Experian admit their "credit score" is pointless since lenders don't see it

JuicyJesus

Something interesting that's turned up on the Financial Ombudsman Service's website is a decision involving Experian's made-up credit scores offered as part of their CreditExpert service. Quite a few people on here, myself included, have quite strongly advised posters to completely ignore this score because, at best, it gives an extremely misleading view of one's ability to obtain credit. I still maintain that CreditExpert is incredibly expensive, as for under a third of the price of Experian's monthly membership you could get a statutory report from both them and Equifax and full free access to CallCredit via Noddle.

Anyway, the interesting bit is that in this decision, the Ombudsman identified that the complainant's credit score not only bore no relation to anything, but in fact fluctuated wildly over a range of almost 100 points with no explanation as his actual account conduct had been constant. Then, finally, we get this (emphasis mine):

I accept Experian’s argument that the credit score is seen only by the consumer (not any potential creditor)

Which means that Experian know full well that it's useless. Of course, the CreditExpert website says this:

Lenders look at information that is displayed on your report when you apply for credit, so your credit score is the best guide you have to find out how lenders might assess you

Quite mealy-mouthed, no? Stands quite in contrast to the clear assertion above that the credit score is totally irrelevant to a credit application. In fact, unless you read between the lines, it's not clear at all.

forgotmyname

The Rep on here has defended the score and in the same post admitted that its more or less meaningless.

They also tend to post when nobody asked them for help. Promoting themselves.

Eonel

The biggest flaw in Experian credit scoring is that the only look at debt details,not salary. Using only half the basis of information that a real lender will use inevitably leads to misleading scores in many cases.

I don't understand why Experian do not ask people for details of their salary as part of the credit scoring process. Sure, it will still produce a credit score number that real lenders would never see or use.

But it would then produce a number that is based upon much of the same data that a real lender would use. Arguably, this would be a more meaningful and useful relative credit scoring mechanism.

CherlokHomes

It's defiantly flawed and IMHO if banks have been scrutinised about Mis-selling surely CRA's should be too.

You can't charge money for a guide.

rb10

JuicyJesus wrote: »

I accept Experian’s argument that the credit score is seen only by the consumer (not any potential creditor)

Which means that Experian know full well that it's useless.

No, it doesn't mean that at all.

All it says is that this particular score is not seen by lenders. From the information you have here, it could still be highly correlated with the scoring systems that lenders use.

Your assertion that "Experian admit their "credit score" is pointless since lenders don't see it" seems to be completely unfounded from your post. I can't see anywhere that they come close to stating or implying that it is 'pointless'.

CherlokHomes

rb10 wrote: »

No, it doesn't mean that at all.

All it says is that this particular score is not seen by lenders. From the information you have here, it could still be highly correlated with the scoring systems that lenders use.

Your assertion that "Experian admit their "credit score" is pointless since lenders don't see it" seems to be completely unfounded from your post. I can't see anywhere that they come close to stating or implying that it is 'pointless'.

You've only got to phone up Experian and their staff will point blank tell you not to rely on their score as it's only just a guide.

They will also tell you lenders don't see the score and lenders will take in much more info to calculate their score.

You can't sell a score that's only a guide as it's misrepresenting a product.

rizla_king

Interesting.....

Experian_company_representative wrote: »

Most lenders do use scores we build, which are based on similar logic. Quote searches don't affect any scores.

James

Experian_company_representative wrote: »

We build scores for most lenders and use similar calculations to produce the guide score you can get. It's certainly worth looking at the pointers we provide alongside the score to help you work out what you might be able to do to build a better credit rating.

James

Experian_company_representative wrote: »

We build credit scores for many major lenders. You don't have to be a lender to be able to analyse and model credit risk - it's what we've been doing for over 30 years.

While a 999 Experian score shows you how a typical lender will interpret your credit report, lenders can employ other assessments too. Most mortgage lenders will use risk and affordability scores alongside policy rules and a manual review of the data. They are very thorough, understandably.

James

Experian_company_representative wrote: »

The score we give you reflects the scores we build for typical lenders. A high unused credit card limit is likely to be seen as a positive in terms of your credit rating as it shows that another lender really trusts you and you aren't needy.

James

rb10

Innovate wrote: »

You've only got to phone up Experian and their staff will point blank tell you not to rely on their score as it's only just a guide.

They will also tell you lenders don't see the score and lenders will take in much more info to calculate their score.

Exactly - it's a guide as to how lenders are likely to score you. So it's certainly not 'pointless'.

Innovate wrote: »

You can't sell a score that's only a guide as it's misrepresenting a product.

If it's clearly sold as a guide, then I don't see why there should be any problem.

CherlokHomes

rb10 wrote: »

Exactly - it's a guide as to how lenders are likely to score you. So it's certainly not 'pointless'.



If it's clearly sold as a guide, then I don't see why there should be any problem.

So you think charging customers for a score that has no relevance whatsoever to the score done by a lender is ok?

rb10

Innovate wrote: »

So you think charging customers for a score that has no relevance whatsoever to the score done by a lender is ok?

The scores that Experian provide to consumers are, to some degree, correlated with those that Experian provide to lenders, and to the scores that lenders calculate themselves (often with Experian's support).

They are, as you have said in your own post, a guide to how a lender is likely to perceive you. If they are only treated in this way, then I see no problem with charging for them.

Unfortunately there seem to be a lot of people on this forum who are under the misguided impression that Experian's credit scores are completely irrelevant.

cynicalgit_2

rb10 wrote: »

The scores that Experian provide to consumers are, to some degree, correlated with those that Experian provide to lenders, and to the scores that lenders calculate themselves (often with Experian's support).

They are, as you have said in your own post, a guide to how a lender is likely to perceive you. If they are only treated in this way, then I see no problem with charging for them.

Unfortunately there seem to be a lot of people on this forum who are under the misguided impression that Experian's credit scores are completely irrelevant.

Yes they are. End of discussion.