Late payments on Cards - Why different to Experian & Equifax

castoutintheseventies

Hi all,

(Been using the site for a while but new to posting...)

A question for you clever people -

Ive just got hold of my credit reports from Experian and Equifax to check all is well before I go for a mortgage.

About a 1 and a half ago when things were a little tight (starting a business) I missed some payments on my credit cards and Next directory. However caught them up quite quickly and most were only 1 month behind (although one was 3).

Looking at my reports today, Equifax note this and flag this up as a 'very bad' thing and give me a rating of 'fair' overall.

However Experian, who have the same records on there (as far as I can see) seem to not be bothered by this and rate me 'excellent'.

Do these late payments 'fade' in importance as time goes by? Is a year enough for them to be overlooked or something? Or do the 2 companies have widely different criteria?

Anyone got any ideas or had experience of this?

Thanks a lot

John

Clariman

castoutintheseventies wrote:

Hi all,
Ive just got hold of my credit reports from Experian and Equifax to check all is well before I go for a mortgage.

About a 1 and a half ago when things were a little tight (starting a business) I missed some payments on my credit cards and Next directory. However caught them up quite quickly and most were only 1 month behind (although one was 3).

Looking at my reports today, Equifax note this and flag this up as a 'very bad' thing and give me a rating of 'fair' overall.

However Experian, who have the same records on there (as far as I can see) seem to not be bothered by this and rate me 'excellent'.

Do these late payments 'fade' in importance as time goes by? Is a year enough for them to be overlooked or something? Or do the 2 companies have widely different criteria?
John

Hi John - you say that you have asked for your "credit report" from the 2 agencies but it sounds as if you have also got them to give you your "credit score". The fact that the 2 credit scores and assessments are different (Fair versus Excellent) just goes to show that a credit score varies depending on the lender's criteria ! Your "credit report" is the important thing - this shows the real facts that a lender will make a lending decision on. The CRA's credit score is just one organisation's view of your credit worthiness. This is fairly meaningless because each future lender will make their own decision based on the facts.

Missed and late payments do reflect badly and will affect your credit rating. Perhaps someone else can comment on how long they affect it.

Clariman

castoutintheseventies

Hi Clariman,

Thanks for the reply.

Youre quite right, I did obtain their credit score assessment as well as report - this seemed a good idea. I guess, as you say, it just demonstrates that different organisations have different criteria.

However, the rating of Excellent by Experian does seem to imply that those late payments are now not of such relevance (to them at least) - so I guess this is my main question -

Are other organisations going to be as generous in their view?
Are there any rules they use here? Is it just a matter of time and if so how long?

Anyone know?

J

MSE_Martin

Clariman is spot on. The key here is these are simply rough assessments by the agencies, most lenders score based on individual criteria to how well you fit their wish list of a profitable customer.

The only time this may be impacted is if the lender buys the 'score' from the 'scoring agency' to feed into their data, but that is still only ever part of the equation

dag_2

Like what clariman and martin have said - scores vary widely from lender to lender, and from assessor to assessor - but the report is the most important thing.

However, as a general rule, missed payments do become gradually less important as time goes by. They certainly don't follow you around for life and haunt you.

I might be wrong on this - but I think that Data Protection legislation puts legal limits on how long financial institutions and credit reference agencies are able to hold personal information about missed payments. I'm not sure what the limit is, but I think it might be six years.

If I've got that right, then in theory it's impossible for a missed payment to affect your credit score six or more years down the line - and if a bank does consider a six-year-old-plus missed payment when assessing you, then they're in breach of the Data Protection Act.

That said, actually enforcing this is another matter. Banks can be a bit secretive about how they do their scoring. So you're relying on whistleblowers and disgruntled employees within the bank to find out about Data Protection breaches in the first place.

But banks obviously don't want to run that risk. And anyway, it's not in their interest to turn away customers because of out-dated information that isn't relevant any more.

Hope that helps.

castoutintheseventies

Thanks Martin, Dag and Clariman,

I guess Ill have to wait and see what happens when I next apply.

If anyone has experience of specific timescales though, Id still be interested to hear about it.

Thanks again for the help guys,

J