Drop in score after opening current account???

sheff6107

If they drop your score you get an email and are encouraged to log back in. Where you are then presented with credit card deals etc. Which the credit company gets a commission off the back off.

So it's handy for them if they don't stay static!

RG2015

I do agree that credit scores are meaningless. However I have a genuine question for those who tend to be vociferous in their condemnation of credit scores.

Would you ignore a sudden dramatic drop in your credit score that was not accompanied by any specific change in your credit history?

takman

sfax wrote: »

Repeatedly telling people credit scores are random is misleading. They aren't seen by lenders, true, they have very limited value and are often misleading, true, but they are produced by an algorithm that looks at basic changes in circumstances, e.g., move house, new credit account, so in that respect, they aren't random at all in a mathematical sense, just too basic and arbitrary and of limited use.

And they're also no longer something that is necessarily sold. E.g., Experian credit score is now free with Barclaycard.

You shouldn't preach that everyone''s score is random as it could be a red flag and if someone hasn't noticed a new fraudulent account appearing or doesn't realise that moving house can adversely affect their credit rating, their "random" score may act as a first warning. Telling people it's random may result in them ignoring an underlying problem.

And before people reply with examples of inaccurate scores, yes, they are just some examples but more often than not a big drop in score is a red flag because it's an algorithm, not random.

I use my (free) Experian score to complement my credit report alerts because I don't have time to examine my three full credit reports every month. I would never rely on it but it's just one tool of many and you simply need to understand its limitations

In the time it took you to login, find this thread, read it and write a reply you could have checked alleast one report in full (likely all three main ones). It takes literally a few minutes to log in and check a report fully.

But you seem to think that if there is an issue your credit score will drop, this is definetly not the case so assuming everything is fine because it isn't reducing is not a good idea. It also sounds like your paying for credit report alerts? This is a waste of money because you can get monthly reports from the three main agencies for free.

Your post is a good example of why people should be told the score is useless because it's giving you a false sense of security that everything is fine and is making you think you don't need to fully check your credit history.

takman

RG2015 wrote: »

I do agree that credit scores are meaningless. However I have a genuine question for those who tend to be vociferous in their condemnation of credit scores.

Would you ignore a sudden dramatic drop in your credit score that was not accompanied by any specific change in your credit history?

Yes I wouldn't take any action based on a reduction of any credit score generated by a company that does not lend money.

What exactly do you think people should do if that happens ?

sfax

Replies as expected. No-one has countered the point I made about the score not being random.

I don't have time or the will to check all three credit reports every month. Some people do and good for them. My credit report is huge as I run about 20 cards and change them a lot, mostly for BT and cash back promotions. I check the reports in detail but not every month. It takes a lot longer than a couple of minutes

I get credit alerts and fraud check alerts as part of my bank account so don't pay for them directly and given the other benefits of the account (now discontinued so I can't link to it) I don't pay anything extra for the alerts.

My system works well for me and has done for over 20 years and I run a lot of accounts. The score is one tool of many and not to be relied on in isolation. It isn't random, it's an algorithm with flaws but if you understand its limitations, it does has a use alongside the other tools and the actual credit reports.

Lenders use their own algorithms too based on the information you provide them alongside information from the CRAs. There is likely to be some overlap between these two (obviously).

I wouldn't pay for a score from a CRA. I don't have to. They're free from Barclaycard.

sfax

takman wrote: »

Yes I wouldn't take any action based on a reduction of any credit score generated by a company that does not lend money.

What exactly do you think people should do if that happens ?

Just because they don't lend money, it doesn't mean you should ignore them. They're often the reason you don't get past first base and it's purely down to the information they provide to the lender (hence why they point you at the CRA when they reject you). That same information is the input for their algorithm

Some of the daft advice and sarcasm on this forum is hopelessly poor. It used to be much better

Ebe_Scrooge

sfax wrote: »

Just because they don't lend money, it doesn't mean you should ignore them. They're often the reason you don't get past first base and it's purely down to the information they provide to the lender (hence why they point you at the CRA when they reject you). That same information is the input for their algorithm

Some of the daft advice and sarcasm on this forum is hopelessly poor. It used to be much better

I think clarification is required on the difference between "score" and "history". Of course the CRAs provide information to potential lenders - information on your credit history. That's their job, and that's how they make their money. And of course lenders will look at this, feed the information into their own algorithms, and decide if they want to lend to you or not. So they'll look at your available credit, current usage, repayment history, etc. etc. and make a decision.

They CANNOT see your "score". This is a number generated by the CRAs, based upon whatever algorithms they use. Anecdotally, scores will drop as the result of ANY change in credit status, whether good or bad. So if you win the lottery and pay off your mortgage, your score will drop. This is the reason why it's said time and again on here, "Ignore your score".

Yes, of course you need to ensure that the information held on file is factually correct - and query it if not. But the bottom line is, your score is seen by no-one other than you and the CRA.

( Which is why I get so annoyed by these adverts from the CRAs on TV that have appeared recently, suggesting that it's important to improve your score. I'm sorely tempted to put in a complaint to the ASA ..... )

takman

sfax wrote: »

Replies as expected. No-one has countered the point I made about the score not being random.

I don't have time or the will to check all three credit reports every month. Some people do and good for them. My credit report is huge as I run about 20 cards and change them a lot, mostly for BT and cash back promotions. I check the reports in detail but not every month. It takes a lot longer than a couple of minutes

I get credit alerts and fraud check alerts as part of my bank account so don't pay for them directly and given the other benefits of the account (now discontinued so I can't link to it) I don't pay anything extra for the alerts.

My system works well for me and has done for over 20 years and I run a lot of accounts. The score is one tool of many and not to be relied on in isolation. It isn't random, it's an algorithm with flaws but if you understand its limitations, it does has a use alongside the other tools and the actual credit reports.

Lenders use their own algorithms too based on the information you provide them alongside information from the CRAs. There is likely to be some overlap between these two (obviously).

I wouldn't pay for a score from a CRA. I don't have to. They're free from Barclaycard.

I've personally never said the score is random and everyone who says it's random does actually know it is generated some way, they are just saying it's as good as random (a computer can't actually generate a truly random number anyway, every number has to be calculated in some way).

You may not have the will to check your credit reports every month but I can gurstee you do have the time, posting on this forum alone proves that.
It's up to you of you do it but it doesn't take long to check a list of a credit providers to make sure payments are up to date for the last month and to check all your searches are correct. It really only takes a few minutes and I have many different current account and a few credit cards to check. The MSE credit club highlights any changes making it even quicker to check.

takman

sfax wrote: »

Just because they don't lend money, it doesn't mean you should ignore them. They're often the reason you don't get past first base and it's purely down to the information they provide to the lender (hence why they point you at the CRA when they reject you). That same information is the input for their algorithm

Some of the daft advice and sarcasm on this forum is hopelessly poor. It used to be much better

Ok so the so some of the same information is used by CRA's to generate the score but lenders also use alot of other information aswell so that makes the score inaccurate to start with.

Then you have differences in lending criteria based on the lender. Some may say no purely due to your income without even using information on your report. Some may automatically reject people witg a CCJ and some may not mind a CCJ of it's over x years old. So no credit score will actually tell you if your going to be able to get credit or not.

Then you get posts from people who have obvious negative factors with perfect experian scores.

Plus differences between the CRA's scoring system - if it's an accurate system how come experian often give perfect scores but I've never heard of a perfect Equifax score or Clearscore from anyone even though the information will be very similar between the agencies.

But what it all comes down to is which is better:
1. Spending time explaining the score and it's drawbacks and what it means
2. Spending time explaining the information on your credit report and what is bad and what is good.

Comparing it to driving a car which would you prefer:
1. A speedo telling you the "exact" speed you are doing, signs showing the speed limit and a good idea of how fast over you can go without being fined.
2. A red and green light telling you if your below or above the speed limit but never knowing what the speed limit is.

sfax

@Ebe Scrooge: Completely agree and I do understand the distinction between the score and the report. I think a lot of the answers on here go too far into slating the CRAs and blur the boundaries between the score they provide and the information they hold.

A change in score might be good, bad or nothing of any note. If your score is free to obtain each month and a change triggers a more thorough check of your credit reports, then it might sometimes be useful if that check reveals something you need to act on.

The alternative is to play spot the difference across three different reports which becomes less clear the more accounts you hold or have held recently.

Re. MSE Credit Club and highlighting differences, I wasn't aware of this tool so I'll check it out, thx takman