How do declined payments affect credit rating?

[Karen7777]

Hi,

I have two bank accounts, one is dedicated to regular payments such as utility bills. The other is for day to day usage. I tend to keep the day to day account on zero balance to avoid fraud but occasionally genuine transactions are declined especially if not charged at the same time of the actual purchase. Usually that happens to me with TfL as I am using contactless.

I am just in the process of buying a flat and I am worried about my credit rating. How bad is it to have declined for my credit rating? Does it matter who was the shop of which the payment was declined?

Thanks,
Karen

Do you mean they are declined or that they make you go overdrawn? Maybe you should keep a token amount in the account to cover those transactions. Have you checked your credit score?

Declined payments make no difference to your credit rating. You have no credit agreement with eg. TfL

It makes sense to keep a token amount I guess. It's just that some of the frauds are for small amounts. For example I once had £15 taken every month from my account after buying a coach ticket online.

Barclays sometimes do let the account get into overdraft but I get a text message and immediately transfer the money required so it is never longer than a day.

I haven't checked my credit score and now I am worried to do so because I read that getting credit report reduces your credit score, and I am worried that for example I am on the lower threshold of a band and one more check will change it to the lower band.

That's a relief thank you. So only direct debit is the problem? Or can I have a credit agreement with a seller just by using my card?

I’m not really sure what you mean... you use an account for day to day spend but you don’t keep any money in there?

Hi you cannot have an agreement just by using a debit card. Declined payments if not going into an overdraft authorised or authorised do not usually affect credit rating. And getting your credit report does not affect credit rating.

Checking your credit score doesn't affect your credit rating as you are just checking the info held about you. If a company credit scored you for a store card or a mortgage then that is different. You checking your own info doesn't affect it. If you are using a card you need to make sure there is money to cover the transaction before you pay for anything.

You sound a bit confused about it all tbh

Exactly, I transfer money before I buy anything, sometimes I transfer money for the day. All using the mobile app. And using cash where possible

Yes, checking your own info does not affect your credit rating. You can use a free credit checking service such as Noddle.
I would advice keeping a buffer in there though. As long as you’re checking your account regularly and could spot any fraud as soon as it occurred.

I have a great credit score (999/999 on Experian) and I check mine through multiple agencies monthly! I got into the habit of it when gearing up to apply for a mortgage.
Although it’s worth pointing out that the score itself is actually meaningless, it’s the information behind it that’s actually important to a lender. All lenders have different criteria.

Thank you so much everyone, I feel much better now that I know it doesn't affect my score and will check my credit rating regularly from now on

Can I point out that you mention you don't keep money in your account because of fraud, this is totally unnecessary! The 'fraud' you mention sounds like you've given your card details to some company for a free trial/offer and they've set up a continuous payment authority on your card. I work in a bank and see this all the time - it's not fraud. If it were a genuine fraud on your card, the bank would refund fully.