Credit scores from Experian, Equifax, Noddle etc - DO NOT READ MUCH INTO THESE

The_Boss

Hi all,

Starting this which can hopefully be made a sticky and the original post edited as more data is added.

For people purchasing their 'credit score' from the likes of Experian, Equifax and Noddle - please do not pay extra for this. Reviewing your credit file is sufficient for you to see if you need to take action that will make you more credit worthy in the eyes of lenders.

The Experian, Equifax and Noddle scores are not at all accurate because...


1) Lenders do not use Experian, Equifax and Noddle scores. Each lender has different criteria that they use to determine whether they accept new customers and they use data from your credit file to do so. The criteria will also determine your credit limit or interest rate
2) They do not take into account your salary
3) They do not take into account your time with current employer
4) The 'scores' are just a vague indication and not worth the money you pay for them because different lenders will assess you in different ways. Credit reports however are extremely useful.

What you can do to improve how lenders perceive you

1) Always keep within your credit limit
2) Always pay at least the minimum by the due date (direct debit is best for this)
3) Try to pay a bit more than the minimum to avoid a 'minimum payment' marker on your account's file
4) Try to avoid using more than 50% of the available credit on your cards
5) If you want to close cards, keep them for at least a year and ideally close newer accounts before older accounts. Older accounts show stability.
6) Do not apply for cards/loans more than 3 times in each six month period
7) If your combined credit limits are > 75% of your salary then lenders tend not to want to provide further credit. This threshold varies from lender to lender

Please post other things we can add. This is off the top of my head and I'm sure there are things that I have forgotten or may need to be amended.

JohalaReewi

There are a number of threads on MSE where people with obviously adverse credit data (like CCJs and bankruptcies) still get high scores from CRAs.

aimingforadebtfreelife

Credit scores are useless.

Coming from a banking background the best time to say apply for a loan was the start of the month. At the start of the month the bank has set aside £xxxxx to lend out. If say mid month there are more approves than the average worked out per day they will internally tighten the credit score. So at month end they could only pick the cream of the crop - hence why a lot of posts asking why people have been turned down when no arrears and decent income.

Treadmill

"What you can do to improve how lenders perceive you"

Is this based on anything concrete or just anecdotal evidence ?

zerog

Treadmill wrote: »

"What you can do to improve how lenders perceive you"

Is this based on anything concrete or just anecdotal evidence ?

Some of it is common sense.

sfax

Some good advice but not sure about this

"Keep cards open for a bit longer than their promotional limit to avoid 'promotional rate?' flags on most of the months data on an account"

I close every BT card as soon as the promo period ends (I usually have about 3-6 on the go at any one time) and have never had any issues with credit because of this card hopping

I would also add that you shouldn't pay off your statement balance in full before the statement is produced as this will report a lesser amount to the CRA and it could look like you're not using a card when in fact you are (you're just paying it off too early)

rb10

The_Boss wrote: »

3) Try to pay a bit more than the minimum to avoid a 'minimum payment' marker on your account's file

Note that if you are on a promotional rate offer (e.g. 0%) then this is less important.

The_Boss wrote: »

4) Keep cards open for a bit longer than their promotional limit to avoid 'promotional rate?' flags on most of the months data on an account

Why is this a problem? Banks are not allowed to use the promotional rate indicator to identify and reject rate tarts - it's used instead to identify people who are only paying the minimum because they are on a promo rate.

The_Boss wrote: »

5) Try to avoid using more than 50% of the available credit on your cards

Where does the 50% figure come from?

Is this 50% per card, or 50% of your total available limits?

The_Boss wrote: »

7) Do not apply for cards/loans more than 3 times in each six month period

Again, this is a fairly arbitrary restriction. 4 applications in 6 months won't be seen as unreasonable by a bank.

aimingforadebtfreelife wrote: »

Coming from a banking background the best time to say apply for a loan was the start of the month. At the start of the month the bank has set aside £xxxxx to lend out. If say mid month there are more approves than the average worked out per day they will internally tighten the credit score. So at month end they could only pick the cream of the crop - hence why a lot of posts asking why people have been turned down when no arrears and decent income.

This certainly isn't the case where I work. Pricing is adjusted to maintain target volumes, but not credit scoring.

If they are having more applications than they need, then it makes much more business sense to start charging new customers more. Then you'll get the desired reduction in volume, but will bring in more income. Increasing credit score thresholds just reduces volume.

Do you know for certain that what you are saying is correct, or is it just a belief that this is true?

The_Boss

Thanks for the responses guys... will make edits later and come back to individuals.

The_Boss

Treadmill wrote: »

"What you can do to improve how lenders perceive you"

Is this based on anything concrete or just anecdotal evidence ?

Mainly concrete plus common sense. The promotional rate was anecdotal - clesr from subsequent posts that this needs to be removed.

The_Boss

Any other additions/changes needed?