MSE Credit Club: Erroneous Affordability Model

ajwid01

Hi,

I wandered past the MSE site this morning, after some contents of a mailshot caught my eye: and I then spotted the FREE "Credit Club" membership offering.

I signed up, and entered some of my financial details, and this appeared to crosscheck my information with that held by Experian (who is obviously a "partner" in this offering).

Anyhow - all seemed good, and I was able to view interesting statistics (for free), similar to what I once perused through a paid subscription service with Experian direct. All great - I thought.

I read a bit of blurb about the utility of the "Credit Score" metric, and took on board this bit about MSE's own "Affordability Metric", and of course: I was interested to see how things looked for me.

Anyhow: first glance... Awesome. My credit score appears to be 999. That's pretty much what I expected.

Then: "Affordability Metric" - pretty poor. There were two measures for this - one based around affordability for loans, and one for credit cards. These all seemed to hover around "Fair" or less - which I found somewhat "odd", frankly.

I've £1,000s stashed in the bank (which of course MSE and Experian can't see), have a mortgage; maintain 2-3 credit cards with 0% interest offers on them: so why not (this is still a very low %age of my available credit). I'm (apparently) in the top 10% of earners in the UK, and I regularly save £1,000s per month.

I've disclosed my income to Experian/MSE, to use in the calculator: obviously they can see my income/outgoings; and it's all "pukka". Surely they would see a 'not insignificant' sum of residual money potentially lying around at the end of every money to service any other loans: should I garner a whim to take some out.....

So - how in the world would my affordability calculation come out so poor? Frankly - this just doesn't make any sense whatsoever, and it just looks to me like there is a major flaw with it.

Can you explain how it works, such that this scenario would make any sense?

Looking forward to enlightenment.

MSE_Chris

Hi ajwid01,

It is possible to have low affordability scores, even if your Experian Credit Score is high and you’re showing as a good chance of being accepted for products. Remember, your Experian Credit Score, just looks at your Credit History, it doesn’t take into account your earnings or expenditure, so is only part of the story.

This is why we created the 'affordability' and 'Credit Hit Rate' scores. To give you an understanding of how lenders view you and your circumstances.

Your affordability scores look at the info you entered when you registered (pre-tax income and mortgage/rent payments) with info on your report (current credit usage etc). The particular affordability score you are referring too (for loans and credit cards) further includes data from your 'eligibility calculations'.

When users have contacted us about this previously, we’ve discovered that some users are not including their partners income in the registration form. Be sure you’re including this (if it applies to you) to ensure that any mortgage/rent payment will be deducted from your total household income, rather than just your own. You can check what you've entered in your account settings. You can find these in the top right corner immediately after you login.

When you see 'fair' or less here, this doesn't mean you'll be rejected. It means that if you were to apply, you're likely to be given credit at a slightly higher rate or your credit limit may not be as high as expected.

Because these results are made up of a number of different elements in the club and that we don't have access to the data behind the results. This makes it impossible for us to say exactly why you're seeing this particular result in your account.

However, if you click through to your full affordability analysis, it will break down different elements of your affordability and provide you with greater detail.

It might be worth checking out our handy guide on what your Credit Score really means:

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

I hope you find this information helpful but if you have any questions, just let me know.