'How credit ratings work: coming full circle'

This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.
Click reply to discuss below.


  • ThinkingOfLinking
    ThinkingOfLinking Posts: 11,828 Forumite
    First Post Combo Breaker First Anniversary
    Thanks for the article. I don't entirely get it though; I mean when I've been turned down for credit, for example a few months ago I tried to get credit in a musical instruments/equipment store, and was declined, and I was just told to check my credit rating with Experian et al, rather than being given any other specifics. I also know different credit providers have different criteria though, but not still how it works, eg when I used to have cards, MBNA turned me down but Barclaycard didn't. I guess the bare facts never change, but little bits get tweaked (and tightened!!)
  • MSE_Martin
    MSE_Martin Posts: 8,272 Money Saving Expert
    First Post First Anniversary Combo Breaker
    edited 5 May 2009 at 2:06PM
    Im confused by your confusion. You say it correctly "different lenders have different criteria" they're looking for different customers.

    MBNA may be looking for those who will borrow lots and be perpetually in debt, but never default as they're a pure card provider.

    Barclaycard may be looking for customers it can try and flog other services like current accounts or mortgages to and its cheap card is just a loss leader.

    (all theoretical)

    So of course as they're looking for different things, they dont accept the same person.

    It works a bit like this... actuallt this is a good explanation so i may put it in the guide...

    Jane Bank and Sarah Lender are out on the pull. Neither like guys who are overweight, and both are looking for dark hair, dark eyes and good looks. Yet while Jane tends towards guys with stubble, Sarah likes clean shaven. While Jane likes intense men, Sarah values a sense of humour. So while there's lots of guys they both reject without question; and some they both lust after, they can still end up fancying different blokes

    Credit scoring works the same way, while many people are unattractive to almost all lenders, different companies are looking for different things, so a rejection by one doesn't mean a rejection by all. Yet if you're a bad risk most will turn you down (though a few may have a special high rate frission for poor credit histories).

    And sadly for those involved, just as when the guys ask Sarah or Jane why they're not interested - they just say "cos I don't fancy you" and that's about it; we don't always get to know other than "your credit score wasnt high enough". Yet this guide is about making you as attractive credit-wise that is, as you can be.

    Martin Lewis, Money Saving Expert.
    Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.
    Don't miss out on urgent MoneySaving, get my weekly e-mail at www.moneysavingexpert.com/tips.
    Debt-Free Wannabee Official Nerd Club: (Honorary) Members number 000
  • ThinkingOfLinking
    ThinkingOfLinking Posts: 11,828 Forumite
    First Post Combo Breaker First Anniversary
    Thanks for that. I've only applied for credit a couple of times in the last few years; currently working on repairing the rating I have. I've read some of the articles on this on these forums. I do think it would be helpful if lenders (or rather potential lenders) were more transparent in their criteria to stop people wasting time and marking their application/credit history for no reason if there's no chance they'll get accepted. Analogies are easier to understand sometimes with these subjects. :)
  • *MF*
    *MF* Posts: 3,113 Forumite
    First Post First Anniversary Combo Breaker
    So ...

    MBNA - remember to shave!

    Barclaycard - stubble is ok!

    Got it!!

    Sorry ... just couldn't resist.

    If many little people, in many little places, do many little things,
    they can change the face of the world.

    - African proverb -
  • ThinkingOfLinking
    ThinkingOfLinking Posts: 11,828 Forumite
    First Post Combo Breaker First Anniversary
    Haha, I think it's cos at the time I was living with my dad and his gf and they both had them so maybe 3 separate MBNA cards to one address is a no-no but I've been card-free since 2006. :D I tried to get credit in this music store the other month though for some equipment I needed cos it's interest free for a year and I could easily repay it in full by then but c'est la vie.
  • Experian_company_representative
    Experian_company_representative Posts: 2,134 Organisation Representative
    First Anniversary Combo Breaker
    It's also worth asking any lender who refuses an application from you to tell you the principle reason for their decision. They are required to do this under the Banking Code. While a valid reason can be that you failed to get a high enough credit score, other reasons can be more enlightening, such as you having enough debt already or you having an adverse credit history. It's always worth asking, especially as some lenders might not initially be very forthcoming.
    Official Company Representative
    I am an official company representative of Experian. MSE has given permission for me to post in response to queries about the company, so that I can help solve issues. You can see my name on the companies with permission to post list. I am not allowed to tout for business at all. If you believe I am please report it to forumteam@moneysavingexpert.com This does NOT imply any form of approval of my company or its products by MSE"

    Posts by James Jones, Neil Stone, Stuart Storey & Joe Standen
  • naijapower
    naijapower Posts: 1,393 Forumite
    But they dont always tell you. They usually say it wasnt adverse info but you dont meet their criteria.
    How unhelpful?
    So how can you improve and re-apply when they havent told you why it was declined
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