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.
Do overdrafts count in this calculation?
No, Experian doesn’t include overdrafts. But the amount you are using of your overdraft is counted as part of your total unsecured credit.
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 & 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. Many people are paying over 20% interest to pay monthly, with a few firms charging over 50% so this can be incredibly expensive!
There is also Experian’s Boost facility. 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.
Four 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.
- From summer 2022, BNPL data such as Klarna purchases will start to be shown on some credit reports. However these will be ignored when calculating your credit score. Even when you miss a payment and a lender such as Klarna adds a late fee, this will still not affect your credit score – but as the missed payments will show on your credit record other lenders may decide not to give you credit.
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 (it used to be 700 – it was changed in 2021.)
- 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?
Jack says
I cancelled a contract with o2 before I’d even received the handset, the account defaulted for £14 for 2 months is there anyway I can look to get this removed?
Sara (Debt Camel) says
talk to the Consumer help line abut your right to cancel: https://www.citizensadvice.org.uk/consumer/get-more-help/if-you-need-more-help-about-a-consumer-issue/
P says
Hi I’ve currently got a score of 355 on ClearScore and 688 on Experian I have 3 defaults from 2021 which is technically 2 as one was sold on to a debt collector, I’ve also satisfied one of the defaults. I’ve only had one 2 late payments in the last 3 years but according to Experian my credit score is still on poor. Is there anything I can do to try and improve my score, I’m trying to finance a car but most places are rejecting me for a pcp
Sara (Debt Camel) says
This may be an affordability problem not just a credit history problem…
how large are the debts that you are paying normally?
how much are you trying to borrow?
how large is your income?
P says
Only debts I have is klarna which is max £100 a month
25k is how much the car is
I earn around 2700 every month after tax, my rent is quite low as it’s 430
Sara (Debt Camel) says
how large a deposit do you have?
P says
3k deposit
Sara (Debt Camel) says
There isn’t a quick way to improve a credit score. Not missing any more payments is vital!
Stopping using Klarna will also make your affordability look better.
You can look at affordability complaints against the defaulted debts and the one with the missed payment, see https://debtcamel.co.uk/tag/refunds/ but they can take many months.
But if you need a car quickly, then the most sensible option may be to look for a much cheaper one.
Steve says
Hi, I have noticed that my car finance company have noted “late” payments on Experian, however some months are marked as ok,even though the dates are consistent. On other credit agency’s all payments are OK.
Does the reporting by the creditor need to be consistent across all credit files?
Sara (Debt Camel) says
were any of the payments late?
Steve says
Only late with 7days. Reason for this is that I changed payment date within 15 days of original collection date then changed jobs with a new organisation 24th so I tried to change payment date and they have refused. So all my payments are being late going by rule of the book but only with 7 days as they won’t change date
Sara (Debt Camel) says
well this is a mess.. There must be a possibility if you object now, the reporting to the other credit reference agencies will be marked as late instead.
How long ago did this start? Did you ask if there would be a cost to changing the date?
Steve says
I was not given any option and was told just no. I have raised a complaint by email on the 30th of September and received their auto response but no acknowledgment to my complaint. All other years have been fine and only marked 3 payments late this year on Experian. I have raised a dispute through them for car finance company
Sara (Debt Camel) says
ok if they reject your complaint, send this to the Financial Ombudsman. Say you think the lender is being unreasonable in not making this small change which is having such a major effect on your Experian credit score
Steve says
Ok great thanks Sarah
Si says
Hi Sarah,
So I took out around 30 payday loans between 2019-2022, last one was December 2022. almost all were paid on time as agreed except for 3 whereby I had an “arrangement to pay” plan – nonetheless the loans were paid off within 3 months tops. I haven’t taken out a payday loan since, and my credit file is clean since with a food credit rating.
I’m wondering how much this will affect my ability to get a mortgage? As mentioned I have not missed a payment in the last two years and everything is in order, but I wonder how much those payday loans will come back to haunt me.
Many thanks,
Simon
Sara (Debt Camel) says
do the arrangements to pay show on your credit record?
how many lenders did you borrow from? have you looked at affordability complaints about the loans? Although they shouldnt, some lender offer a low refund but say they will delete the records from the credit reports. (NB dont ask for that – make a “normal” complaint asking for a refund)
Sam says
Hello, I hope I’m on the right page to ask this.
I have quite a few debts, which are all in £10 payment plans pcm, with the likes of Moorcroft, BPO etc. I have recently got a new job and I have a few questions…
1) Should I start saving up and settle these or just leave them in payment plans for the next 5-10 years?
2) As I’m paying them monthly, will my defaults drop off after 6 years even if I’m still paying them after 6 years?
3) My goal was to get a job, save up money for 6 years and then as the defaults start dropping off, I was hoping to have a bit of money put aside (through saving for 6 years) to rent my own place. I thought this was a good plan but maybe a better plan would be to settle them all over the next two years, be completely debt free and then save AFTER that for 4 years?
It’s hard to explain, but I hope you understand and can slightly point me in the right direction.
Thanks.
Sara (Debt Camel) says
1) Starting to save and then making a lower settlement offer is often a good plan. Don’t start paying more to these debts until you have a good emergency fund saved, you don’t want to go back to having to borrow again
2) are there default dates record on your credit reports for these debts? Check this – don’t just assume as the answer is very different if there is a default date or if there isnt
3) are you living at home at the moment?
Sam says
1) Thank you, I’ll take that advice onboard.
2) Yes, there are default dates
3) Yes, I’m in the fortunate position where I don’t have to leave home, ever, if I don’t want too. Obviously, I’m going too but I was going to wait for a good 5-10 more years whilst I was saving up and just fixing my CR
Sara (Debt Camel) says
So when there is a default date, the debt will drop off 6 years after that default date, even if you are still paying them. It will still be very hard to get a mortgage when you are paying these old debts, but your credit record will look clean.
Andrew says
Hi, Checkmyfile is currently showing a score of 613. I have 6 historic defaults on my file, one should have dropped off in December 2024 but is still showing, 4 are reported until March 2025 and the final one is reported until September 2025. Once those 6 defaults have all dropped off do you think I might go up to 700 (which is a Good score)? For making a mortgage applications is it best to wait until the final default has dropped off in September?
Otherwise I don’t have any missed payments, credit card utilisation is at 40% (need to get that down a bit further) and I have circa £3k loan.
Thank you
Sara (Debt Camel) says
I suggest you look at the statutory reports from the individual credit references agencies to get a clear picture. See https://debtcamel.co.uk/best-way-to-check-credit-score/ which has the three links to use. And if you are paying Checkmyfile, stop!
These historic defaults, how long ago were the debts settled?
Labels like “good” on a credit score are largely irrelevant for a mortgage application, it is the details of your history that matter
Andrew says
Sorry, got addicted to check checkmyfile!
The defaults were settled in May/August 2023.
Thanks!
Sara (Debt Camel) says
Do you have any problems – missed payments or payment arrangements – showing since August 23?
how large is your deposit?
Andrew says
My last missed payment and/or arrangement to pay was in May 2022.
Our deposit is 10- 15%.
Thanks!
Sara (Debt Camel) says
So mortgage lenders typically (and this is very broad generalization, talk to a mortgage broker for more details!) like to see that there haven’t been any problems in the last two years. If the defaults were all settled by August 2023, that suggests an application after that. But with the last default dropping off the next month, you may prefer to wait another month! By which time your loan balance will have dropped and your credit card balances too. It is the amount of the balances that matters most as well as past problems on your credit record and how old they are… not your score specifically
Eliza says
Hi Sara, I have 3 defaults showing- would be 2 (1 was sold to a dc so showing twice). These come off in March and April and are settled.
I have a few credit cards at 40% utilisation, paying off 3k left of a loan and have a monthly income of £3600.
My credit scores are LOW / VPoor. 410 on Experian / 518 on clear score.
What would a rough amount of improvement be done you think May time?
Thank you for your time.
Sara (Debt Camel) says
Can you get the cards down to under 30% by May? That would be a good first step.
Do you have any missed payments or payments arrangements showing?
Eliza says
Yes that would be possible.
I have 2 missed payments showing to British Gas. I wanted to make a separate payment to pay down some of the balance which I was unable to do with my dd in place. I was told I could cancel my dd, make a payment and set up again. I blindly did this- made a payment but didn’t set up again until 19 days later. I am a priority customer and I asked several times via chat messenger whether this would affect my standing before I did it. I wasn’t aware aware of the 14 day process as I’d paid over that months amount, nor was there any other communication around this. Just a notification on clear score that I had negative marks being added. Nightmare really as this was only September.
I am in the process of contacting the FO to see if they can help as BG weren’t very interested. But that is a separate issue unfortunately.
Thanks Sara.
Sara (Debt Camel) says
I don’t think the Financial Ombudsman will look at a case involving arrears on a utility bill.
Eliza says
Ah, okay! Is there any further advice you could give on this as there was no further contact or information and I asked several times over the chat before the missed payment was added.
Who would be best to pursue this with please?
Sara (Debt Camel) says
You can try the energy ombudsman https://www.energyombudsman.org/.
Or the ICO saying that the information recorded on your credit record is inaccurate: https://ico.org.uk/make-a-complaint/data-protection-complaints/
Donald C. says
Hello Sara,
I can really do with you advice at the moment.
I was out of a job in 2023 and the whole corona put me in a bad state. As a result I left England and I missed payments on my credit card and overdraft. This resulted in a default in October 2023. and later the debt was sold off as I was informed. it will remain until 2029.
Now I am back to England and trying to get my affairs in order. The thing is I am selling off my home in Europe and with the proceeds I plan buying over a business and building over now in England.
The total of sum was 7500 and I intend to pay it off when I get paid for my property. I should get about between 100k to 130k. With this I want to get on track buy putting it towards a business.
I know the defaults will make it nearly impossible and i’m wondering if there is anyway I can navigate my way around all this?
With a debt so freshly settled will lenders even consider a part loan alongside my own funds to procure a business?
Any chance I can get any type of loan to compliment my funds to buy a business since I have a very bad credit I suppose and just about to settle the defaults?
Is there anything I can do to improve mu circumstance since I still have 4 years to wait?
If I have to wait before taking any actions, what is the recommended time do you advice?
I don’t have any credit cards currently, can I get a secured one of any amount to build my credit?
Sara (Debt Camel) says
I can’t advise on your chance of getting business finance.
With a default you haven.t been making any payments to and no job, you may not be able to get a “credit builder” card. Ones with a tiny li it of under £250 don’t help your credit score. And even if you got a card with a larger limit and managed it beautifully (that means using it for less than a third of the limit each month and repaying it in full every month) I( would be suprised if it makes much difference to the chance of anyone lening you a significant amount of money for a business.
JB says
Hey Sara,
Thanks to your advice I’m now 2 years into a DMP, my finances are in a much better place and I’ve had refunds of close to £15,000.
I’m getting to the point where I’m settling some of my debts, so now want to look at repairing my credit score for any complaints which required the lender to remove negative information.
I have had some success where the debt had not been sold on, but my question is does that obligation pass on to whomever the debt is sold to?
ie. Monzo overdraft sold to Link financial – if the link financial payments are defaulted, do they have to remove any negative information once the debt is settled given the complaint was upheld against the original lender and not them?
Sara (Debt Camel) says
Did Monzo agree to remove the default?
JB says
Yes – the original lenders have agreed to remove negative information once the debt is settled.
Sara (Debt Camel) says
Then Link has to do the same
Chris Griffiths says
Hi. I defaulted on a credit card to the tune of £3000 on the 28th May, and will be settling / satisfying it on the 13th June.
How will the speed of satisfying it affect my credit score?
Reason for default was sudden unexpected redundancy and a gap between jobs for a few months.
Sara (Debt Camel) says
It won’t make any difference to your credit score. However other lenders will be able to see that the default was settled very quickly, so they may be more likely to give you credit