accounts to help your credit score.