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Late payment affected my credit score

How to improve my credit score?


Every month I get an email from a credit scorer that provides me with a summary of my credit report from Equifax. This normally provides a score out of 700 and an indicator as to how you compare to the average for your age and location.

Up until recently my score was a respectable 570 and compared favourably with people in my age bracket of 25-30 with an average of 330 and with my area average of 360. This was build through years of building up credit with various credit card companies, staying well within my credit limit, never going into my overdraft and always paying off my credit cards in full each month.

It was with this strong credit score that my partner and I were able to borrow the maximum against our gross income (five times the combined gross income), in order to get the mortgage that we needed to afford our home. Having a strong credit rating is the foundation to be able to prosper in a capitalist economy. If you're not deemed credit worthy then you can't borrow, which makes it difficult to invest. You now need to rely on your own capital and your own income entirely to build wealth - this will always be harder than leveraging what you have by borrowing. For example, you would miss the benefits of any property price growth if you had to wait all those years in order to save enough to buy a property outright.

Credit score disaster


My partner and I recently purchased our flat. I have since packed up my bags and moved out of my rented accomodation. As many of us know, one of the irritants of moving out of a property is having to close out all of the accounts and bills. I was in charge of the bills for our flat. One of those that needed to be canelled was the broadband. I phoned the provider (a company called TalkTalk) who informed me that they had cancelled. I asked whether they I could cancel the direct debit from my bank. They said that it should be fine. I proceeded to cancel the direct debit from my end.

A couple of months later I had an answerphone message from TalkTalk asking me to call urgently. When I got through to them they said that my direct debit had bounced and that I still owed my final payment. Without wanting to dwell as to who was at fault I offered to pay the final bill and a £10 penalty charge. "Done and dusted", I thought and merrily went on my way.

Later that month I received my updated credit score. It had plummeted to 310. As you can imagine this was a real shock to the system, particularly as I've always prided myself on keeping a clean credit history. Upon investigation it was revealed that the missed direct debit was the cause.

How to solve a bad credit score


The sensible thing to do is to call up TalkTalk and ask them to correct the mark on my credit history given that I had now paid the direct debit and penalty. However, when I called TalkTalk they had no record of me as a customer - strange! I can only presume they remove people from their systems once they close their accounts.

I did a bit of research online and have now taken the following steps. I have written to Equifax to inform them of the error, I await a response.

In addition, further research has revealed that blemishes on credit reports become insignificant as time goes on. In particular, after 6 months the mark on my credit report will be fairly irrelevant when credit companies review my history. This has given me comfort but for now the fight to repair my history goes on.

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