Credit Checks

Threesheds

This is a question out of curiosity.

I receive updates from two different companies regarding my Credit score. Both are usually pretty similar. Recently one notified my score had dropped slightly as I was not utilising my credit. The other said my rating had increased as my credit useage had gone down.

My overall rating is good so no real issue. I'm just wondering how two similar companies can have such opposing views ?

flaneurs_lobster

Rather demonstrates why these scores are meaningless.

They make the numbers up.

Just realise that they are generated by the Credit Reference agencies in order to persuade you to "improve" your made-up number by partaking in one of the credit products helpfully advertised alongside your report.

From the number of posts on here with concerns about "my score", the Agencies have done an excellent job of persuading people of its importance, presumably by misunderstanding the difference between credit reporting (a factual description of your current indebtedness and available credit) and the magical "score".

Threesheds

Another anomaly. I enquired last year about soft searches on my history.

My Dad had run a car insurance quote through a comparison site, with me as named driver. A soft search appeared on my history !

flaneurs_lobster

https://forums.moneysavingexpert.com/discussion/comment/81931866#Comment_81931866

I often find soft searches appear around annual insurance renewal dates - the comparison sites/insurers are just checking if they should start marketing.

MEM62

I'm just wondering how two similar companies can have such opposing views ?

Because they are randomly generated numbers produced for amusement purposes only.

Nasqueron

https://forums.moneysavingexpert.com/discussion/comment/81931866#Comment_81931866

ID checks, nothing more

CliveOfIndia

As others have said, the score generated by the CRAs is nothing more than a marketing gimmick. They often receive a commission for selling products to you, so will use your score pretty much at will to try and sell you stuff you don't want or need.

Crucially, the score they produce is not used by any lender. Indeed, lenders cannot even see it. A lender will take the raw data contained in your file (repayment history, level of existing debt, that kind of thing), run it through their internal algorithms, and produce their own internal score. Since each lender will have different criteria, and a different target customer base, there cannot possibly be a "one-size-fits-all" score.

Perhaps the only useful function of the CRA score is to alert you unexpected changes. If you see a sudden large drop for no apparent reason, then check your file - is there a new credit agreement that you were unaware of? But really, aside from than that, the score itself is meaningless.

"Another anomaly. I enquired last year about soft searches on my history.

My Dad had run a car insurance quote through a comparison site, with me as named driver. A soft search appeared on my history !"

Be aware that soft searches are visible only to you (not other lenders), and have no impact whatsoever on your "credit rating" or whatever you want to call it. Often used for ID checks, as noted by the previous poster. Also commonly used to generate lists of potential customers for marketing campaigns. If you've had any dealings with the insurer previously (as in your case, being a named driver, or simply comparing Meerkats or whatever), they might run a soft search to see if you meet their current criteria to send out advertising bumf for their latest product to you. Soft searches really are nothing at all to be concerned about.