Why are credit scores useless?

pvt

jessex1990 wrote: »

Im pretty sure when my current account had an overdraft it had a running total of my balance whether it was positive or minus and from that they could guess what my monthly salary was.

The banks report monthly, if that's what you define as "running total".

The words I highlighted sum up the accuracy of the credit score they offer you. How would they differentiate, sorry, guess what is salary, money you're shuffling around your accounts to maximise current account benefits, company expenses repayments, or savings accounts that mature and pass through your current account. Combine that with a lack of certainty as to whether that is your only bank account (as not all banks report to all CRAs).

The frightening thing here is just how many posters on this thread are justifying that the CRAs offer credit scores that have some value, despite it being pointed out they have inadequate data to do so. And despite the fact that so many posts on the forum are people asking why their CRA credit scores make no logical sense.

bazzyb

takman wrote: »

That's an interesting comment to make. Experian state that lenders cannot see the name of who provides credit.

'Who from' is probably meant in more general terms here. Rather than the name of the provider, they can see the type of credit so could mean 'who from' as in from a mortgage provider, car finance provider, payday loan company, credit card, charge card, lease, current account etc etc...

bazzyb

jessex1990 wrote: »

Im pretty sure when my current account had an overdraft it had a running total of my balance whether it was positive or minus and from that they could guess what my monthly salary was.

How far into your overdraft you are will be reported, NOT how much credit is in your account. There would be very limited indication of your salary from your credit report alone.

Thrugelmir

pvt wrote: »

Except, it isn't able to, as I pointed out above to duckyduck (and you even allude to yourself), they only have half a picture, so the credit score they come up with is as much use as a chocolate teapot.

What they able to do however with all the data available including that on the application form is profile you as a borrower. In essence categorise the applicants into one of around 17 types. From the extremes of pessimistic, i.e. cautious money management. To the extremes of optimistic , i.e. carefree money management. Human beings are surprisingly predictable in their behaviour. Enough to provide a lender with a good insight when making the decision. As far as the lender is concerned the task is reduce financial losses. Not eradicate them. .