I have been informed by Fairfinance that if I was to pay off, a loan with them early it would show as settled on my credit report would this impact my credit score.
The early repayment, is the full cost of the loan anyways + interest rebate so should that not just show as a closed account? as a settled account is paying less than the agreed amount?
Fairfinance said to contact Experian, and equifax and both have told me it would impact my credit score.
Should, I just leave the monthly payments run until December of this year, or pay it off in full but as fairfinance said it would show as settled.?
I have no definitive knowledge of this area, but taking what youāve said, if you agreed a 1 year loan of Ā£1000 to be repaid over a year with interest so at the end you paid them Ā£1200, they are expecting Ā£1200. If you repay early and repay Ā£1000 plus just Ā£150 interest as youāre repaying early, youāre paying less than the Ā£1200 they expected. Is this what they are saying? Because of paying less interest it isnāt the full amount so it would be settled not repaid in full?
This is the response, I had for the early repayment figure.
The payment you need to make to settle the loan is Ā£566.78, rebate of Ā£179.86 would be then applied to close loan.
Kind regards
Payments Team
I have checked the online, portal and the two figures added together is the current amount of the loan.
My understanding is if you pay something off in full to the agreed amount it should show as closed not settled?
I will be honest I have like five credit cards and the worst credit score, canāt get it above 600 , Equifax is like 103 currently, Call Credit 583 and Experian 600.
I donāt want to negative impact my credit score, but when I rang up Fairfinance I was told it show as settled and not closed.
I ended my Vodafone contact at Ā£450 last week, and that is also due to drop off my credit report after being opened since 2019.
I donāt want to cause a negative impact to my credit score, as when ever I have in the past it takes ages to rebuild the score.
I have zero late payment markers nor, defaults on my credit report.
Future, note five credit cards was just to build credit I plan on removing them they have a balance under Ā£20 on each but I also fear that will down my credit score.
EE was added to my credit report, and that took it down by 13 points, on a sim only contract.
With regards to your credit report, a closed account and a settled account are the same thing. The options lenders have to report your account to the credit bureau are: up to date, 1, 2, 3, 4, 5 or 6 payment in arrears, settled, defaulted, query, unclassified, in an arrangement or reposition.
Settling a loan will impact your credit file, in the exact same way anything can impact your credit file - some lenders may see it as a negative, others will see it as a positive, itās impossible to tell for sure but in general settling a loan will be a positive thing. The main reason for this is that your credit history isnāt the only component of deciding whether to lend to a customer or not, affordability is also a consideration and while you have an outstanding loan your monthly affordability will be reduced by whatever your monthly repayment amount is, meaning other lenders are less likely to lend to you for affordability reasons, not credit reasons.
I canāt give financial advice but Iād say you shouldnāt really care about how this will impact your credit file - think about what you can afford and what will put you in the best financial position going forward - if you can afford to settle the loan and save Ā£180 in interest then thatās great!
This goes for anything credit wise - as long as you donāt miss lots of payments then you really donāt need to worry that much about your credit file and you should always do whats best for you, not your credit file
It would be perfectly fine then to pay it off, and then get ride of some credit cards even though the score would dip? it would have no real negative impact and recover?
My credit report is sulking because I donāt have a mortgage and I donāt have Ā£15,000 available in credit. I donāt want either of those things
The things that seem to be important to the credit reference agencies seems to be the age of the account. If you keep cards open that youāve had a while open it looks better
But it depends on if you think youāll need credit soon. Iāll worry when Iām at the stage I want a mortgage. Until then Iāll just not miss payments
What usually happens is you āsettleā the loan --the loan basically being a bank account with its own sort code and account numberā¦but with a negative balance. Once it is back to Ā£0 they usually close the account within 24 hours, cancel any direct debits that are set up on it and sometimes theyāll send you a nice letter to say the account is now closed.
If it was me Iād settle the loan sooner rather than later and perhaps close all but the oldest credit card --credit length is a factor, as is credit utilisation, but 5 credit cards from a personal perspective just sounds like an ordeal.
I settled my loan a year early at the beginning of last year and it had a positive impact on my credit score. I donāt remember by how much though, but it was a sizeable chunk.
Defo fake, it is actually what is in the report itself that matters
Missed payments, number of applications, who and when, time between applications
Amount of credit you currently hold, whether in credit cards or loans, mortgage etc
How old you are, possibly other people linked to you as in your house, family members
How long you have been at your current address, if you keep moving house
Whether you are on the electoral roll, this is important, helps if you are, proves to them who you are etc
In some reports, I have a score of 969 out of 999, now when you consider that I can not work due to health issues, that I have managed to keep my repayments up. Credit card use low etc, I should be able to open a bank account etc no probs right? Nope, current account, no overdraft, but happy to give me a credit card with a decentish limitā¦ makes you wonder how they make their decisionsā¦
Home improvements? If they are āimprovementsā, Iād wait until I had the cash to spare (as in, not every last penny) and pay it with a credit card and clear it within the same month.
If they are urgent repairs like to the boiler, electricity or roof, the 0% card would be what Iād do if you think you can clear it in the timescale. Otherwise a loan from a bank at 3-4% would be my next option.
I wouldnāt want to go into debt for home improvements, but then Iām. pretty allergic to debt these days. If the bathtub had found its way into the lounge, then ok, fair enough!
Would you not be able to get a credit card with a 0% cash advance or 0% cash interest for 12 months and just use Wise to transfer the money to your bank account?
You have to of course pay the wise fee / transfer wise fee.
