To think this is unfair (credit score)

[lalalalaloo]

I reinsured my car in June, my Experian credit score has gone down 37pts because 'you've opened a new credit account'

I have never had this happen before and I have been insuring my car for years!

Surely this can't be right? I have to insure my car!

And is car insurance classed as a 'credit account'?

I'm going to send an email but it's really pissed me off.

@Fancynancy01 yes in the current climate a default is enough to be refused a mortgage. Even one like yours. However, the relevance of any default decreases over time with years 5-6 being the lowest relevance before it drops off your credit history completely.

Hopefully by the time you renew your mortgage the default will have dropped off and the lenders might start accepting more variations.

@Tunnocks34 thank you so much, I am a worrier and you have really helped. Thank you so much

I a in different scoring bands across all the CRAs. One of them terms me 'excellent', one 'good' and one 'fair'. All of them have the same, accurate information on address, credit accounts, repayment history, electoral roll registration, etc. Credit Karma changes my 'score' constantly, without anything about my credit profile actually changing.

I wouldn't worry about a drop of 37 points in my credit 'score'.

@shouldhavecalleditoatabix my 5 year fixed term ends when the default is 4 years 3 months old, I will just be wanting another fixed term over 2 years

I have a 4 year old default which was paid of soon after defaulting, anyone know if this will affect me when I get another fixed rate with the same lender at the end of the 5 year fixed???

If it is one default in an otherwise good credit history, any impact would be minimal. Have you signed up for somewhere that does credit scoring? There are some good free options out there.

@MintyMabel not necessarily true. I got a default for £40 when I was 25 due to a phone bill on an otherwise impeccable credit history.

My credit was described as poor by all the major credit reference checks and I couldn’t even get a current account with Barclays. Even after 5 years old I couldn’t get a credit card without extortionate interest rates.

@MintyMabel yes I received a statutory credit report from experian and this is the only negative on my report

[quote Youngatheart00]@BarbaraofSeville I disagree with this entirely. My policy costs £700 a year which is a lot to pay in one go, but irrespective of that, there is no charge for credit and so it’s just the premium divided by 12. I don’t see why this should damage a credit score!! It’s very standard??[/quote]
I paid £700 for my annual premium back in March because it was much cheaper to pay it in lump sum. It was over £100 more over the year to pay monthly, definitely not the standard premium divided by 12. I've never seen a quote on the comparison sites where the monthly amount adds up to the same as the annual payment.

Hi- the problem I see is that they have never done this before (I have been with them a number of years) and that I wasn't made aware of it when I rolled my insurance on for another year.

Will absolutely pay it off in full next time- a thought.... my house and life insurance don't do this. I wonder why Esure do?

@dixiedo

I've just checked mine and mine has gone down 50 points. Exact same thing. Ensure insurance services! I've had the same insurance company for years too and always just paid monthly. It's never been on there before.

Oh I'm sorry that's happened to you, but at least you know now!

Hi, I work in the insurance industry. If you look really closely at the documentation, and what you are told in the sales process, you will be told (albeit not very clearly), that your credit score will be used to decide the price for your insurance. Insurers identify a correlation between credit score and insurance claims. As a result if you have a poorer credit score you pay more for your insurance and you might be limited on credit options and pay more for instalments as well This may not be fair, but it is what happens

I would note the check you see from insurers is a "soft check", i.e. it does not impact your credit rating unless you have taken out credit.

I'm afraid that pay monthly car insurance does count as credit. And yes it is a bit odd!

Insurers are also checking that you do live where you say you do, so are not pretending that you live with a relative who lives somewhere with cheaper car insurance rates.

Yes it is a credit account. Your insurance premium is due when the policy is taken out. When you pay by instalments, the insurance company are essentially loaning you the money to pay it x

Does anybody know if paying your road tax (or whatever its official name is) monthly affects your credit?

I think it's annoying enough that insurance attracts interest - I get that it's an annual agreed policy, but it's still irritating that, if you take out a policy to start in January, you cannot possibly claim on the December element of it for another 11 months; however, these are commercial companies looking to make a profit.

I think it's immoral that the government charges you extra, on the same principle, if you can't pay for the whole year in one go, and thus profits from the less well-off. It's all automated and can barely be any extra work for them, plus if you pay on a rolling monthly DD basis, there's less chance of you stopping paying than if you have to renew annually and then make a manual payment.

Granted, you could take out an annual insurance policy in January, write the car off the next day and get a lump-sum payout soon afterwards, which still requires you to honour your annual policy payment; but road tax can only possibly be 'used' proportionately one day at a time. They don't pay you a 5% discount on your annual income tax bill if you've been paying monthly via PAYE.

Am I right in thinking that paying your fuel bills by monthly direct debit isn't credit, it's just a more frequent payment?

And the same applies to water rates and poll tax?

But for insurance (house as well as car) a different mechanism applies, you effectively take out a loan from a third party to pay the insurance in one lump, and repay the loan over the year?

Have just checked and my car insurance isn’t on my credit file. The only ‘bill’ that is is my mobile phone, I’m guessing that’s because the handset element is a quasi loan

Your credit score is only ever seen by YOU. Its an arbitrary number that means nothing.

Your credit HISTORY is what lenders see and use against their own lending criteria.

If you've insured your car with a monthly payment then yes, you have engaged in a credit agreement.

What a shame. I wonder why it has changed this year? I would have paid off in full if I had known, its only 30quid a month.

Im going to ring them and ask to pay it off.

It will come back up soon. It's just few points

My credit was described as poor by all the major credit reference checks and I couldn’t even get a current account with Barclays. Even after 5 years old I couldn’t get a credit card without extortionate interest rates.

I had a default two years ago on my account due to a fuck up at the bank. The only one in 30 years. I got a re-mortgage last year with no problems.

Your credit score is only ever seen by YOU. Its an arbitrary number that means nothing.
Your credit HISTORY is what lenders see and use against their own lending criteria.

Your credit score is based on your credit history. The lenders might not see it, but is far from arbitrary.

That's a positive @MintyMabel

My mortgage is with a specialist lender and for that reason I have just found out you cannot just get abother fixed rate when yours ends and we will need to remortgage with another lender. Hoping a clean file for my partner and 1 old default for me isn't going to be a problem

In the UK "credit scores" promoted by credit reference agencies are indicative only. Lenders use their own criteria, there's no standard 'scoring' used. I would pay little attention to a shift of a few dozen points.

As mentioned, monthly car insurance payments are normally in fact borrowing the money.

(The USA does have a set of standard credit score calculations which almost all lenders there use. The idea of "credit score" has leaked into the UK from the USA, and the agencies are happy to piggyback on that.)