Why is my credit score rubbish?

[snorrrlax]

Just checked ClearScore for the first time in a long time. My score is 497.

The little breakdown says I’m “doing well” in each of the 11 domains with no suggestions for improvement.

For context we have just moved house and taken on a large mortgage on a high LTV (85%). We ported part of it across and have just agreed our new rate, due to start in April. Given the current climate, we’ve run through several of these agreements with our mortgage provider in the past few months - agreeing a rate to start in April, then doing it again when the rates come down a bit. There’s never been any suggestion from the bank or our mortgage advisor that we’d be penalised for this!

I have one credit card which I use for one or two purchases a month and pay off in full every month. I rarely go above 5% of my total borrowing allowance.

I recently took out a new phone on finance. My husband has a car on finance. That’s it for finance agreements for our household.

We’ve never missed a mortgage payment or any other type of payment. We have a joint account with a few thousand in savings in it. No overdrafts. No debts.

What‘a the problem? Am I not using my credit card enough? I don’t get it.

You've just moved.

Are you on the electoral roll at your new address? That will give you more "points", though being on it longer helps more so will improve with time.

You do know that "credit score" is a made-up thing that isn't actually used by any company that actually offers credit, don't you?

Are you on the electoral roll?

Are you actually using some credit every month?

Maybe the volume of searches recently on your credit record?

Any old accounts still open even if not in use?

Any financial links with past other halves?

I am on the electoral roll! No financial links with ex partners. Use a bit of credit monthly as stated.

@HappyHolidai I did not know that, is that real? Good news if so. What’s the purpose of the credit score then? And what do lenders use instead?

I’m not entirely sure what the purpose of my credit score is. It did go down when I took out car finance by 40 points as I had increased my debt in comparison with six months ago. I suspect it’s a moving house/ increased debt thing.

@snorrrlax using a bit of credit each month on a pre-existing arrangement is different to taking out a number of new credit arrangements in a short space of time (mortgage, phone contract, car finance e.g.). I'd still say it's that and given 6 months time passing or so (less maybe) your clearscore will recover. But I wouldn't be bothered too much about it as a pp has already pointed out

I work for one of the credit score companies and not using your credit card enough is one of the things that reduces your rating. As does changing accounts or getting a new mortgage deal, especially if you are just on the new mortgage as the old one might still be on your record.

Any defaults in payment hurt obviously. A new thing they consider these days is your total outgoings against your total income and what they think you can realistically afford based on that.

You should be able to ask the company how they came to that score. Mine explains it all on the site and also lets you model changes to your lifestyle to see the changes they would make to your rating.

Oh and the credit score is used by companies im afraid.

Thank you @FenghuangHoyan and others. Naive of me but I actually didn’t realise a mortgage affected credit score! 😳 We have leveraged ourselves to the max (all put in place last spring and we decided to ride it out when the base rate started to change as realistically it’s our last chance to borrow this big) so if they’re looking at that it could definitely affect my score. Good thing we’ve secured the largest mortgage we’re ever likely to want and are otherwise not big on using credit! 😂 I guess this means we should buy our new sofa outright rather than apply for finance…

A yes, a huge mortgage with very little spare cash afterwards will do it. This "affordability" way of looking at your credit rating is new(ish), but it's the way it's going to go now as they think it's a more accurate way of telling if someone can afford something - which it is.

@FenghuangHoyan yes, seems a lot more accurate than “make sure you use your credit card lots!!! That’s more convincing than just having the cash to buy things outright!!!!” which has always irritated me 😁. Thanks again for your insight!

@FenghuangHoyan Can you give example of which companies use which credit scores please? I was always under the impression that in the U.K. it is the information in the credit file that is used, not the credit score.

Usernamesamegame you are 100% correct, FenghuangHoyan you may mean well but you are talking rubbish.

your company may have its Wien scoring system that it used, but not a signed company in the U.K. can even see the score the websites give you, let alone use them. If you do work for one of them it worries me that you give this info, it’s irresponsible and unfair on the people asking for help, errors happen but this is incompetence on your part

Update on this: ClearScore emailed me today saying my score had been updated and it’s now 996

🤷🏻‍♀️🤷🏻‍♀️🤷🏻‍♀️

Credit SCORES mean nothing except to each credit report company - each will have you at a different score, probably.

What matters is the information on the report.

-Being on the electoral role
-No CCJs
-No insolvencies
-No defaults
-Showing as up to date with all accounts showing on there (credit cards, utilities, phones etc)

All of the above is visible to lenders. No score is visible.

Source: Debt Advisor. I see hundreds of credit files a month.

Wrong. Please sit this one out.

That’s wonderful, bit meaningless.

it’s there score they give you using criteria that you don’t know about. No bank, lender, financial institution etc will EVER see that score, ever.

No, it's correct. As I said, I work for one of the major credit score companies.I actually went and double checked this.

The credit score is referenced by other companies when they are deciding if you can have a loan or credit card or mortgage etc. You may not believe this, but it is true. Credit score companies don't "just" have a organ that makes ups numbers for customers, there have a while raft of products that utilise that score when another company wants to check.

I run credit checks on people every day. I see the exact information that lenders see. NO SCORES are on there.