Don't understand how credit score works?

gionnetto

I've ready everywhere that a credit application (hard search) will drop your score, and so will opening a new account.
I applied for a credit card, got it but... the score (Experian) hasn't dropped??? Yet, both the search and the new account are already in the online report.

This is so confusing! I don't understand how it works.

cjv

It's because the score is made up by Experian as a marketing gimmick which manipulates human nature, similar to addictive games where you always strive to improve your "score".

The score is not used by lenders.

[Deleted User]

The score will go up if France beat Croatia, unless it goes to penalties, in which case you go back to zero.

DCFC79

The problem is your focusing on the score, forget the score and carry on with life.

gionnetto

Yes, and no.

Meaning, I don't like to do things by trial and error, for one. For two, if a lender I am interested in getting credit from checks, say, Call Credit rather than Equifax then it means that, for some reason, that lender thinks Call Credit is more reliable for the purposes it has. And, if I am weak on that CRA report, my chances are slimmer than they'd be otherwise. I have no inclination in "apply and see what happens". I like to get prepared in advance, and make an educated guess before making an application. And I usually plan months in advance.

antrobus

gionnetto wrote: »

...

This is so confusing! I don't understand how it works.

Nobody does really.

But here are some clues.
https://www.lovemoney.com/news/71771/credit-score-rating-what-it-means-check-uk-credit-points

boo_star

Your credit score is meaningless.

It's a number generated by one company. Another company's score will likely be different.

I've seen people who were bankrupt getting 999 scores with Experian and people who have immaculate files getting much lower scores.

Ignore what the CRA's say. Actual lenders don't use them.

[Deleted User]

Every application will be a !!!8220;guess!!!8221; as lenders use their own system to rate you and judge your credit worthiness.

Ignore any scores or ratings given by CRA!!!8217;s.

System

gionnetto wrote: »

Yes, and no.

For two, if a lender I am interested in getting credit from checks, say, Call Credit rather than Equifax then it means that, for some reason, that lender thinks Call Credit is more reliable for the purposes it has. And, if I am weak on that CRA report, my chances are slimmer than they'd be otherwise. I have no inclination in "apply and see what happens". I like to get prepared in advance, and make an educated guess before making an application. And I usually plan months in advance.

The same day my Experian score went up to 999 my Clearscore dropped 80 points.

Companies DO NOT look at the number you get from a CRA because they can't see it, only you can. All they look at is the contents of your credit file with a CRA and use their own internal scoring to decide whether to lend to you and at what rate.

You will NOT be weaker on one CRA than another because all CRAs should have EXACTLY THE SAME INFORMATION and as my example of Experian and Clearscore shows, the numbers they give you are meaningless because with the same information one upped mine to the max, the other has only given me at best 75% of the max and dropped it over 15% one month when there were no changes other than my mortgage balance dropping because of another month repayment.

The CRA scores are all a load of crap and the sooner people figure that out the less stressful their lives will be. Concentrate on what it says are good and bad factors, not the number.

MEM62

gionnetto wrote: »

Yes, and no.

Meaning, I don't like to do things by trial and error, for one. For two, if a lender I am interested in getting credit from checks, say, Call Credit rather than Equifax then it means that, for some reason, that lender thinks Call Credit is more reliable for the purposes it has. And, if I am weak on that CRA report, my chances are slimmer than they'd be otherwise. I have no inclination in "apply and see what happens". I like to get prepared in advance, and make an educated guess before making an application. And I usually plan months in advance.

The only thing that is important is the data on your reports. As long as you ensure that is correct then whatever rating the CRA's give you is completely irrelevant. Their view is neither seen not taken into account by lenders when making decisions and therefore you cannot be favoured or otherwise by lenders based on your standing with a particular CRA.

You may not be inclined to "apply and see what happens" but in the end that is the only option open to you. In many cases it will not boil down to your credit stand but down to whether a particular financial institution want's your business or business from people in your demographic or not. People in perfectly good standing have been refused by lenders where the lender decides that they do not want their business. There are no certainties when applying for credit.

Anthorn

gionnetto wrote: »

I've ready everywhere that a credit application (hard search) will drop your score, and so will opening a new account.
I applied for a credit card, got it but... the score (Experian) hasn't dropped??? Yet, both the search and the new account are already in the online report.

This is so confusing! I don't understand how it works.

Not strictly true: More than a few credit applications are likely to be regarded as suspicious by lenders and will therefore be regarded as such by CRAs which offer a credit score and therefore the score will drop. The time period for more than a few credit applications used to be 6 months but now it's a year.

How it works overall in a credit history is the recording of a credit profile which will be of interest to lenders. In that credit profile, credit searches resulting from credit applications are just one parameter. Other parameters amongst others might be whether you only pay the minimum payment, whether you regularly pay late or whether you regularly miss payments.

Strictly speaking, when we refer to the building or re-building of a credit history what we are actually talking about is building or re-building a credit profile.