What your credit score really means

[Deleted User]

They are random.

Lenders do not see them. Lenders do not use them. Lenders do not care for them.

If you’re declined a loan as an example and go back to the lender and say “oh but my Experian score is 888....” they’ll laugh you out the door. They won’t say “well that changes everything here’s £100k”.

[Deleted User]

Point proven...

https://forums.moneysavingexpert.com/discussion/5870520/credit-rating-past-still-affected

jamesd

That proves nothing other than that there are some well known limitations to the scores, likely no credit use at all and maybe no job in that case. With no history only starter credit cards are likely to be available, as suggested in that thread.

You're trying to generalise from the cases were there are known limitations to all of them.

jamesd

!!! wrote: »

They are random.

Are they evenly distributed throughout the range? Random is another of those high school maths things, it has an actual meaning and the scores aren't random.

If instead you'd written arbitrary at least the school children wouldn't have known instantly that you were lying again.

!!! wrote: »

Lenders do not see them. Lenders do not use them. Lenders do not care for them.

Largely true, but lender scorecards do have access to the same information and incorporate that along with other things in their decision-making.

!!! wrote: »

If you!!!8217;re declined a loan as an example and go back to the lender and say !!!8220;oh but my Experian score is 888....!!!8221; they!!!8217;ll laugh you out the door. They won!!!8217;t say !!!8220;well that changes everything here!!!8217;s £100k!!!8221;.

The last time I was declined I asked the lender for the reason and they told me they wanted to see more history of my use of a card I had relatively recently got. A subsequent application was accepted. And of course that is one of the factors used to calculate credit scores, both the generic ones and the lender-specific ones.

binaryuniverse

jamesd wrote: »

Largely true, but lender scorecards do have access to the same information and incorporate that along with other things in their decision-making.

There you are. That's what the lenders use. They use your data, and generate their own score, based on their own criteria. It's not the score you see. The score you see is irrelevant. There is no need to try and 'improve' it. Or wonder why it's gone down by 20 points, because it has no bearing on anything.

[Deleted User]

It proves everyone that the score the CRA’s issue is made up.

You!!!8217;re going off the point. In fact you even admitted in your post above that it!!!8217;s the history that!!!8217;s missing.

So a score of 999 means absolutely jack.

SteveDInScotland

I am retired, have been for ten years (retired young). I get a smallish pension, some interest and dividend payments and a relatively small return on a rental flat I own. Therefore my yearly earnings are around twenty thousand.

But I have a relatively large amount of savings (over 100k)

It seems that nowhere in your credit score (mine is apparently weak because of low yearly earnings) do they take account of savings or property values. I live with my sister (she has a large house with annexes) and therefore am a 'tenant'

This again seems to go against me.

It seems that if you are not in a normal financial situation (home owner in work( then Experian don't like you.

badmemory

What Experian think is irrelevant. They aren't going to give you a loan. Just don't have anything bad on your credit record & make sure you're on the electoral register.


They and the other CRAs are just businesses, whose sole purpose is to make money. One of the ways they do that is by persuading people that they need to buy a product from them to improve their totally meaningless "credit score". Don't fall for their BS.

Pixie5740

SteveDInScotland wrote: »

I am retired, have been for ten years (retired young). I get a smallish pension, some interest and dividend payments and a relatively small return on a rental flat I own. Therefore my yearly earnings are around twenty thousand.

But I have a relatively large amount of savings (over 100k)

It seems that nowhere in your credit score (mine is apparently weak because of low yearly earnings) do they take account of savings or property values. I live with my sister (she has a large house with annexes) and therefore am a 'tenant'

This again seems to go against me.

It seems that if you are not in a normal financial situation (home owner in work( then Experian don't like you.

Have you read the "What credit scores really mean" guide? If so why do you care how Experian rate you? If not, why not?

sonuenjoys

Extract from Experian website:

As many people may know, having a low credit score can prevent you from getting loans, renting or buying a home, purchasing a car, and possibly even opening a bank account. But knowledge is a great place to start when planning a brighter future for your credit. Your FICO® Score powered by Experian is a lender score, so when you consult it, you’re seeing the same type of information that banks and lenders see. Understanding FICO Scores is easier once you know how they’re calculated.

FICO Scores consider five types of information in their calculation:

Your payment history (35 percent)
Your debt usage ratio: how much you owe in relation to your credit limit (30 percent)
How far back your credit history goes (15 percent)
New credit (10 percent)
Your mix of various types of credit (10 percent)
Your payment history includes recent payment record of car loans, mortgages, retail accounts, installment loans, credit cards and more. Making sure you pay your bills on time is critical, because recent late payments and accounts in collection can have a significant negative impact on your Score.

Your debt usage ratio calculates the total amount owed on revolving accounts in relation to the total credit limit. It’s important to keep your balances low on credit cards and other revolving accounts. A general rule of thumb is to keep your balance below 30 percent of the total credit available. By this logic, you wouldn’t want to spend more than $300 with a $1,000 credit limit.

Length of credit history looks at the age of your accounts, number of recently opened accounts, time since account activity, proportion of new credit vs. established credit, and the re-establishment of new credit following any adverse payment problems. If you’re just establishing your credit history, carefully consider opening any new accounts. New accounts may bring down your Score temporarily, especially if you’re just starting out.

Rapid account buildup can be seen as a risk to potential creditors. If you have past payment history problems, work to get back on track as soon as you can. Opening new accounts you can afford to pay off on time can positively impact your credit scores in the long term.

Additionally, new credit/inquiries are considered. The calculation considers the number of recent inquiries, the time since an inquiry, the number of recently opened accounts, and the time since opening an account. A credit inquiry appears on your report if your credit report was requested and delivered while you were seeking new credit. If you or your current lenders request your credit report, this is not usually considered in your credit score calculation.

Lastly, a balanced credit mix is important when managing your finances. Your credit mix refers to the different types of accounts – credit cards, retail accounts, installment loans, mortgages and consumer finance accounts – that can impact your credit scores. In general, a varied mix of credit types can have a more positive impact on your credit scores than a credit report that shows only one type of credit.

Ultimately, your understanding of how FICO Scores are calculated helps you identify the most important elements of your Experian credit report. Your credit report shows your credit behaviors. Now that you know how your behavior impacts the calculation of your credit score, you’ll be able to see how your actions are reflected in the FICO Score powered by Experian data.

This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.

FICO is a registered trademark of the Fair Isaac Corporation.