Increased credit card use and credit rating

[Deleted User]

No one sees the score apart from you. Lenders can't see it and wouldn't care if they did.

a4a

Deleted_User wrote: »

No one sees the score apart from you. Lenders can't see it and wouldn't care if they did.

Do you know this for a fact?

How does a soft search work and what is the point of it if it doesn't check anything? Many, not all, soft searches are quite accurate.

[Deleted User]

a4a wrote: »

Do you know this for a fact?

Yes.

Lenders look at information, not someone else's score of you.

A score is just the CRAs opinion of you, and without knowing your income. A lender wants to know if you fit their lending criteria and target audience. Being told that you're a 700 doesn't tell them anything.

Paul_the_Painter

Lenders look at the DATA behind the "score"
For instance lender A (say a company lending you £500 on an interest free computer purchase) may be very interested and decline credit to you based on a default that you had on a £25 mobile phone contract.
Lender B loaning you £250,000 for a house purchase may be less likely to take that into account if you had serviced your previous mortgage and car payments perfectly but 2 years ago missed a payment on the mobile phone.
Horses for courses and all that.
No one lending you money sees the "score" they do see the data.

a4a

Are you able to explain how you know this?

Yes I understand that. I fully appreciate that CRA's 'credit score' is NOT a credit score for lending purposes but I am curious about soft searches. If a soft search doesn't look at your report at all, how can they make an 'informed' decision about your chances of success?

I have been told by someone who used to work at a lender, that they rely on CRA's opinion of 'credit score' to make their initial assumption on your likelihood of gaining credit, then when you apply they do a full search and look at all the other factors and then make a final decision.

I'm not asking for asking sake, but would really like to know if this is actually true or not and what evidence there is to support it?

Thrugelmir

a4a wrote: »

I have been told by someone who used to work at a lender, that they rely on CRA's opinion of 'credit score' to make their initial assumption on your likelihood of gaining credit,

Now the large lenders have direct access to the CRA's databases so not reliant on paper reports. As was the case in years gone by.

Experian is far more than a few scores.

Experian has developed a range of solutions to help lenders assess affordability and make the most informed and responsible lending decisions. These solutions include services to help lenders measure the key affordability indicators for each borrower, and to assess the impact of wider economic factors on individual borrowers.
A critical element of responsible lending is assessing indebtedness and affordability, areas in which Experian has been researching and developing decision support tools since 2000. From a lending perspective:

Indebtedness is a measure of the credit burden associated with a consumer’s debt profile. Experian’s Consumer Indebtedness Index (CII) uses credit bureau data to identify individuals who are up to date with their credit repayments at present, but who, as a result of their levels of indebtedness, are likely to experience payment problems in the near future.

Affordability is a measure of a consumer’s financial capacity to fund their outstanding debts, now and in the future.

Experian’s Affordability Metrics enable full CAIS members to robustly assess different elements of affordability at the point of credit application or extension, in line with the recent guidelines.

Future Delphi combines Experian’s powerful credit bureau data assets with a unique set of national, regional and local economic data to augment the Delphi score and to make it more tolerant of changes in the economy. The use of economic data at the local and regional level brings the economy much closer to the individual than has been possible in the past and provides a mechanism for capturing the impact of economic changes on regions and households within a credit score. It stabilises the calibration of credit scores during times of economic change, makes them forward looking and provides a convenient mechanism for scenario testing.
Equity Check compares CAIS mortgage balances with house valuation models in order to provide full CAIS members with an estimate of the potential equity available.

Mortgage Shock identifies people with a mortgage who have suffered an interest rate shock, have mitigated by changing to an interest only mortgage or changing the term or who would be vulnerable to an interest rate shock. For example people who are on interest only mortgages or people whose account is approaching an anniversary of opening. The product also provides a detailed breakdown of the customer’s mortgage borrowing.

a4a

Thrugelmir wrote: »

Now the large lenders have direct access to the CRA's databases so not reliant on paper reports. As was the case in years gone by.

Experian is far more than a few scores.

So is that how CRA's arrive at the scores they produce?

Still uncertain how a soft search works and what information it relies on. Surely its more than just a generic search on your postcode?

fawnsinthegarden

a4a wrote: »

So is that how CRA's arrive at the scores they produce?

Still uncertain how a soft search works and what information it relies on. Surely its more than just a generic search on your postcode?

It's clear that you aren't going to accept any answers on here, but there is an article that explains about soft search, it also talks a bit more in depth about each lenders soft search service, how each service works and how reliable each is.
http://www.thisismoney.co.uk/money/cardsloans/article-2087839/Soft-checks-loans-credit-cards-Avoid-damaging-credit-score.html

a4a

fawnsinthegarden wrote: »

It's clear that you aren't going to accept any answers on here, but there is an article that explains about soft search, it also talks a bit more in depth about each lenders soft search service, how each service works and how reliable each is.
http://www.thisismoney.co.uk/money/cardsloans/article-2087839/Soft-checks-loans-credit-cards-Avoid-damaging-credit-score.html

I apologise if I am coming across the wrong way, that is not my intention. I am accepting the answers, just asking further questions as I want to be sure how it all works.

I understand the point about CRA's scores and lenders and the difference between the two, as I've said but I wanted to find out if the information I had been given by the person who worked for a lender was correct or not. I always appreciate peoples opinions but want to be sure they are more than just opinions.

I'm about to complain to both equifax and experian and need to be sure of my facts and fully understand their processes.

The article you sent is very helpful, so I thank you for that and it would seem, if the newspaper is certain of its facts, that the lenders still look at your file, albeit in a 'soft way', so I will have to accept that as the final answer.

zerog

a4a wrote: »

I apologise if I am coming across the wrong way, that is not my intention. I am accepting the answers, just asking further questions as I want to be sure how it all works.

I understand the point about CRA's scores and lenders and the difference between the two, as I've said but I wanted to find out if the information I had been given by the person who worked for a lender was correct or not. I always appreciate peoples opinions but want to be sure they are more than just opinions.

I'm about to complain to both equifax and experian and need to be sure of my facts and fully understand their processes.

The article you sent is very helpful, so I thank you for that and it would seem, if the newspaper is certain of its facts, that the lenders still look at your file, albeit in a 'soft way', so I will have to accept that as the final answer.

There are very few valid reasons to complain to Equifax or Experian. Credit files belong to financial institutions and the CRAs only hold them. If any data is incorrect, you need to approach the financial institution responsible for that data. You can complain to the CRAs if the financial institution has asked for the data to be corrected, but the CRA is not correcting it.

In the USA, everybody has a credit score and each financial activity has a known impact on this score (may not be known to the public, apart from analysing one's own score before and after the activity). In the UK, the CRAs probably use a similar model to calculate scores, but these scores are NOT known to any financial institution, nor are they used in making lending decisions.

CRAs also submit a monthly feed of data to financial institutions.