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Credit reference agencies - how do they work?

Discussion in 'off topic' started by MikeMA, Dec 5, 2021.

  1. MikeMA

    MikeMA pfm Member

    Out of curiosity I signed up for the "free" version of Experian a few months ago. Once a month or thereabouts I get an email inviting me to check my latest score. The highest rating you can get is 999. Mine is quite close but never 999. My only debt is my credit card balance which Experian always get wrong but they know I pay it off in full each month. All my utility bills are paid monthly and I'm always in credit. I have a regular income and a number of banks and investment institutions are indebted to me, so why is my score less than 999? If I stop using my credit card and had no debts at all how would they go about rating me? How do these things work?
  2. gintonic

    gintonic 50 shades of grey pussy cats

    because you haven't joined the Experian premium service?
    MikeMA and narabdela like this.
  3. narabdela

    narabdela who?

    I wouldn't fret about it.
    hifilover1979 likes this.
  4. MikeMA

    MikeMA pfm Member

    Did cross my mind,...b*******s!
    gintonic likes this.
  5. Joe Hutch

    Joe Hutch Mate of the bloke

    Indeed. If the OP has no debts, he’s unlikely to be refused credit if/when he wants it just because Experian don’t give him their top score.
  6. Sue Pertwee-Tyr

    Sue Pertwee-Tyr Pending

    The top score is probably reserved for high net worth individuals. Maybe the OP needs to tell them what system he’s running ATM.
    TheDecameron likes this.
  7. Jamie

    Jamie pfm Member

    I have the same Experian free one. My score has always been 999 every month for a year or two since I signed up.
    Not sure what affects it. We don't have vast savings, have 2 credit cards, both paid in full every month, no overdraft (since around 1994) a mortgage which will be paid off next July and the house value is circa £650k (not sure that is a factor).
  8. julifriend

    julifriend pfm Member

    The credit rating my bank provides (TransUnion) says my rating is not as high as it could be as I don’t have a mortgage. That’ll be because I paid it off ten years ago. D’uh.
  9. Bob McC

    Bob McC Living the life of Riley

  10. stevec67

    stevec67 pfm Member

    History. Bizarrely you have a better rating if you are hocked up to the eyeballs than if you are a millionaire who runs everything on cash from his bank. I struggled to get a credit card a couple of years ago, in the 90s I had thousands available but didn't use it and the card was closed down. I need one now for hire cars, but with no mortgage, no car lease of loan, no debt, I coulnt get more than £500. This was even after pointing out to the bank in question that I had some thousands in my account s with them!
    TheDecameron likes this.
  11. Nero

    Nero Call me 'Goose'

    I had a similar experience when I applied for a Mastercard through my bank, so I could use it on Anamoz. I have a not inconsiderable mortgage and PCP car loan, and I run three credit cards already with a stupid credit limit, and pay off every month.
    My application was declined, even though my current account has plenty sleeping in it, with the same bank, so I signed up for Experian out of curiosity (it used to be free with Barclaycard) and I come out with a rating of 973, which didn’t seem too bad given my level of indebtedness. But still not enough for a credit card? I suspect there’s more to credit ratings than just the number.
    So next time you want to sell me some of your nice kit, be warned. Cash up front!

    Why is it that banks only lend you money when you don’t need it? :)
  12. lordsummit

    lordsummit Moderator

    It’s because they won’t make any money out of you! You’re just not their ideal customer.
    wow&flutter and paulfromcamden like this.
  13. simon g

    simon g Older, wiser but no longer retired

    Credit scores are merely reflections of some of the information that lenders use to inform their decisions. They all have different priorities and target customer profiles.

    It's certainly useful to regularly check your credit file, get alerts on searches, etc. This helps you avoid being a victim of identity theft and also ensures that the info that the agencies hold on you is accurate.
  14. paulfromcamden

    paulfromcamden Baffled

    Yep. Years ago (pre online shopping!) my wife sent off for a clothing catalogue thing and was refused because, apart from a student loan, she didn't have any credit history. Months later we took out our first joint mortgage without a hitch.
  15. paulfromcamden

    paulfromcamden Baffled

    Yes, as Steve points out, the debt business is about finding customers who will keep paying the interest without ever paying down the principal. There's not much money to be made out of someone who pays off the full amount before any interest is due.

    Remember that you are the product ;-)
  16. Somafunk

    Somafunk pfm Member

    They’re a scam (perhaps not but that’s my opinion).

    Never had a c-card, never had an overdraft, never had a mortgage (council/ha tenant), never borrowed money from bank/lender, never been in debt, pay all bills by d-debit and have regular guaranteed disability income going into bank every month and I applied for a credit card last year as I wanted to make a few large purchases yet pay them off immediately (iMac + hifi stuff) with the consumer protection that c-cards provide rather than using bank card but was turned down from every application.

    Seems that the more debt you have the more they’ll give you, once you’re hooked they’re not gonna let go.
  17. Bob McC

    Bob McC Living the life of Riley

    They aren’t a scam.
    If you have no credit history then they have no way of assessing your risk to them.
  18. Somafunk

    Somafunk pfm Member

    But surely a lifetime of never missing an electrical bill/phone bill/rent/council tax/no overdraft or been overdrawn/never needing a loan/nor student loan for uni and living within my financial means, always had money for bills in the bank would count in my favour?, perhaps not….moot point anyway as I used my mums c-card.

    The above signifies a very low risk to my reckoning, or are the algorithms that dumb as to not take the above into account.

    Scam…….I’m right and everyone else is wrong ;)
    MikeMA likes this.
  19. simon g

    simon g Older, wiser but no longer retired

    Why would a company want to lend you money if they won't make any profit from you, other than the original small fee from the retailer?
    paulfromcamden likes this.
  20. Somafunk

    Somafunk pfm Member

    So I am penalised for not having a history of debt dragged behind me?, seems legit :rolleyes:

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