credit scores

[Haggisman]

I had massive problems with my Bank previously because of duff information held by them and 1 credit agency relating to my electoral register position and houses owned. So to my point, it does not mean bugger all, it has an impact.

Wrong. It's not your score that has an impact, it's the information which Experian (or whichever agency) use to make up that score.

Every lender will use a different calculation on that information to make up their own "score", based on the criteria which that particular lender feel is important.

So using the exact same information as in your Experian credit report, lender A may give you a "score" of 2/10, while lender B gives you a "score" of 9/10.

It doesn't matter what "score" Experian give you, because they aren't the ones deciding whether to lend you money.

Obviously if the information in your credit report is incorrect, it will affect your score, but it depends on the lender as to how.

 

[Housey]

Wrong. It's not your score that has an impact, it's the information which Experian (or whichever agency) use to make up that score.

Every lender will use a different calculation on that information to make up their own "score", based on the criteria which that particular lender feel is important.

So using the exact same information as in your Experian credit report, lender A may give you a "score" of 2/10, while lender B gives you a "score" of 9/10.

It doesn't matter what "score" Experian give you, because they aren't the ones deciding whether to lend you money.

Obviously if the information in your credit report is incorrect, it will affect your score, but it depends on the lender as to how.

You are actually agreeing with me...

 

[Haggisman]

You are actually agreeing with me...

You're saying that your Experian score means something - it doesn't (except to Experian).

What's important is the information that goes to make that score, but without knowing the criteria that a particular lender uses, it's still pretty useless other than to keep an eye on to make sure the information is correct and that no one is taking out accounts in your name.

 

[Housey]

You're saying that your Experian score means something - it doesn't (except to Experian).

What's important is the information that goes to make that score, but without knowing the criteria that a particular lender uses, it's still pretty useless other than to keep an eye on to make sure the information is correct and that no one is taking out accounts in your name.

But the score is based on a set of metrics held by the credit agency. The different lenders will then weight those to determine what is important to them. If you have a crap score it is likely that most of the metrics are crap too, though Vanquis will view them differently to an Amex Black application. If there was zero relevance in the score wrong data would have no impact. I am well aware that people love to run into these threads and tell you your score has no relevance, but that is not true no matter how much you protest. It is an indicator and to my point above you should be aware of it because if data is wrong it can impact your ability to obtain credit as perhaps the OP is seeing.

As I said previously I am being very clear here that it is purely 1 metric and the score will be read differently by different lenders, but to suggest it's worthless is wrong.

 

[Haggisman]

But the score is based on a set of metrics held by the credit agency. The different lenders will then weight those to determine what is important to them. If you have a crap score it is likely that most of the metrics are crap too, though Vanquis will view them differently to an Amex Black application. If there was zero relevance in the score wrong data would have no impact. I am well aware that people love to run into these threads and tell you your score has no relevance, but that is not true no matter how much you protest. It is an indicator and to my point above you should be aware of it because if data is wrong it can impact your ability to obtain credit as perhaps the OP is seeing.

As I said previously I am being very clear here that it is purely 1 metric and the score will be read differently by different lenders, but to suggest it's worthless is wrong.

The score isn't "read" by the lenders, so it is worthless. Yes it's an indicator of generally how healthy your credit profile is, but it doesn't give any information that can actually be used for anything.

You could in theory have 2 people with the same score, but completely different profiles, meaning a lender which accepts one wouldn't necessarily accept the other.

It's the information which makes up the score which is important, not the score itself, otherwise it would be as simple as saying "well you have a score between X-Y so you'll get accepted by lenders A, B & C"

 

[Werewolf]

I paste this here purely because it was the first site that came up when I asked which lenders use which credit agencies.

http://www.moneysavingexpert.com/credit-cards/credit-reference

It's interesting that different types of lender seem to prefer one of the agencies over the others, for example only a few card companies, one Mortgage provider and no car finance companies in that list use Call Credit, whilst most of the banks/card companies use Experian.

 

[Housey]

As I said previously I am being very clear here that it is purely 1 metric and the score will be read differently by different lenders...

I made a point in a previous thread about owning your credit score. This was not about worrying to much about what it was, but more about ensuring the data is accurate..

Whilst a bad credit score does not mean no credit, you can be stopped and will be stopped by many lenders if your risk profile is bad and your score forms part of that. Some companies elevate it, some don't, but let's stop with the 'credit score means bugger all' because that is false.

The score isn't "read" by the lenders, so it is worthless. Yes it's an indicator of generally how healthy your credit profile is, but it doesn't give any information that can actually be used for anything.

So it's useless....but it gives you an indicator of how healthy your score is. There is value in the latter surely? Stop focusing on the fact the score isn't a metric used by a lender, that isn't what I am arguing with. You are telling me the score is irrelevant and this isn't the case to many people, it gives them an indicator of their overall state. Now THAT wont help them or tell them if they will/wont get credit, for all the reasons mentioned above, but if it's low and should be high it can highlight something is wrong that needs checking because you know what, it's all metrics and if the wrong bit is an important metric to the person lending, you will struggle. THAT is my point.

 

[Housey]

It's interesting that different types of lender seem to prefer one of the agencies over the others, for example only a few card companies, one Mortgage provider and no car finance companies in that list use Call Credit, whilst most of the banks/card companies use Experian.

It's just a commercial deal around software, services, look up rates etc etc

 

[Haggisman]

Well, I was responding to the statement that:

"let's stop with the 'credit score means bugger all' because that is false."

[...] but if it's low and should be high it can highlight something is wrong that needs checking [...]

It's such a vague indicator that it doesn't really highlight anything. A quick glance at your score isn't going to show any discrepancies, and in fact could be detrimental, as if it looks "about right", then you aren't going to bother actually checking the information in your report. The score doesn't tell you anything that you couldn't see by looking at the actual information.

 

[Housey]

Well, I was responding to the statement that:

"let's stop with the 'credit score means bugger all' because that is false."



It's such a vague indicator that it doesn't really highlight anything. A quick glance at your score isn't going to show any discrepancies, and in fact could be detrimental, as if it looks "about right", then you aren't going to bother actually checking the information in your report. The score doesn't tell you anything that you couldn't see by looking at the actual information.

But it does highlight stuff, as I said and evidenced. The rest is you trying to say it tells you nothing, which we can agree to disagree on.

 

[PMKeates]

I think it's pretty patent that any 'credit score' generated by the reference agencies for consumers will have some basis in fact. These agencies don't live in bubbles and work day-to-day with lenders, so will have a good idea of what they are interested in and what will have a detrimental effect on your access to preferential credit lines. It won't be the exact match to every lender's scoring but it will give you a start. Saying it's worthless because Aqua want people with ropey credit histories is missing the point.

 

[Housey]

I think it's pretty patent that any 'credit score' generated by the reference agencies for consumers will have some basis in fact. These agencies don't live in bubbles and work day-to-day with lenders, so will have a good idea of what they are interested in and what will have a detrimental effect on your access to preferential credit lines. It won't be the exact match to every lender's scoring but it will give you a start. Saying it's worthless because Aqua want people with ropey credit histories is missing the point.

Exactly.

 

[muon]

I think it's pretty patent that any 'credit score' generated by the reference agencies for consumers will have some basis in fact. These agencies don't live in bubbles and work day-to-day with lenders, so will have a good idea of what they are interested in and what will have a detrimental effect on your access to preferential credit lines. It won't be the exact match to every lender's scoring but it will give you a start. Saying it's worthless because Aqua want people with ropey credit histories is missing the point.

Yep. The thread is laughable.

Basically MSE or someone has highlighted that the CRA scores aren't exactly the same as what every financial company uses and somehow the internet has used that to mean they are useless and it keeps getting peddled on internet forums.

Barclays will for example know that X types of people with X1 and X2 credit histories end up defaulting Y1 and Y2 amounts. They can attempt to build a model of that for the many permutations.

The CRAs can do this for all companies. They have that exact same information from Barclays, but also HSBC, Natwest etc. They all upload that information to the CRA databases!

What these people will be surprised to hear is that the CRAs actually produce the best credit scores as they have the most information. Companies, know this and so don't inherently dismiss the CRA scores.

Smaller companies or companies that don't wish to invest heavily in analytics will in fact use these off the shelf scores.

The issue arises in that not all financial companies are looking for exactly the same things, and so any one size fits all score doesn't work. Certain factors may be weighted differently according to the needs of the company. Companies also have other information available to them that they don't necessarily reveal to CRAs (or CRAs aren't allowed to reveal to other companies).

This is where additional information can help and they have analytics teams to decide what is best for the company. Will it be massively different to the CRA scores? It will actually be very strongly correlated.

 

[fez]

I did the same as the OP, signed up to noddle to get an update on my credit rating as its been about a year since I used experian. My score on noddle was pretty rubbish while experian rated me very highly. I didn't bother going any further because noddle make you pay to actually see what is effecting your score and I felt like their "free" credit rating was a lie to sucker you into paying for it.

Either way, as others have said, each company takes different things into account so it's hard to know why you might be rejected. Also, having available credit is usually considered a good thing unless you abuse it.

 

[DR_Pingu]

The very fact i'm not using my available credit shows i am well in control of my finances. My only debt is my car which isn't exactly stretching me. Far from it infact.

Perhaps it's to do with the fact that Credit Score is based upon your ability to pay back Credit, instead of having access to it yet not using it.

Retarded logic I know, but I'm not the one who comes up with how it's scored. I don't have an overdraft or anywhere near the apparent financial responsibilities that you do, and most likely am on a fair bit less than yourself (being an Apprentice, after all), but being in the same position - well in control of my finances and Credit (a few hundred quid on one of my cards, the others I cleared a long time ago) - also driving a BMW - my Credit Score is pretty well off, so I imagine. I go purely off the basis I've never been rejected a credit card, phone contract, loan (I only looked at loans as they were a cheaper option to finance for my car, plus I didn't want my car not being marked up on a HPI check as having outstanding finance on it), always paid bills on time, have a standing order (money into savings every month) and have other regular outgoings. As far as I'm aware, those are generally the things the companies look for which is why I imagine my Score would be pretty high.

 

[Glaucus]

How's it retarded?
Having a lot of available credit is generally bad as you could just use it all and then have large repayments.

Small amount if unused credit is generally positive. Not large amounts.

 

[DR_Pingu]

How's it retarded?
Having a lot of available credit is generally bad as you could just use it all and then have large repayments.

Small amount if unused credit is generally positive. Not large amounts.

Sorry, retarded in the sense that you have to 'borrow' money to boost your rating, instead of say having absolutely no finance (on a car I mean), no credit cards, no overdraft, basically access to absolutely NO credit at all only supporting yourself off your own back which can actually be at detriment to your credit score. <--- That's what I meant when I said the logic is retarded. I don't disagree with the part in saying that because he has access to what could be seen as a concerning amount could provide a negative impact on his 'assessment' in particular.

Hope that's cleared up

It's a little bit like how (generalising) mortgage lenders don't take into account payments for rent should you be looking to finally do the smart thing and just get a mortgage.

 

[rojones]

I paste this here purely because it was the first site that came up when I asked which lenders use which credit agencies.

http://www.moneysavingexpert.com/credit-cards/credit-reference

That's a very insightful link. Cheers.

 

[Glaucus]

That's still not retarded. It's sensible.
With out a history they have nothing to gauge.
Just like your first employer takes a risk as you have no experience or reference.

 

[DR_Pingu]

That's still not retarded. It's sensible.
With out a history they have nothing to gauge.
Just like your first employer takes a risk as you have no experience or reference.

You're really not understanding what I'm saying. *sigh* at text being the worst way to communicate with people when trying to help them understand a point, regardless of how simple it seems to 'yourself'.

Put lightly, I had never taken any credit before I looked at a loan with [bank]. I had no arranged overdraft, my standing order, and they knew my wage (again, refer to apprentice, imagine it's not a great wage but better than most apprentices) - The consultant said there's a 99.9% chance you'd be accepted. That's been the same case with the 3 credit cards I applied for and got; 2 in person, 1 (most recently) online which uses automation which is then accepted by a person. My first credit card had a limit of £4000 on it. To put things into perspective, my friend of a year younger, on the same wage as me on his first credit card had a limit of £500.

In my opinion, there needs to be one measureable standard, then companies can set their own limits. Might not benefit some people, but when did anything ever benefit everyone? I understand why most companies nowadays are edgy, with great thanks to plenty of 'adults', young and old, who are ****ing clueless when it comes to managing finances, instead constantly borrowing with no idea what they're even doing. Morons in my eyes.