How Credit Scores are Calculated

bertieo

rayw wrote: »

So they factor in where you live into your credit score?

I better move!

You can't move. No one will give you a mortgage!

rayw_3

I must say it is news to me that your credit score was influenced by where you live. I can’t say that is fair. You frequently get council estates alongside supposedly comfortable middle class areas. They can share the same postcode. How can the credit agencies determine what demographic profile to give you? This means you could be refused credit because your profile didn’t fit the required social profiling. Does anyone know for sure if this is the case?

jonnyb

Rayw, in answer to your question, as far as I know, (and I do know quote a bit but I'm not officially allowed to say too much due to corporate censorship) - when a lender looks at an indivdual for credit scoring, they do not use demographic data. They have to only use factual data about that individual (and any possibly and financial associates, depending on circumstances).

Demographic data is most often used in marketing campaigns to offer credit to individuals. It might also form part of the "gimmick" credit score that the CRAs sell to those unwitting members of the public who choose to buy it alongside their credit report.

Most lenders are too sophisticated to even consider demographic data, when there is so much more for them to use.

Bill_Badger

I've just had a run in with Halifax over what they classed as a missed payment. In actual fact I had paid off virtually all of my card a few days before my statement arrived, and knowing that I only had a balance of about £70, I had reduced the Standing Order to £20 from £60. What I didn't take into account was that my statement stipulated a minimum of £40 since it was based on the figure calculated before my payment. After a few phone calls, Halifax finally agreed to refund my £12 penalty fee.

What I'm finally getting to is will this 'missed payment' count against me?

I should perhaps point out that I pay all bills regularly by Standing Order and other than a payment to Halifax that was lost in their system about 4 years ago (penalty fee also refunded), I have never failed to pay anyone on time.

rayw_3

I was trying to see what would influence credit scores and I got some answers from The Credit Report FAQ site http://www.creditreportfaq.co.uk
Your missed payment may show on your credit history, but if it is an isolated case it would not appear to be too bad. But if you were worried, the FAQ site says you can add a statement to your own credit report explaining circumstances surrounding an entry on your file. Lenders searching your credit report would then see it in context. It could make you feel better about it.

eggyoke

I have seen my credit report recently and have a similar concern.

Can anyone tell me why my credit score would be low. I have read some of the replies that say lenders will use their own credit score, but I would still like to know why the credit rating agency would give me a low score.

I have been declined for credit and think that this must be a factor.

rayw_3

You say you don’t know why you have a bad credit score. Have you missed payments? What bad data is there on your credit report?

eggyoke

No I never missed any credit card payments. I don't have anything like that so I can't miss payments. No CCJS or anything either.

jonnyb

even if you have not missed any payments, do you have a large amount of credit already, or a large potential amount of credit (existing accounts with low balances but large limits)?

are you on the voters roll, and for how long ?

more than a couple of recent searches ?

Numenor

eggyoke wrote: »

No I never missed any credit card payments. I don't have anything like that so I can't miss payments. No CCJS or anything either.

You don't have anything 'like that'? So, no credit cards, no personal loans, no store cards...?

In that case your score is probably low because there isn't much payment history available to determine how capable of repaying you are. If they can't be sure, they err on the side of caution.