Credit rating inconsistency

Tempest100

New to the forum, but frustrated by credit file inconstancy.

How can I be a Poor rating on Experian 631 and a Good rating 425 on Equifax?

I have no defaults or any major differences between the two providers records, so this makes no sense to me? I have plenty of disposable income, great payment history on credit and only one recent credit search...go figure?

[Deleted User]

It's simple.

Both the score are made up.

As they are both random, the chances of them being similar are minimal.

Simply ensure the data on your files is correct.

Pixie5740

Experian use a different algorithm to Equifax and lenders each have their own algorithms.

http://www.moneysavingexpert.com/loans/credit-rating-credit-score

MEM62

Tempest100 wrote: »

How can I be a Poor rating on Experian 631 and a Good rating 425 on Equifax?

Why would you expect two random number generators to produce two numbers that bear any relation to each other? The statistical chances of that are virtually impossible.

PixelPound

Not sure if they use the same source, but more info on CRA scores here https://www.random.org/ ;-)

Mobeer

These numbers aren't purely random but just calculated differently; if you started defaulting on payments then you would see both decline at the same time. If looking at the score from a CRA then the trend is more useful than the numerical value.

When any financial institution (bank, insurer, etc) considers you for a financial product they will calculate their own credit score for you, which will be different to the CRA values. Each institution has different criteria.
For example three credit card companies:
- company A may score you lowly for keeping an outstanding balance as they perceive this as high risk
- company B may score you highly for keeping an outstanding balance as they perceive this as profitable
- company C would have scored highly for keeping an outstanding balance as they perceive this as profitable, except in recent months they changed their scoring system as they think they have too many high risk customers, so now they score you lowly

Then there are lots of other considerations:
- bank A may score you lowly as non-home owner
- bank B may score you highly as a potential first time buyer in need of a mortgage in future

Tempest100

Thanks for the replies and insights. So, in summary, CRA's are a classic case of business taking a set of relatively straightforward metrics and complicating the hell out of them to annoy consumers and make money....I assume the measures were created by the same individuals who evolved utility bills...

[Deleted User]

It's the other way round.

They've taken a range of metrics and tried to simplify it into something that means nothing, in order to make more.

Thrugelmir

Tempest100 wrote: »

Thanks for the replies and insights. So, in summary, CRA's are a classic case of business taking a set of relatively straightforward metrics and complicating the hell out of them to annoy consumers and make money....I assume the measures were created by the same individuals who evolved utility bills...

Lenders use complex algorithms to "score" you against their criteria. Using data from various sources. Consumer metrics are simply there to assist people with poor personal finance management skills to improve them. Anything more than a simple number would be far too difficult for people to comprehend.