A reader asked:
My credit score isn’t following the rules you described on How much will my credit score change if…?
I cleared a default two months ago and my score hardly changed. And four days ago another default should have gone but I can see it’s still there on ClearScore. What do I have to do? Should I complain to ClearScore?
Trying to sort out a poor credit score can sometimes feel like you are stuck in a maze. You know where you want to get to but some of the paths seem blocked or you go round in circles with nothing getting better.
But for this reader, there are a couple of simple explanations.
Why didn’t repaying a debt increase his score?
Repaying a debt doesn’t change your headline credit score because the credit score calculations don’t pay any attention to whether a debt is settled or not. Many people don’t believe that, but it’s correct. See “Will paying off debt improve my credit rating?” for details.
So the reader can’t get this “corrected” because the system is working the way it is supposed to.
But paying that default was important for two reasons:
- now the debt is repaid, there is no danger of a CCJ. And a CCJ would have harmed his credit score for another six years.
- lenders make their own assessments of your credit record. They don’t use the credit score that shows on ClearScore or any other reports. Many lenders may be prepared to lend to someone who has paid off defaults as that shows they have resolved their financial problems. Even some mortgage lenders may happy if a default has been paid off over a year ago.
Why hasn’t the old default dropped off?
If a debt has a default date on your credit record it will go six years after the default date.
This always happens. Whether the debt has been settled or you are still paying it or you are not making any payments. Whether you have repaid it in full or partially.
But the reader’s debts hasn’t…
The answer here is that it probably has gone already but it is still showing on the ClearScore report because that isn’t up to date.
ClearScore reports are a snapshot of your Equifax credit file but that snapshot can be a few days or weeks old, see What are our services? where ClearScore says:
We get this information from Credit Reference Agencies once a month on your behalf.
So the reader can see an old report. It will get corrected sometime in the next few weeks.
When he gets an up-to-date report, that should have an improvement to his credit score without the defaulted debt. How much it improves will depends on what other problems there are – if there are lots of defaulted debts, the first one going won’t make a big difference.
If you are in this situation and you don’t want to wait, look at the table in The best free ways to check your credit score for the options which says they are updated daily. In this case the Equifax Statutory Report is free and it is updated daily. That will prove the defaulted debt has disappeared.
How can you improve your credit score faster?
This depends on what the problems are on your credit record.
If they are defaults or missed payments, then the problems will improve with time as they get older and then drop off your credit record. There often isn’t much you can do to speed this up unless you think a default is unfair and you can get it removed. See Can I get a default deleted? which looks at the situation where this will work and those where it won’t.
If your main problem is that your credit card and overdraft debts are too large then this can take a long while to resolve. Stopping spending on the cards and paying more than the minimum every month will work but it takes time. For overdrafts, many people find they have to get a new bank account and then treat the old overdraft as a debt to repay.
Will a credit builder card help? That depends on why your credit record is poor:
- if there are lots of defaults and missed payments, getting a new credit card isn’t going outweigh the old problems. Until they drop off your credit score will never get to be good.
- if there is very little on your credit record then a credit builder card can help. This could be because you have never had much credit in the past. Or because you had problems but they have now all vanished.
- see Will a credit card improve my score? What’s the best way to use it? for details about these cards, which can be dangerous.
Who do you complain to about a problem with a debt on your credit record?
So the reader doesn’t have to complain. But if he did, who should he talk to? In most cases, the answer is the lender.
Experian, Equifax and CallCredit – the three Credit Reference Agencies – just report the data they are given. If you complain to a CRA they will just ask the lender, who will probably tell the CRA it is correct, the CRA will tell you that and you have just wasted 4-6 weeks.
So skip the middle man and get it sorted by going directly to the lender.
If the lender has disappeared as they went under a while ago, or if the lender is currently in administration and won’t talk to you, you should complain the CRA. Explain your problem – perhaps you had repaid the debt, perhaps the default date should have been a long while, perhaps the lender agreed the loan was unaffordable wand was supposed to remove the default but hasn’t, whatever… Then say why you can’t get an answer from the lender so tell the CRA you want them to “suppress” your credit record as it is incorrect and misleading.