Credit Club - disposable income very odd result

sghughes42

On my MSE Credit Club report, the 'Disposable Income' is considered very weak. I'm struggling to understand how - could it be a bug in the algorithm? Combined household income £100k, no kids or financial dependents, mortgage is only £850 a month and is joint, <£70k to repay.

How on earth is that a very weak disposable income position? The bumpf on the score suggests it doesn't take anything on the credit file in to account, not that I've got anything in my file that is worrying anyway.

DullGreyGuy

How much is left to pay is going to be irrelevant, disposable income is your net income less the answers to the questions they ask about your spending, less any other things they estimate or can get from other sources. 

Without knowing everything you said, all the info they have etc no one is going to know if you accidentally gave your annual council tax bill rather than monthly or you've a tone of debts etc. Some will have good disposable income off a small salary, others will have double your salaries but have big commitments meaning the bank is empty every month 

CliveOfIndia

It's largely irrelevant what the CRA's assessment of your disposable income is - and the score you see on your report is completely irrelevant.

If you ever need to apply for a credit product, a lender will look purely at the raw data relating to your credit history and outstanding debt, along with information you supply relating to your income.  They'll feed this information into their own internal scoring algorithm, and decide whether or not they want to lend to you.

Since the CRA's are not the ones lending you money, who cares what they think of you?  You just need to ensure that the raw data are factually correct, ignore their assessment of your credit-worthiness.

penners324

Very likely any payments sent to a savings account is shown as a payment / regular outgoings in the affordability checker.

Grumpy_chap

sghughes42 said:

On my MSE Credit Club report, the 'Disposable Income' is considered very weak. I'm struggling to understand how - could it be a bug in the algorithm? Combined household income £100k, no kids or financial dependents, mortgage is only £850 a month and is joint, <£70k to repay.

How on earth is that a very weak disposable income position? The bumpf on the score suggests it doesn't take anything on the credit file in to account, not that I've got anything in my file that is worrying anyway.

Have you linked your current account to the Credit Club?

It will see £xxx income, followed by all the outgoings including any savings and discretionary spend and then work out there is nothing left.  At least, that is how I understand the algorithms work.
No consideration that you live to your means and, for example, if you moved to a bigger house with a bigger mortgage, you'd then spend less on meal out (or whatever).

Nasqueron

I wouldn't pay any attention the credit site marketing stuff like that - if you want a finance product, apply with your honest income and outgoings and they will decide. Neither MSE nor Experian are a lender so what they think is poor income may be completely the opposite of a lender 

sghughes42

Grumpy_chap said:

Have you linked your current account to the Credit Club?

It will see £xxx income, followed by all the outgoings including any savings and discretionary spend and then work out there is nothing left.  At least, that is how I understand the algorithms work.
No consideration that you live to your means and, for example, if you moved to a bigger house with a bigger mortgage, you'd then spend less on meal out (or whatever).

Thanks to you and the others who pointed this out - that's exactly what I do. After all, why would I leave money in a current account that pays little interest when I can move it in to a higher rate easy access one? I guess it's an easy assumption to make, and as the credit report doesn't show the credit balances in accounts they won't know just how much my savings are increasing by per month.

Hopefully as others have said if I needed to apply for credit they'd look in a little more detail. It just got me worried that I'm saving >£1k per month and being told I can't afford any credit!

Nasqueron

sghughes42 said:

Grumpy_chap said:

Have you linked your current account to the Credit Club?

It will see £xxx income, followed by all the outgoings including any savings and discretionary spend and then work out there is nothing left.  At least, that is how I understand the algorithms work.
No consideration that you live to your means and, for example, if you moved to a bigger house with a bigger mortgage, you'd then spend less on meal out (or whatever).

Thanks to you and the others who pointed this out - that's exactly what I do. After all, why would I leave money in a current account that pays little interest when I can move it in to a higher rate easy access one? I guess it's an easy assumption to make, and as the credit report doesn't show the credit balances in accounts they won't know just how much my savings are increasing by per month.

Hopefully as others have said if I needed to apply for credit they'd look in a little more detail. It just got me worried that I'm saving >£1k per month and being told I can't afford any credit!

Savings are not, and never will be, taken into account for things like loads or cards because you could spend all the money on a holiday tomorrow. Apply direct with lenders showing your income and they will check your credit file and score you on their own criteria, not the gimmick that CRAs use

sghughes42

Nasqueron said:

Savings are not, and never will be, taken into account for things like loads or cards because you could spend all the money on a holiday tomorrow. Apply direct with lenders showing your income and they will check your credit file and score you on their own criteria, not the gimmick that CRAs use

I feel you are missing the point slightly. It's not that I have savings, it is the fact they are thinking the money I'm saving each month is being spent, meaning I have no spare income.

As you say, hopefully a lender would see that rather than assuming all money leaving a current account is being spent.

Nasqueron

sghughes42 said:

Nasqueron said:

Savings are not, and never will be, taken into account for things like loads or cards because you could spend all the money on a holiday tomorrow. Apply direct with lenders showing your income and they will check your credit file and score you on their own criteria, not the gimmick that CRAs use

I feel you are missing the point slightly. It's not that I have savings, it is the fact they are thinking the money I'm saving each month is being spent, meaning I have no spare income.

As you say, hopefully a lender would see that rather than assuming all money leaving a current account is being spent.

 I was replying to your specific comment

"I guess it's an easy assumption to make, and as the credit report doesn't show the credit balances in accounts they won't know just how much my savings are increasing by per month."

CRA would ignore your credit balance regardless

However, lenders don't look at individual transactions on accounts any more than MSE does. The credit club, if you told them you earn 100k but "spend" 99k including savings, thinks you have no spare cash.

landsbeyondthesea

I think a lot of the calculated sections of the report have bugs (apart from the score, which shows the same on my Experian account).

I have "very weak" credit card and loan affordability and have done for years yet I'm also listed as having 100% chances of getting a top 0% spending card or a top balance transfer card, along with a 99% credit hit rate.

I never have any trouble when applying for credit.