Credit card usage affecting credit scoring

lakesider52

For a number of years now I put all my expenditure on my credit card and then have a direct debit to pay it off in full each month. However, it appears Experian credit scoring is old fashioned/unsophisticated and does not recognise this increasingly popular usage of credit cards because many provide reward points or air miles. I notice when my balances go up, it has an adverse effect on my credit score which is plain wrong as my financial strength has not diminished. Isn't it about time credit scoring moved into the 21st century!

la531983

No, because the 3 digit score is meaningless, seen by you only to try and cross sell you other credit products, and isnt used in credit lending decisions. It could go up 20 points when it snows and down 40 points when it rains for all I care.

So essentially the whole thread is based on a fallacy. Sorry.

CliveOfIndia

Since your credit score is not used - nor even seen - by any lender, it matters not one jot whether it moves up, down or sideways.

What matters is your credit history - you need to show a pattern of responsible borrowing and repayment.  Using the card regularly and always repaying in full every month - as you say you're doing - is absolutely the correct thing to do.  Lenders will see this pattern of usage on your credit history and will view it very favourably.

If the score bothers you, I'll happily send you some of my points, they're of no use to me whatsoever.

daivid

As already said the 3 digit score is meaningless. On top of that Experian is slow to update its data; the credit balance currently showing on my Amex was paid in full in Jan, similarly last year I used my 0% overdraft for a few weeks and that took near 3 months to return to zero with Experian. If you are spending and paying in full each month a provider will see that as responsible use so ignore Experian.

Dandytf

I find Experian reporting most helpful.
Think I'll never reach Dizzy Heights of 900+ Equifax Score and Karma -stuck in medium score until Eternity.
Experian Does have very good Percentage usage and Score explainer.

Nasqueron

Dandytf said:

I find Experian reporting most helpful.
Think I'll never reach Dizzy Heights of 900+ Equifax Score and Karma -stuck in medium score until Eternity.
Experian Does have very good Percentage usage and Score explainer.

But the score, as you know, is meaningless, so who cares?

Your huge persistent debt and continual attempts to take on more debt are what is affecting the "score" you see, it would be wiser to pay down the debt than worry about utilisation % and the affect it has on the score

Grumpy_chap

lakesider52 said:

For a number of years now I put all my expenditure on my credit card and then have a direct debit to pay it off in full each month. However, it appears Experian credit scoring is old fashioned/unsophisticated and does not recognise this increasingly popular usage of credit cards because many provide reward points or air miles. I notice when my balances go up, it has an adverse effect on my credit score which is plain wrong as my financial strength has not diminished. Isn't it about time credit scoring moved into the 21st century!

I think this is simply that the algorithm used does not differentiate between a statement balance that is cleared in full every month and a statement balance that is carried along month to month.
It does not matter that the credit score is "simple" in this regard as any potential lender will differentiate.

Hoenir

lakesider52 said:

For a number of years now I put all my expenditure on my credit card and then have a direct debit to pay it off in full each month. However, it appears Experian credit scoring is old fashioned/unsophisticated and does not recognise this increasingly popular usage of credit cards because many provide reward points or air miles. I notice when my balances go up, it has an adverse effect on my credit score which is plain wrong as my financial strength has not diminished. Isn't it about time credit scoring moved into the 21st century!

Statistically I suspect you'll find that the majority of people are in fact using the current months pay to clear the previous months debt. Not what they intended. Over time the card usage doesn't get monitored and slowly accumulates. Savings rates are notoriously poor in the UK. That unexpected bill, loss of income due to sickness or being made redundant. Tips people over the edge. Only the card companies benefit from their existance. 

steven141

I also noticed this and I even get mine going down when I haven’t used it. You can’t win it’s so annoying. I use it then it goes down, I pay it off and it shows as £0 on the credit file my score goes down. Also my score goes down if I don’t have a high enough credit limit if I cancel a credit card or account but then when I take one out again it goes up. 

Desmond_Hume

Do people not read the other comments in threads before replying? Or is there some kind of denial going on?

Dandytf

Hoenir said:

lakesider52 said:

For a number of years now I put all my expenditure on my credit card and then have a direct debit to pay it off in full each month. However, it appears Experian credit scoring is old fashioned/unsophisticated and does not recognise this increasingly popular usage of credit cards because many provide reward points or air miles. I notice when my balances go up, it has an adverse effect on my credit score which is plain wrong as my financial strength has not diminished. Isn't it about time credit scoring moved into the 21st century!

Statistically I suspect you'll find that the majority of people are in fact using the current months pay to clear the previous months debt. Not what they intended. Over time the card usage doesn't get monitored and slowly accumulates. Savings rates are notoriously poor in the UK. That unexpected bill, loss of income due to sickness or being made redundant. Tips people over the edge. Only the card companies benefit from their existance. 

deleted.
thanks