A Modern Conundrum

titchroberts

Today I tried to buy a car, but failed. I failed because the lender saw me as an unsuitable borrower.

In 2012, I was a student working on my dissertation. I missed three payments on my £350 RBS Student Credit Card and the bank placed a default on my credit file. This discussion that your credit score means nothing is a fallacy. This "black mark" will remain on my credit score for 6 years until Nov 2018.

Last month I was pleased to see after years of hard work of improving my credit score that it was nearly out of Experian's 'Fair' and into the green, 'Good'. I had watched it grown from 100 points to 790 points. However, at the beginning of this month I was shocked to see it had made a huge drop into the 'Poor' region. I quickly assessed the situation and read the details: banks and lenders have reassessed the information they find important and a default is now the biggest factor.

As a young professional, with a good £33,000 salary and secure job with the MOD, imagine my embarrassment when I was turned down for a small loan to pay for a new car today. The payments were half of what I was paying for my last car, I had a large deposit, and I was going for CPC rather than Contract Hire so the loan amount was even smaller. To make matters worse, I then checked my credit score and it went from Poor to Very Poor, dropping 50 points from that one application. If I make another application will it drop further?!

So here's my conundrum; a young professional on a reasonably good wage, with no car, a terrible credit score but an immaculate history of paying both loans and credit cards since 2012.

I guess I better put those plans to get a mortgage on hold until 2018. Whoever says credit score do not matter, please feel free to re-educate me.

molerat

Your credit score is meaningless, it is just a made up number by the reference agencies. Your credit report on the other hand shows a factual picture of how you have managed your finances over the past 6 years and means everything.

GingerBob_3

molerat wrote: »

Your credit score is meaningless, it is just a made up number by the reference agencies. Your credit report on the other hand shows a factual picture of how you have managed your finances over the past 6 years and means everything.

In the case of the OP it shows a totally distorted picture.

[Deleted User]

titchroberts wrote: »

. This discussion that your credit score means nothing is a fallacy.

Please. No more. I can't take any more credit score believers this week.

Are we getting the Flat Earth Society invasion next week?

20aday

Your credit score definitely is "meaningless" as by looking at your own files would not cause a '50 point' drop!

I've looked at mine a lot over the years and not once has my "meaningless" score been affected.

If you'd six years' worth of immaculate credit history then you'd have stood more of a chance of being accepted for your loan.

Because you've a default on your credit files that will have an impact until it falls off in three years time.

Granted the older the default the less of an impact it'll have on the whole but the lender at this moment in time it is causing you to be declined.

I assume you've obtained your £2 statutory report from Experian and use the free of charge Clearscore and Noddle (data supplied by Equifax and Callcredit respectively) to make sure all of the information being reported is factual and correct?

titchroberts

Deleted_User wrote: »

Please. No more. I can't take any more credit score believers this week.

Are we getting the Flat Earth Society invasion next week?

I do understand what people are saying about credit scores and I am not saying it is a massive conspiracy. I am not that stupid and your quote is slightly moronic.

Yes, the lenders cannot see your actual score but that number is a numerical representation of the completely distorted credit file that people have to their name. It gives you an idea of how suitable you are to lenders. So overnight, because the lenders changed their policies, I went from being a relatively suitable individual back down to a completely unsuitable borrower.

No one actually thinks this number has any weight. But it's what that number stands for and the fact that years of building my credit rating, years of planning for a mortgage and setting myself up, has been completely eradicated because suddenly, and without warning, the banks want to assess people differently. That's what this thread was about, not the credit score conspiracy that everyone seems to be getting so excited about.

robber2

Prepare to be re-educated;

Firstly this;

titchroberts wrote: »

I So overnight, because the lenders changed their policies, I went from being a relatively suitable individual back down to a completely unsuitable borrower.

Is complete and utter nonsense.

The reality is that one of the credit reference agencies may have changed the way they derive a completely fictitious number seen only by them and the gullible or ill informed consumer.

The banks and others have their own individual systems for assessing your suitability for a loan. Each system will be unique and the last thing the banks will do is tell you what criteria the use

Secondly this;

"This "black mark" will remain on my credit score for 6 years until Nov 2018". Is simply impossible as YOU DO NOT HAVE A PERSONAL CREDIT SCORE. The details will however remain on your credit HISTORY.

As far as getting a loan is concerned I would recommend that you try your own bank first, after all they know much more about your overall financial behavior than any profiteering credit agency.

good luck

alchemist.1

You accept that the credit score doesn't mean anything but then believe it is an accurate reflection of your creditworthiness by relying upon it.

The point is it that it doesnt give you any idea as to how suitable you are to each lender.

Thrugelmir

titchroberts wrote: »

but an immaculate history of paying both loans and credit cards since 2012.

So what? That's your side of a contractual agreement. It's the minimum standard that a lender would expect. Doing so doesn't score extra points.

How much do you currently owe on credit cards, loans etc.

Rrushi_Shqiptar

It is useful to see if any of the information is incorrect and get it sorted.

That said, nobody knows who uses what CRA for loans so you need to check all three just incase. I know the score is useless but it can give you an idea, to a point as to how your financial dealings have been dealt with by you.

Would be interesting if lenders issued a guideline as to their requirements so that you can make sure you are suitable before.

Thrugelmir

Rrushi_Shqiptar wrote: »

Would be interesting if lenders issued a guideline as to their requirements so that you can make sure you are suitable before.

Not viable. Such information is commercially sensitive in nature. Also changes very quickly depending on market conditions and internal policy decisions. Lenders aren't selling cans of baked beans.