Credit Scroe NEVER Changes...

[Deleted User]

tenchy wrote: »

So, some lenders buy a/the score from the CRAs. What evidence is there that they buy a different score from that seen on your file? Why would the CRAs have such a 'dual-scoring' system?

It's very simple.

The score consumers see is a highly inaccurate one size fits all score.

Smaller lenders buy a score based on their own criteria, which is therefore entirely different from the consumer one.

More sophisticated lenders create their own scores by processing the data themselves.

sourcrates

what your credit score really means

By Martin | Edited by sourcrates

A long read, but explains it well.



If you've paid to get a credit score from one of the credit agencies, how reliable is it? We run through the truth about credit scores.

I have just found out that my credit score has dropped should I be worried? Right, hold on there for a second. Actually, you don't have a credit score in the UK, you do not have a credit rating, and there is no such thing as a credit blacklist.
So, when you say your credit score has dropped what exactly do you mean by that?

Well, I paid a credit reference agency to check my credit score and it's dropped. OK. So you went to one of the credit agencies Equifax, Experian and Callcredit and paid them a sum to get your 'credit score'. You'll get a score up to 600 from Equifax, up to 999 from Experian and up to five from Callcredit.

That's very common, and it's common to be confused about exactly what this is.

So I do get a score, but it's worthless? What you have to understand is this score does not really mean that much. The first thing you need to appreciate is when you apply to a lender is that it will judge you based on three criteria.

Firstly, your application form details (which the credit reference agencies do not have). Secondly, any past dealings you have had with that lender (which the credit reference agencies might not know). And thirdly, the information contained in your credit reference files (which the credit rating agencies do know).

So, the first thing to understand is that this score is based on incomplete information. The next thing to understand is different lenders are looking for different things, so they score you differently.

Just because one lender rejects you does not mean another lender will do the same. The idea that this is all based on some simple score given to you by one of the credit reference agencies is false. At best, it's just an indicative guide to roughly how good or bad a risk you are.

In that case why do they sell it to me? Well, the key word in what you have just said is sell They sell it to you. Credit reference agencies used to make all their money from selling data to lenders. The idea was to help lenders predict your behaviour, which allowed them to assess whether or not you were a good person to lend to. They do that by deciding not just if you are a good or bad risk, but if you will be profitable or not.

Then some bright spark at the credit reference agencies realised they could generate a business called 'credit management'. It meant they could start to sell you all the other sorts of data and monitoring products for the first time and start making money from it. You ask why they sell it to you well, it makes them money.


Does that mean it is completely worthless and I should ignore it? No, I would not go that far. It's a loose indication of your rough creditworthiness, and certainly it's worth looking at the things they say are blemishes to see what you can do to improve your credit.
Where I think scoring does not work is, for example, imagine you closed a credit card with a high credit limit that you'd had a long time, but didn't use any more. It's perfectly possible that your score would drop because a long relationship means it's a credit card that could give a good prediction of your behaviour.

But it also needs to be understood closing this would count as a positive for some lenders because you had less available credit.
The fact that your credit scorer has decided to reduce the score it gives you because you've cancelled that card does not mean other lenders will do the same. Nor does it mean there's anything wrong.

OK right, I understand. So what should I do to improve my credit? Well, it's important to think of this like a beauty parade. Just as everybody finds different people attractive so do lenders.

There are general things you can do to 'rouge' up your credit appearance that make sense everywhere. As this guide's only 60 seconds long, I'm not going to go into that here. Instead, read the full Credit Scores guide.

It's very important to understand this is art, not science.

What works for one lender wont necessarily work for another so there's no tried and tested right answer.

bazzyb

tenchy wrote: »

So, some lenders buy a/the score from the CRAs. What evidence is there that they buy a different score from that seen on your file? Why would the CRAs have such a 'dual-scoring' system?

Most lenders will calculate their own internal scores from the raw data on the credit file. Their score will also be made from other data which is not on your file, so buying a score from a lender would be pointless in that respect.

It is also true that some lenders will purchase a score from the CRA along with your data. These tend to be smaller lenders, and the reason the scores differ is because the score is calculated according to that lender!!!8217;s individual scorecard rather than a generic score. So the CRA could take your data and present 5 different scores to 5 different lenders according to how they want the score calculated.

This is why people advise to ignore the score.


Edited to add: Clearly other posters write the same things much quicker than I do

DigitalDevil

bazzyb wrote: »

You need to be looking at your credit history rather than your score. You can see the data that is visible to the lender, and each lender will use that data differently.

Well my Credit History is bad, I have defaults on three accounts starting from the beginning of 2014 when I entered a DMP (biggest mistake of my life) and running until the end of 2016 when all the accounts were settled. So the last default registered on my file is from December 2016, so does that mean I’ll have this visible for creditors to see until 2022 (6 years from default), and it will then take me another what? 3-4 years to rebuild my credit score to a point where I’ll be eligible for credit again?

If that’s true I’d have rather just slit my wrists and been done with it back in 2014 when everything else was going to pot.........

Lauralou79

Your 'score' may not change but your history is the important bit and time is the key. Your history shows that accounts are settled and the last default is 18 months ago.
You now have to maintain your credit history in a good way, no more defaults, missed payments etc and as time passes banks/lenders will see you in a more positive light.
People get mortgages with defaults of a few years old so don't lose hope. Time and good money management is a healer.

bazzyb

DigitalDevil wrote: »

Well my Credit History is bad, I have defaults on three accounts starting from the beginning of 2014 when I entered a DMP (biggest mistake of my life) and running until the end of 2016 when all the accounts were settled. So the last default registered on my file is from December 2016, so does that mean I’ll have this visible for creditors to see until 2022 (6 years from default), and it will then take me another what? 3-4 years to rebuild my credit score to a point where I’ll be eligible for credit again?

If that’s true I’d have rather just slit my wrists and been done with it back in 2014 when everything else was going to pot.........

The first question would be, if you've been through all that why are you in a rush to take out more credit?

You would need to wait until the defaults have dropped off or are about to drop off to have any real chance of getting credit with the best prime lenders and you would need to keep everything up to date to do so - so the best part of 6 years.

You may be able to get access to some sun-dried offers when your file shows that you have not had any late payments / defaults / pay day loans / unauthorised overdraft / etc for 2/3/4 years - but I would seriously proceed with caution as the interest rates will be astronomical. If in a year's time for example you are able to get a high APR credit card, then spending on this and clearing the balance in full every month will help a little in improving your history.

DigitalDevil

bazzyb wrote: »

The first question would be, if you've been through all that why are you in a rush to take out more credit?

You would need to wait until the defaults have dropped off or are about to drop off to have any real chance of getting credit with the best prime lenders and you would need to keep everything up to date to do so - so the best part of 6 years.

You may be able to get access to some sun-dried offers when your file shows that you have not had any late payments / defaults / pay day loans / unauthorised overdraft / etc for 2/3/4 years - but I would seriously proceed with caution as the interest rates will be astronomical. If in a year's time for example you are able to get a high APR credit card, then spending on this and clearing the balance in full every month will help a little in improving your history.

Circumstances were caused through having credit for both myself and my ex partner all in my name, when we split it left me with two car payments etc etc which resulted in the defaults and eventually the DMP....

I’m now almost 40, I‘ve had to move back to my parents as I can’t get a mortgage of my own, I have to get a taxi to work each day as I’m unable to get a car on finance, so knowing I have another 6+ years of this puts my mindset to suicidal.... really what’s the point.... it’s a pretty bad future tbh.....

......to top it off you tried been single.... almost 40.... no car and living with parents....

bigisi

You don!!!8217;t need finance to buy a car, save up. You don!!!8217;t need to get a mortgage, you could rent. Save up.

With respect, nobody here is your friend so nobody really cares about your hammed up !!!8220;woe is me!!!8221; statements. People are more than happy to help but you have to be prepared to help yourself.

A good first step would be to head to the Debt Free Wannabe or budgeting boards and get help with budgeting your income so you have spare to save for a car and rent deposits etc to put you in a better place. None of this is going to happen overnight though but with your attitude above it will take a whole lot longer. Think positive, good luck!

DigitalDevil

bigisi wrote: »

You don!!!8217;t need finance to buy a car, save up. You don!!!8217;t need to get a mortgage, you could rent. Save up.

With respect, nobody here is your friend so nobody really cares about your hammed up !!!8220;woe is me!!!8221; statements. People are more than happy to help but you have to be prepared to help yourself.

A good first step would be to head to the Debt Free Wannabe or budgeting boards and get help with budgeting your income so you have spare to save for a car and rent deposits etc to put you in a better place. None of this is going to happen overnight though but with your attitude above it will take a whole lot longer. Think positive, good luck!

Save up to buy a house or car? The entry house price in my area is £250k..... a reasonable car is £10k..... if I save my entire income for 10 years I still wouldn’t have enough to buy both.....

I don’t know how anyone looking at such a bleak future could find anything “positive” to take from it.....

John-K_3

tenchy wrote: »

So, some lenders buy a/the score from the CRAs. What evidence is there that they buy a different score from that seen on your file? Why would the CRAs have such a 'dual-scoring' system?



I think a big problem here is that no one who contributes to this forum actually works for any of the credit bureaus, so we never get definitive answers on anything.

That's not true, there are plenty of definitive answers and then there are people like you who just think that they know better, and so don't believe what they read.