Credit "Scores"

lolly3fh

People always tell me the scores on the likes of Experian and Equifax aren't true, so I'm wondering why lenders use the scores to make their decision?

EG: My credit file used to be abysmal. Over the years I've worked hard and now I don't have any late payments on it, and the small default comes off in June next year. The last year or so my "score" has been GOOD. I knew it wouldn't improve until next year but it was a good achievement.

2 months ago I switched bank accounts, purely for a better deal (I was with my previous bank for 15 years, so I don't change a lot). Now my credit "score" has gone down from good, missed out fair, and is now POOR. The report tells me that lenders will view this new credit account as proof that I required more credit to suit my needs. But that's not right, is it?

We want to apply for a mortgage next year, will the lender look at my score and reject us, or will they look at WHY Experian thinks my score should be so low?

I feel so miffed that all my hard work has been ruined, just because I opened somewhere new to put MY money. Not borrowed money or credit, but the money I earned.

matttye

Lenders don't consider the credit scores given by credit reference agencies; they score you based on your own internal criteria using the information from your credit report (not score).

IMO Experian is over zealous when it gives advice about the 'negatives' on your report.

Gizmo247

lolly3fh wrote: »

People always tell me the scores on the likes of Experian and Equifax aren't true, so I'm wondering why lenders use the scores to make their decision?

That is exactly why these scores are misleading. The lenders don't use them at all. The only value they have is to the CRA as a way of extracting money from you. In that respect they "score" very well.

You just need to think objectively about your file details like a lender would. So if you switch accounts and the old one is a long standing account then keep it open with a small balance to prevent it from accidentally going overdrawn but remove the overdraft so that your level of credit stays the same and your record display longevity.

CRAs want you to obsess about your score otherwise why else would you want to spend a large amount of monthly cash for a worthless number. You don't need access to your credit files on a daily basis, just once or twice a year for the price of £2 a time.

The_Boss

Can't really add to the above. It's all absolutely correct. But suggest you check the default had come off your files before applying for your mortgage next year - don't assume it has dropped off by end of June/July.

JohalaReewi

lolly3fh wrote: »

People always tell me the scores on the likes of Experian and Equifax aren't true, so I'm wondering why lenders use the scores to make their decision?

As Gizmo said. Lenders do not see those scores. In fact, the only person who sees those scores is you (and us if you post them here). As James says

What you need to understand, however, is that this score is only a guide and is only seen by you.
http://experian.co.uk/consumer/questions/askjames301.html

tinkerbell28

The scores are a load of old tripe. I had an "Excellent" score which dropped to fair....

Why?

I opened, and received a new TESCO credit card at 18 months interest free purchases for using over the internet.

Opening one account dropped my "score". Load of old rubbish

lics

Recent credit applications, even if overdraft, recent searches, etc do temporarily affect one's credit rating. A high limit card also affects total credit available to you etc. So there is an impact.