Why are credit scores useless?

zippygeorgeandben

Good morning!
Quick query, I see many posts from members on the MSE boards saying 'Will I get a loan, I've never missed a payment, my credit score is excellent' or something along those lines and many members (experienced posters usually) post back saying your credit score is useless and lenders only look at your credit history.
Looking at noddle they say this;
Why is my credit score important?


Your credit score is a number that can affect your ability to be approved for credit as it helps reflect the likelihood of you making repayments.


Credit scores help lenders assess each application fairly using their criteria. People with a high score are usually seen as lower risk, and are therefore more likely to be able to get credit (possibly at better rates). However, your score is only one element that a lender will take into consideration when reviewing your application so a high score doesn't guarantee that your application will be accepted.



So my question is, is it useless?!
Have a great day.

Pixie5740

How can a credit score generated by Noddle help a lender decide whether to lend to you when the lender cannot even see never mind use the Noddle credit score?

Furthermore, the credit reference agencies do not lend money so whether they consider you to be excellent, good or the total puts is irrelevant.

Lenders use your credit history, note that's history not score, along with affordability and past dealings with them as a bank. The credit reference agencies only know one of those things.
http://www.moneysavingexpert.com/loans/credit-rating-credit-score

molerat

This month my Clearscore/Equifax and MSE/Experian scores went up and my Noddle/CallCredit score went down so who do I believe, glad I don't want to borrow any money from Noddle

zippygeorgeandben

Thank you for the replies Pixie5740 and molerat.

redpete

They are not useless but they should not be obsessed about and they won't tell you if anyone will offer you a loan.

The score gives you an indication of whether there are problems in your credit history that might affect your chances of getting a loan. Any lender sees the same credit history and uses this with other information to make a decision, they do not see the score but they do see the information behind it. Different lenders will use different criteria and apply different weighting to each criterion to make their decision.

jessex1990

Lenders basically make their own score using your credit history.

Duckyduck

Credit scores are indictative of credit worthiness.

Someone at some point in MSE history once pointed out that lenders don't see that actual score so not to obsess over them, and so everyone else jumped on the bandwagon and over time became convinced of their own argument to conclude "credit scores are meaningless".

Pixie5740

Duckyduck wrote: »

Credit scores are indictative of credit worthiness.

Someone at some point in MSE history once pointed out that lenders don't see that actual score so not to obsess over them, and so everyone else jumped on the bandwagon and over time became convinced of their own argument to conclude "credit scores are meaningless".

If the credit scores are such good indicators why are there so many threads that start, "I have an excellent credit score why have I been rejected for......"

jessex1990

Pixie5740 wrote: »

If the credit scores are such good indicators why are there so many threads that start, "I have an excellent credit score why have I been rejected for......"

It could be because they don't believe they can make any profit off of you.

Pixie5740

jessex1990 wrote: »

It could be because they don't believe they can make any profit off of you.

Indeed it could be. It could be due to any number of factors which goes to show why people shouldn't be any stock into a credit score generated by a company that only knows part of the story and doesn't lend money.

bazzyb

Pixie5740 wrote: »

If the credit scores are such good indicators why are there so many threads that start, "I have an excellent credit score why have I been rejected for......"

Because it is only part of the picture. A credit score can be somewhat helpful because - generally speaking - somebody with a good credit score should find it easier to get credit than someone with a bad score.

But there is lot more to take into account, for example income being a very big factor. You could have a big income and bad score or small income and good score - both have risk factors and some lenders would prefer one type of risk to another.

Whilst I think the credit score can be slightly helpful as an indicative measure, one should generally have an idea of if they have missed payments / defaults / CCJs / lots of credit - so probably have a good inkling as to whether their credit history is any good or not without seeing the actual score.

It's the obsession of constantly checking a score to see if it's gone up/down a point or two that is pointless and meaningless in my opinion.