Credit reference agencies - how do they work?

[paulfromcamden]

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

As Simon rightly points out, credit (i.e. debt) companies aren't in the business of providing a public service. They're about identifying individuals who will provide them with an ongoing income stream.

 

[TheDecameron]

I couldn’t give a toss now about credit ratings apart from the convenience/protection of a cc. I couldn’t get 3Mobile to respond to me to cancel a SIM card that never worked from the start so I cancelled the DD which did get their attention - but only to threaten me and ask if I needed debt counselling rather than answer why their product didn’t work! The debt dept is fully staffed, the customer service not so much.

 

[gavreid]

I couldn’t give a toss now about credit ratings apart from the convenience/protection of a cc. I couldn’t get 3Mobile to respond to me to cancel a SIM card that never worked from the start so I cancelled the DD which did get their attention - but only to threaten me and ask if I needed debt counselling rather than answer why their product didn’t work! The debt dept is fully staffed, the customer service not so much.

They usually sell the 'debt' for pennies in the pound to debt collectors who can be a major nuisance...

 

[Sue Pertwee-Tyr]

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

Your credit reference is not a service to you, it is a service provided to the banks. So if the service provider doesn’t have enough data points to provide assurance, the score will be low. The service is based on borrowing and repayment history, whether you pay your bills on time is not information that the agencies collect. Yes, it may be relevant, but for example if every time you paid your rent, or leccy or phone bill, the council or utility company told Experian, you might reasonably consider that an intrusion into your privacy.

 

[Thorn]

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

Your debt-free history doesn't give any indication of your reliability. Lenders need to know that you've handled debts responsibly in the past. You're the invisible man.

 

[KrisW]

Yes. Loans are like jobs. It’s really easy to get a lucrative one if you already have a good one.

One thing that, paradoxically, reduces your score is repeatedly clearing loans ahead of term. This will normally result in being offered higher interest rates, rather than outright refusal, but it’s one to watch out for.

( In Ireland the system is very different. Unsecured credit is much more tightly controlled here, anyway, and there’s no “scoring” agencies. Instead, anyone can apply to the Central Bank and see the exact data that the lenders use to form their judgement, and request amendments. That report is just a list of what, when and how much outstanding for every lone in the last 5 years. There’s no magic number. )

 

[Joe Hutch]

In my less-than-frugal middle years, I had a large overdraft every month, and several maxed-out credit cards. I never had a problem getting more credit, and AFAIK my credit rating is fine (now that I no longer need to borrow).