Experian showing excellent score which can't be true

Eternal1

SnowTiger wrote: »

Experian seems to give everyone a starting score of 999, then knocks points off for bad behaviour.

That means someone with no or little history is likely to score high.

Prospective lenders will look at the actual data on your report when making a discussion, along with other information you give them. Salary and household make up for example. No or little data means you have no or little track record regarding credit.

If that's the case, you're realistically looking at Vanquis, Capital One or a starter card from Barclaycard or Tesco. An organisation you already have financial dealings with might score you higher, based on the data they hold about you.

Yup, I applied for the capital one platinum card and got approved with a £200 limit which means I can at least start to build a good credit history.

I signed up with Noddle and CreditWise and both list my score as fair so at least I have some idea of where I am on the scale, I think it's very poor and frankly unprofessional that Experian listed my credit score as excellent... It's obvious my score isn't excellent and they should score me based on my credit history, or in my case lack of credit history.

Thanks for the advice.

[Deleted User]

Fingerbobs wrote: »

surely Experian must base this score on similar criteria to those a lender would use to "score" your creditworthiness?

I can catergorically confirm they don't.

[Deleted User]

If your “score” is so high then why did you get a card with only a £200 limit, yet people with much lower scores get offered limits in the thousands and tens of thousands?

Seriously ignore it

Lenders use their own personalised in-house algorithms to score you internally for their own products which you are applying for - which is obviously not for sharing with joe public.

Terry_Towelling

Eternal1 wrote: »

I'm also going to try and stay under 20% credit utilisation as I heard that's really important too.

Just a little disappointed about the credit score thing because that's the only real way to gauge how well you're performing and how likely you are to get accepted for new cards and mortgages, loans etc but if it's not relevant then you don't really know how good your credit rating is.
.

Are you planning on taking out a mortgage or getting more credit cards? If not, you don't really need to know how good your credit rating is anyway. I've checked mine once in the 36 years since I started borrowing and that was just out of curiosity. It really does just seem to be a new marketing strategy and it wouldn't surprise me if things eventually started to get mis-sold on the back of it.

As for the 20% utilisation, I presume that relates to unpaid monthly balances, but my strategy with a credit card for the past 30+ years has been to use it for everything I have to buy and always clear it in full each month. This has the added advantage in the first month of creating a bit of a cash buffer in your current account as your money doesn't get taken until a few weeks after the credit card statement comes in. The buffer is a bit illusory because the money is spoken for but it can help if there are any cash-flow problems. I accept that a £200 credit limit may be a bit restrictive but you shouldn't be afraid of using it.

Eternal1

Terry_Towelling wrote: »

Are you planning on taking out a mortgage or getting more credit cards? If not, you don't really need to know how good your credit rating is anyway. I've checked mine once in the 36 years since I started borrowing and that was just out of curiosity. It really does just seem to be a new marketing strategy and it wouldn't surprise me if things eventually started to get mis-sold on the back of it.

As for the 20% utilisation, I presume that relates to unpaid monthly balances, but my strategy with a credit card for the past 30+ years has been to use it for everything I have to buy and always clear it in full each month. This has the added advantage in the first month of creating a bit of a cash buffer in your current account as your money doesn't get taken until a few weeks after the credit card statement comes in. The buffer is a bit illusory because the money is spoken for but it can help if there are any cash-flow problems. I accept that a £200 credit limit may be a bit restrictive but you shouldn't be afraid of using it.

People online were saying using a small amount of your available credit is better for your credit rating rather than using it all or using a lot of it. Not sure if it's a myth but a lot of popular youtube channels keep repeating it.

[Deleted User]

There’s no such thing as a credit rating

[Deleted User]

Eternal1 wrote: »

People online were saying using a small amount of your available credit is better for your credit rating rather than using it all or using a lot of it. Not sure if it's a myth but a lot of popular youtube channels keep repeating it.

It's important to not seem reliant on credit, which is where that advice comes from.

However, if you're clearing in full, and especially if you have a low limit, it's not generally that important.

Eternal1

Deleted_User wrote: »

It's important to not seem reliant on credit, which is where that advice comes from.

However, if you're clearing in full, and especially if you have a low limit, it's not generally that important.

Got it, thanks.

SnowTiger

Eternal1 wrote: »

People online were saying using a small amount of your available credit is better for your credit rating rather than using it all or using a lot of it. Not sure if it's a myth but a lot of popular youtube channels keep repeating it.

Myth.

Whenever I take a card up to the max I get my limit upped a month or so later.

I do leave a little headroom for the odd coffee or sandwich I forgot I bought. Difficult to do when you have a low credit limit though.

Another myth sometimes mentioned here is that you should carry a small balance from one month to another and pay a little interest.

Eternal1

SnowTiger wrote: »

Myth.

Whenever I take a card up to the max I get my limit upped a month or so later.

I do leave a little headroom for the odd coffee or sandwich I forgot I bought. Difficult to do when you have a low credit limit though.

Another myth sometimes mentioned here is that you should carry a small balance from one month to another and pay a little interest.

Well I've just found this article by Experian

https://www.experian.com/blogs/ask-experian/how-utilization-rate-affects-credit-scores/

"Your utilization rate is an important indicator of credit risk. To calculate your balance-to-limit ratio, divide the balance by the credit limit for that account. To calculate your total utilization compare your total balances to your total limits.

A high utilization rate is a sign that you may be experiencing financial difficulty and is a strong indicator of lending risk. As a result, high utilization hurts credit scores and can cause lenders to be reluctant to extend additional credit."

Sounds pretty logical, I think I'll just stick to under 20% just to be safe, I don't even need the money my credit card offers me anyway but I just want to build good credit.