Tag Archives: experian james jones

Will voluntary termination of car finance affect my credit score?

Dear James,

I’ve had a car on finance, but it’s not really suitable for my daily use. Will voluntarily terminating my car finance agreement affect my credit score and could it prevent me from getting another car on finance?

Nicola, Port Glasgow

Dear Nicola,

Ending a car finance agreement early using ‘voluntary termination’ is your legal right, as long as you’ve paid at least half of the total amount due and you hand the car back in satisfactory condition. You should then be left owing nothing and the lender should update your credit report to reflect this. The lender may also add a voluntary termination marker to the entry on your credit report which explains to other lenders why the finance was settled early. Your credit score should not be affected, as long as you have paid all of your monthly payments on time up to the point you hand the keys back, so you should not see any late payments registered. Lastly, unless any lender you approach has a policy of not lending to people who’ve opted for a voluntary termination in the past – and I’ve not seen any evidence of this – then it should not affect your chances of securing credit in the future. (January 2016)

You can find archived Ask James questions arranged under subject headings such as ‘applying for credit’, ‘credit and debt’ and ‘fraud’ at the main Ask James page.

Why is my debt relief order still affecting my credit rating?

Dear James,

I had a debt relief order about two years ago and I don’t understand why it is still saying that my credit rating is bad?

Cherie, Paignton

Dear Cherie,

It’s great that you’ve taken steps to regain control of your finances using a debt relief order (DRO). Assuming this is now fully discharged your debts should have been cleared or at least written off, which is a positive step forward for you. Unfortunately, your credit rating is likely to take a little longer to recover as your credit report looks back over the past six years of your borrowing history. But there may be things you can do to improve your credit rating right now.

Start by checking your credit report to make sure the DRO has been updated as ‘discharged’. If it hasn’t then please tell us. You should find that the accounts that were included in your DRO are shown separately on your report, which is quite usual. These accounts are likely to be shown as defaults, as you broke the terms of your agreements. Like the DRO, defaults stay on your report for six years, from the original date of default. Importantly, any defaults should also be marked as satisfied or partially settled so if any aren’t you should contact the relevant lender. If you need help, ask us to raise a query with them on your behalf. Your credit rating is likely to improve in the short term once the DRO and any individual defaults are marked as cleared, and in the medium term as they get older. Some lenders will rate your most recent credit history more highly than events that took place several years ago. However, some lenders may also have a policy whereby they refuse applicants that have a default on their credit report regardless of how old it is and whether it has been paid or not.

Additionally, if the reason for you defaulting was the result of something out of your control – such as losing your job or a serious illness – you might benefit from explaining this on your credit report. Simply send us a statement of up to 200 words describing any relevant circumstances and we’ll add this to your report. Known as a notice of correction, lenders will see this when they check your report in the future and should factor it in to their decision. Please note we can’t add a statement that is frivolous, factually incorrect or defamatory (January 2016)

You can find archived Ask James questions arranged under subject headings such as ‘applying for credit’, ‘credit and debt’ and ‘fraud’ at the main Ask James page.

What is financial association? Watch our new video

To begin the second series of Credit Café videos, on the topic of Money and Relationships, our Experian Experts James Jones and Jill O’Connor explain what financial association means, and the impact it can have on your credit report.

You can see all the Credit Café videos so far here on our YouTube playlist.