How Credit Scores are Calculated

24

Comments

  • nomoneytoday
    nomoneytoday Posts: 4,866 Forumite
    First Post First Anniversary Combo Breaker
    Every lender uses their own secret scores, tailored to their lending profile.

    If they released the formulae it would cause many people to massage their applications.
  • bertieo
    bertieo Posts: 12 Forumite
    What kind of data could massage the application? You can't change what the lender will see about you on your credit report so wont that practically limit how much you can massage some of the important information they use to credit score you?
  • Paul_Herring
    Paul_Herring Posts: 7,481 Forumite
    Name Dropper Photogenic First Post First Anniversary
    bertieo wrote: »
    What kind of data could massage the application?
    • Where 'I' live, (hello students!)
    • How long I've had my job (that I've just [STRIKE]been fired from[/STRIKE] left of my own violition.)
    • That credit card that is reported to the firm that isn't the one you're looking at. Chosen because I know they don't report to that firm.
    You can't change what the lender will see about you on your credit report so wont that practically limit how much you can massage some of the important information they use to credit score you?

    Your comment assumes that asking one CRA gives a 'global view' of a prospective customer. It doesn't.

    For better (privacy/DPA) or worse (erm.. same reasons.) the CRA's don't share info. The companies using them may choose to share with more than one, but they don't have to, and once that information is there, it cannot be passed between the CRAs.
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
  • bertieo
    bertieo Posts: 12 Forumite
    Paul_Herring wrote: »
    • Where 'I' live, (hello students!)
    • How long I've had my job (that I've just [strike]been fired from[/strike] left of my own violition.)
    • That credit card that is reported to the firm that isn't the one you're looking at. Chosen because I know they don't report to that firm.

    It sounds like you know how it all works, but surely if you try to say you live somewhere you don't live, then wouldn't that count against you because your credit report won't confirm you on the voters roll?

    As it is, I am on the voters roll and I thought my credit report looked fine, so I can't see why my credit score was low. It may be that lenders use their own credit score, but it is still concerning to see a low credit score.
  • Porkbell
    Porkbell Posts: 3 Newbie
    bertieo wrote: »
    if you try to say you live somewhere you don't live, then wouldn't that count against you because your credit report won't confirm you on the voters roll?

    As it is, I am on the voters roll and I thought my credit report looked fine, so I can't see why my credit score was low. It may be that lenders use their own credit score, but it is still concerning to see a low credit score.

    Yes the voters roll information is shown on your credit report so I guess it would catch you out if you tried to give a wrong address. It could be that credit rating agencies include demographic profiling of postcodes for example, but I don't know if that could affect your credit score.
  • bertieo
    bertieo Posts: 12 Forumite
    I didn't think that demographics would be part of your credit score. Are there such things as credit 'black spots' e.g. some postcodes are known to have a higher proportion of defaults? If that was the case then more affluent addresses would score higher than less affluent areas...
  • Paul_Herring
    Paul_Herring Posts: 7,481 Forumite
    Name Dropper Photogenic First Post First Anniversary
    e.g. some postcodes are known to have a higher proportion of defaults?
    No, but some postcodes are known to have terraced houses, and others are known to have detached houses, which can imply a lot about the average person living there.
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
  • rayw_3
    rayw_3 Posts: 9 Forumite
    Does this mean that credit rating agencies use demographic profiling to tell lenders what type of area you live in? Is this so lenders can see whether the rest of the information on your application form matches with where you live, e.g. what you claim to earn or your occupation is plausible for where you live? So they factor in where you live into your credit score?

    I better move!
  • Snooze
    Snooze Posts: 2,041 Forumite
    Combo Breaker First Post
    Paul_Herring wrote: »
    No, but some postcodes are known to have terraced houses, and others are known to have detached houses, which can imply a lot about the average person living there.

    Yep, it's called your ACORN rating and plays a part in your credit score.

    http://www.caci.co.uk/acorn/pclookup.asp

    Rob
  • Paul_Herring
    Paul_Herring Posts: 7,481 Forumite
    Name Dropper Photogenic First Post First Anniversary
    Ta for that - couldn't remember what it was called.
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
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