MSE credit club question

cotys

Dear all, I'm a bit puzzled regarding MSE Credit Club's assessment, specifically the debt ratio in the affordability section. MSE says my debt ratio is only Fair (3 on a 1-5 scale) because "This is when you have less than 1% of the income you’ve told us you have as debt [... ] most lenders prefer to see some credit on your report to use as a basis for future lending.".

My credit history is clean: I've never missed a payment, no defaults, on electoral roll, good credit limits with very low usage rate. The report is showing 8 accounts: 2 current accounts, 2 credit cards, 1 mortgage, 3 other (gas, electric, mobile), no loans.

Very low credit utilisation rate, as I'm indeed using less than 1% of my total credit card limits. I'm using one of my credit cards for everyday spending, but I pay it in full every month - so I do have credit and I'm using it responsibly. However, this seems to be a flaw in MSE's view? Why does MSE do that: giving a low Debt Ratio rating to people with no unsecured debt? This is basically encouraging people to incur (carry) more debt, so that they can be offered even more? Isn't this going against MSE's philosophy?

[Deleted User]

It's how Experian tend to rate you, as they don't understand risk assessment.

Fortunately, lenders will see you in a much more positive light, which is all that matters.

Willing2Learn

I would simply ignore the stuff on debt ratio and utilisation as MSE is not a lender and their statistics are therefore meaningless.

As long as you have a solid history showing that you can manage credit accounts successfully, then you are doing the right things. (I am assuming you are using your two credit cards regularly and paying off the balances in full each month...)

Edit: And welcome to the forum

cotys

Thanks guys, that low Debt Ratio rating (3 out of 5) is computed by MSE, not by Experian. The Experian report is on a separate tab and the score shown is currently 999.

I know all these ratings are pretty much useless, and it's the credit history/behaviour that actually matters to lenders... but I believe MSE sends the wrong message to people with that assessment. No unsecured debt with a good available credit limit should be seen as excellent/ideal, not a problem.

[Deleted User]

MSE aren't lenders - so they cannot rate or "score" anyone regardless.