I thought 'credit score' was meaningless

Ebe_Scrooge

adamp87 said:

I’m very surprised we’ve never been able to have someone answer a Q&A or post on here whom has worked in a company dealing with applications that can explain the process a little better for people to understand.

OK, I currently work as an IT analyst at a bank.  You'll understand, hopefully, if I'm a little cagey about specific details, given that the internal scoring systems vary from lender to lender, and are commercially sensitive.  What I can tell you is that we have a "scoring engine", several in fact, that take in a data feed from Experian.  We use different criteria depending on whether the customer is applying for a loan, a credit card or an insurance product to be paid by instalments.  We look at income, current available credit, current indebtedness, address history, repayment history, CCJ markers, late payment markers, and a whole host of other data items.  This churns through the algorithms, and the scoring engine assigns a unique score based on many parameters (largely based on current risk appetite, market volatility, etc., and changes regularly).  The score then gets fed into another more specific approval engine - one for loans, one for credit cards, etc., which again has its own set of operating parameters.  The upshot is that it spits out a result - declined, or approved with a credit limit (for cards) of £x and an APR of y%.

Sounds complicated ?  Believe me, it is - I've spent weeks going through the code in order to understand it, before I can add in yet another permutation for a new product that's being developed.  But that, in simplified terms, is how it works.  And since every lender will have different requirements, different risk appetites, different target customer profiles, a single universal score provided by a third-party cannot possibly have any meaning whatsoever to them.

Shakin_Steve

Hence the reason customer service agents have absolutely no idea why you've been declined when you ring up. "Computer says no" is actually an accurate statement.

femalemonarchfemalecanine

msallen said:

jet01 said:

Because Martin Lewis has in the past correctly pointed out the often meaningless nature of the credit score systems, people on here seem to feel honour bound to repeat this in a mantra like fashion every time the phrase credit score is used whatever the context, like good disciple’s of their messiah.

You couldn't be more wrong. I think you'll find that most of the longer standing and more knowledgeable contributors to these boards have no particular love for Martin Lewis, or indeed the rest of the site outside of the forums. The only people liable to think of him as some sort of messiah are those who know so little about personal finance as to think that credit scores are meaningful.

I like him, blimey, he tries to help people, what's wrong with that. Even hmrc like him ;-)

bellaboosmapu

Ebe_Scrooge said:
We look at income, current available credit, current indebtedness, address history, repayment history, CCJ markers, late payment markers, and a whole host of other data items.

I've developed the scorecards themselves and agree they can be very complicated! But, is there anything in your Experian feed than begins with code E5?

dr_adidas01

bellaboosmapu said:

Ebe_Scrooge said:
We look at income, current available credit, current indebtedness, address history, repayment history, CCJ markers, late payment markers, and a whole host of other data items.

I've developed the scorecards themselves and agree they can be very complicated! But, is there anything in your Experian feed than begins with code E5?

Elaborate on what E5 means?

jcontest

femalemonarchfemalecanine said:

msallen said:

jet01 said:

Because Martin Lewis has in the past correctly pointed out the often meaningless nature of the credit score systems, people on here seem to feel honour bound to repeat this in a mantra like fashion every time the phrase credit score is used whatever the context, like good disciple’s of their messiah.

You couldn't be more wrong. I think you'll find that most of the longer standing and more knowledgeable contributors to these boards have no particular love for Martin Lewis, or indeed the rest of the site outside of the forums. The only people liable to think of him as some sort of messiah are those who know so little about personal finance as to think that credit scores are meaningful.

I like him, blimey, he tries to help people, what's wrong with that. Even hmrc like him ;-)

I like how he pushed for PPI to be reclaimed by all, so much so that perhaps as much as 1/4th of all claims were known to be fraudulent.

What I never got was that he never pushed for other types of banking (staff based) fraud to be tackled.  Premium account upgrades, and staff lying about personal information being the main problem.  Can't say I love or hate ML (never thought of it), but there's a ton of good consumer information on these forums and the website (MoneySuperMarket owns it now).  He has done a lot of consumer good over the years too by throwing the power of his persona behind things that needed "celebrity" backing.  His "business" is selling us his help, he has made a lot of money off of his MSE persona so I am sure that's been a large driving force in his life (even if he doesn't realise it).

As to the credit "score" debate.  One should use it as a guide and not a rule.  If the CRA says your score is horrible then you can be sure most other institutions will as well.  If your score is great then shop around and see if you meet the criteria to try for the great products. 

jcontest

dr_adidas01 said:

bellaboosmapu said:

Ebe_Scrooge said:
We look at income, current available credit, current indebtedness, address history, repayment history, CCJ markers, late payment markers, and a whole host of other data items.

I've developed the scorecards themselves and agree they can be very complicated! But, is there anything in your Experian feed than begins with code E5?

Elaborate on what E5 means?

E(x) should be the address verified by electoral role.  So if you have registered previously at 4 locations before this one then E5 would be the oldest one on the list.

Experian keeps moving my sons ER registration to me lol... Different first and middle isn't enough to make the computer go HMM....  Tired of sending in a query to have this fixed, so going to leave it.  Equifax removed it and never added it back, even TransUnion has it on there list too.

eskbanker

jcontest said:

What I never got was that he never pushed for other types of banking (staff based) fraud to be tackled.  Premium account upgrades, and staff lying about personal information being the main problem.

Like anyone else, he has to pick his battles, rather than leaping to the barricades on every single issue, and presumably does so based on some sort of evaluation about how serious it is and how many people it's likely to affect.  The packaged account misselling bandwagon has been rumbling along since at least 2013 but I can't say I've ever heard of 'staff lying about personal information' being any sort of issue, never mind 'the main problem', so I'd suggest that everyone has their own opinions about what's important to them but someone in his position has to choose carefully which causes to throw his weight behind....

MinuteNoodles

mazzetti said:

Well it was a genuine question and I have always wondered about two people applying for say a Lloyds bank credit card - one with a credit score of 999 and one with a credit score of 15 and and the perceived wisdom on here is that the numbers just don't matter....

Have you not seen posts from time to time from people who are still bankrupt or recently discharged from bankruptcy reporting they have a 999 score?
If the numbers had any meaning someone who is still or has just been discharged from bankruptcy should have a 15 score not a 999.

whitesmith

MinuteNoodles said:

mazzetti said:

Well it was a genuine question and I have always wondered about two people applying for say a Lloyds bank credit card - one with a credit score of 999 and one with a credit score of 15 and and the perceived wisdom on here is that the numbers just don't matter....

Have you not seen posts from time to time from people who are still bankrupt or recently discharged from bankruptcy reporting they have a 999 score?
If the numbers had any meaning someone who is still or has just been discharged from bankruptcy should have a 15 score not a 999.

Did  quick Google but couldn't find anything about that - could you post a link if possible. Thanks