Why’s it a thing?

Mr_Singleton

Back in the late 90’s was in America when a friend was joining the local public library. Was hugely surprised when they said they had to check her credit rating. Was told that a persons credit rating was hugely important.

Why has this obsession been exported to the UK? Other than financial institutions wanting to monitize people’s financial data what do consumers get out of it?

I have absolutely no interest in my credit rating whatsoever yet am bombarded with adverts offering me credit file services.

[Deleted User]

It’s not a thing.

There is no universal credit rating or credit score in the uk.

It’s a marketing gimmick to sell you “improvement” products.

The only thing that matters in the uk is credit history.

binaryuniverse

In the UK nobody has a set rating that lenders will use. They will delve through your credit history and work out if you're a fit for their business.
To be fair, these is a lot of confusion around the words 'rating/score/history/report' and all 4 end up being used interchangeably, for the same thing or different things.

Another problem is that people become far more concerned over massaging the headline score that the credit reference agencies give you, despite those scored not being used by lenders, and becoming overly obsessed with small 'drops' which, even if lenders did use those scores, would still be minute enough to mean nothing anyway.

With this, there is the belief that, as along as they have a good score, all should be fine. But lending money is far more nuanced than that. Different lenders have different profiles, and lend to different types of people with different needs. They will use your credit history to determine whether you are an acceptable risk to their business. You can check your history, with the credit reference agencies, via various means and this gives you a far better picture on how you need to improve your 'rating' than looking at a nonsense number.

Anyway, if you want to get credit in the UK, then it is always a good idea to go through your files and check everything is in order. But always ignore any single rating or score.

kuratowski

Mr_Singleton wrote: »

Why has this obsession been exported to the UK? Other than financial institutions wanting to monitize people’s financial data what do consumers get out of it?

I think it is part and parcel of the country's obsession with house prices. For most people, in order to buy a house they need a mortgage. So fretting constantly about creditworthiness follows from fretting constantly about house prices. At least that's my perspective from the kinds of people I know and talk to...

RG2015

Mr_Singleton wrote: »

Back in the late 90’s was in America when a friend was joining the local public library. Was hugely surprised when they said they had to check her credit rating. Was told that a persons credit rating was hugely important.

Why has this obsession been exported to the UK? Other than financial institutions wanting to monitize people’s financial data what do consumers get out of it?

I have absolutely no interest in my credit rating whatsoever yet am bombarded with adverts offering me credit file services.

One reason to regularly check you credit file is to have an early warning of possible identity theft.

Your credit files with Experian, Equifax and Transunion (formerly Callcredit) include details of searches on your credit file. If you see a search that you did not instigate yourself it may be someone else using your data.

Your credit files with the three agencies already exist. To me it makes sense to know every detail that is on these files that is available to banks, financial agencies and others authorised to carry out financial and identity checks.

John_G_Jones

As above, your contention is wrong, it’s not something which exists in the U.K., but if you are asking the wider question about credit files it’s hugely useful as it lets reliable borrowers demonstrate this fact and so access credit at low rates.

For example I decided to buy my new house before selling my old one recently and was able to borrow a pretty large amount at 1.4% interest only as the bank could see my history of always repaying everything on time, going back over years.

Without a credit recors no bank would have been comfortable offering that deal.