#1  
Old 02-13-2020, 12:52 PM
glee is offline
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Credit Score


I kept seeing adverts for 'credit rating', so thought I would find out mine.

I registered (with a UK company called Clearscore), gave them a few financial details and sat back.
Now I was feeling quite smug, because:

- I own my house
- I have no credit card debt (and a decent credit limit)
- I have no other debts
- I'm retired and live comfortably off my pensions, plus interest on an investment fund
- I have an agreed overdraft facility with my Bank - but have never had to use it.

So I've got a score of 521. (Apparently this is out of 700.)
The notes accompanying the score say there's nothing I can do to 'improve' it.

So I have two questions.
How 'good' is 521?
What does the score measure? (I have no debt, so it can't be that. Is it how likely I am to get a loan?)
  #2  
Old 02-13-2020, 01:00 PM
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Credit scores basically state how profitable and safe a customer you are to people who will lend you money. It doesn't exactly measure how good a bet you are, although that's part of it.

A person who has lots of money in the bank but has had no credit, or almost no credit, will have a terrible credit score; without any history there is no evidence they are a profitable customer.

On the other hand, I was in fairly serious credit card trouble awhile back, but I always made the payments and by credit score remained good; the system perceived me as being a excellent profit center.
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Old 02-13-2020, 01:01 PM
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521 is very poor.
It usually means you have consistently been late with payments.
You can obtain a credit report that will show why your score is so low and you can dispute anything you think is wrong.
  #4  
Old 02-13-2020, 01:15 PM
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Quote:
Originally Posted by puddleglum View Post
521 is very poor.
It usually means you have consistently been late with payments.
You can obtain a credit report that will show why your score is so low and you can dispute anything you think is wrong.
521 is very good. Mine's in the 400s using the same service as the OP. I also have never missed a debt, have high credit card limits, (always paid off) and overdrafts, (never used.)

I'm not really sure what the point of the score is, but the OP's is high.
  #5  
Old 02-13-2020, 01:23 PM
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I take it the credit scores are different in the UK and the U.S?

I'm in the States and my credit score was (until the last few months) 832 (out of 850).

It dropped down to 814 after I paid off one my charge cards.
  #6  
Old 02-13-2020, 01:25 PM
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I make a good living, netting about $58.000 a year.

I have low overhead with no kids and no debts other than a car note.

I pay the entire balance on my credit cards every month.

My credit score vacillates (why?) between 735 and 775. I can never reach the coveted 800 mark. I'm thinking RickJay is right. I don't have the collateral to cover a loan, so I'm not considered solid in that regard. What else could it be?
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Last edited by Jasmine; 02-13-2020 at 01:26 PM.
  #7  
Old 02-13-2020, 01:47 PM
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Quote:
Originally Posted by Jasmine View Post
I make a good living, netting about $58.000 a year.

I have low overhead with no kids and no debts other than a car note.

I pay the entire balance on my credit cards every month.

My credit score vacillates (why?) between 735 and 775. I can never reach the coveted 800 mark. I'm thinking RickJay is right. I don't have the collateral to cover a loan, so I'm not considered solid in that regard. What else could it be?
Collateral/assets/income aren't part of your credit score. That's something a lender would determine themselves.

The thing about credit scores is that they're a proprietary formula, so you'll never know exactly what is affecting it. But mainly it comes down to
1) Credit History
2) Number of open accounts
3) Recent Credit inquiries
4) Your credit balance vs your credit availability.
  #8  
Old 02-13-2020, 01:48 PM
Kimera757 is offline
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Quote:
Originally Posted by glee View Post
I kept seeing adverts for 'credit rating', so thought I would find out mine.

I registered (with a UK company called Clearscore), gave them a few financial details and sat back.
Now I was feeling quite smug, because:

- I own my house
- I have no credit card debt (and a decent credit limit)
- I have no other debts
- I'm retired and live comfortably off my pensions, plus interest on an investment fund
- I have an agreed overdraft facility with my Bank - but have never had to use it.

So I've got a score of 521. (Apparently this is out of 700.)
The notes accompanying the score say there's nothing I can do to 'improve' it.

So I have two questions.
How 'good' is 521?
What does the score measure? (I have no debt, so it can't be that. Is it how likely I am to get a loan?)
You're using British numbers, so I couldn't tell if that's good or not. That is a score of about 75%, which I suspect is good but I don't really know.

The score measures how much of a risk you are; if the bank lends you money, will you pay them back? Based on your history, probably yes. (Note that most creditors would also look at your income, which is not part of your credit score.) You don't seem like you need loans, unless the sky falls on you, so as long as your credit score stays decent you should be fine. (I know a good credit rating gives Canadians better vehicle insurance rates, and makes it easier to rent an apartment or get a post-paid mobile phone plan. I don't know if that is relevant in the UK.)

The biggest part of the score is your history. Presumably you have not missed a payment in years, so you cannot improve on that. (But you can lose out on that!) Most of your history's contribution to your score concerns the last two years. If you made a single late payment this month, you would see your score drop a fair bit. If you missed a payment three years ago, it will have very little impact on your score.

The second biggest part is your credit usage. I assume you have paid off your house and don't need to continue paying a mortgage. As for the credit card... when you say you have no debt, I assume you mean that you pay off your credit card in full on time every month (so you do not have to pay interest and are not spending beyond your means). Your credit card company reports details to the credit agencies every month. I assume they send your statement info (just the amount owing compared to the amount available); that's what they did with me. The lower that is, the lower your credit usage.

For this reason I have some very large lines of credit I don't actually use. It just reduces my credit usage.

Length of credit history... given your apparent age, you probably have a long record. I have great credit and this is my worst area.

Credit checks: if you did a bunch of hard credit checks recently, it reduces your score slightly. This would suggest you are frantically seeking new credit. Checking your credit this way did not count as a hard check.

Credit mix: I don't know if this applies to the British system.
  #9  
Old 02-13-2020, 01:49 PM
glee is offline
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Quote:
Originally Posted by puddleglum View Post
521 is very poor.
It usually means you have consistently been late with payments.
I have always paid off my credit card in full on time.
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Old 02-13-2020, 01:51 PM
glee is offline
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Thanks to all who replied!
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Old 02-13-2020, 01:53 PM
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Quote:
Originally Posted by puddleglum View Post
521 is very poor.
It usually means you have consistently been late with payments.
You can obtain a credit report that will show why your score is so low and you can dispute anything you think is wrong.
There are multiple credit ratings and they don't all use the same scoring metric. In particular, 521 would be a very bad score on most of the Fair-Isaacs scoring systems, but I don't think any of those use a 700-point scale.

It looks like Clearscore reports the UK Equifax score, and this source suggests 521 is puts you in the Excellent category on that particular model.

ETA: Average UK Equifax score is 380.

Last edited by slash2k; 02-13-2020 at 01:57 PM. Reason: added link to clearscore; added average
  #12  
Old 02-13-2020, 02:02 PM
Fotheringay-Phipps is offline
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Quote:
Originally Posted by RickJay View Post
Credit scores basically state how profitable and safe a customer you are to people who will lend you money. It doesn't exactly measure how good a bet you are, although that's part of it.

A person who has lots of money in the bank but has had no credit, or almost no credit, will have a terrible credit score; without any history there is no evidence they are a profitable customer.

On the other hand, I was in fairly serious credit card trouble awhile back, but I always made the payments and by credit score remained good; the system perceived me as being a excellent profit center.
I don't think how "profitable" you are has anything to do with your credit score. It's all about how unlikely you are to default on your payments.

If you have no history of credit card debt you might have a low score, but it's not because the rating agencies think you're not likely to be profitable. It's because since you have no history of paying off debt, they don't know how likely you are to pay it off if you incur some for the first time.

But if you charge a lot of stuff to your credit card and consistently pay it off in full each month and thus incur zero interest payments, you can get an excellent credit rating based on this history of making your payments, even though you're not nearly as profitable as a guy who makes the minimum payments and pays through the nose for interest.
  #13  
Old 02-13-2020, 02:11 PM
Musicat is offline
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I am not a credit expert, only an armchair amateur. So here's what I know.

There are several credit ranges. Without specifying which one you are using, 521 tells us nothing. On a 0-800 scale, it is below average. On a 100-700 scale, not so bad.

Trans-Union offers a monitoring service for $20/month. They will alert you if anything (good or bad) is added to your credit data. They also have some options where you can simulate what your score would be if you did something, like apply for a loan, default on an account, cancel a card, or increase your credit limit. You might be surprised what affects the score, and how (If I raised my credit limit on 3 cards, my score would go up 10 points!)

It is always a good idea to check your credit data periodically. Strange things may turn up. Remember that the credit reporting agencies are under NO legal obligation to verify accuracy unless you complain. They absolutely do not verify ANY data submitted to them unless challenged. If adverse data is reported, it will become part of your credit report forever (until the statute of limitations kicks in) unless you challenge it.

Also keep in mind that cash customers are considered poorer credit risks, since the value of your bank account(s) or investments is not taken into consideration. If you own your own home (so no mortgage), you will have a lower rating than someone with a large mortgage, even if you have millions in the bank or copious investments. It is in the credit institutions' best interests to encourage debt, because that's how they make their money.

So beware!

Quote:
Originally Posted by Fotheringay-Phipps
But if you charge a lot of stuff to your credit card and consistently pay it off in full each month and thus incur zero interest payments, you can get an excellent credit rating based on this history of making your payments, even though you're not nearly as profitable as a guy who makes the minimum payments and pays through the nose for interest.
Very true.
  #14  
Old 02-13-2020, 02:36 PM
Kovitlac is offline
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Quote:
Originally Posted by Jasmine View Post
I make a good living, netting about $58.000 a year.

I have low overhead with no kids and no debts other than a car note.

I pay the entire balance on my credit cards every month.

My credit score vacillates (why?) between 735 and 775. I can never reach the coveted 800 mark. I'm thinking RickJay is right. I don't have the collateral to cover a loan, so I'm not considered solid in that regard. What else could it be?
While having virtually no money at all, my credit reached over 800. Hell, I didn't even HAVE a credit card for most of that time. I think my consistent automatic payment of a federal student loan is what caused it. It's since gone down a little bit due to getting a new car, and then several repairs/maintenance on said car, and the odd late payment. Still over 700 though.
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