Go this from gmtvs site today:
Credit ratings and credit blacklists don't exist. There is no universal credit rating; no one-off judgment of your creditworthiness, nor is there a blacklist. It mightn't feel like that though as, while each lender scores differently, the information is similar, so a bad risk for one lender is often a bad risk for others too.
Lenders aren't obliged to dole out credit. Applications are aggregated into millions, and banks prefer to deny a few good quality applicants rather than overspend on personalised vetting procedures or accepting large numbers of unprofitable customers.
Even good risks can be rejected simply because they won't make the bank money!"
Credit scoring is about profit not risk. Of course risk plays a part, as those unlikely to repay are an immediate threat to profits. Yet rejection may happen to even the most solvent if they're unlikely to act in a way that'll make profit for lenders. The sooner we understand banks are there to make money, not help us, the better we can play the system.
Credit card companies reject you for always repaying cards in full. The most profitable credit card customer is perpetually in debt, never defaulting, always paying just the minimum .Thus if you pay off in full every month, or always shift debt to 0% cards, you may be rejected for further credit.
Your score mightn't be for to the product you apply for. It's all about weeding out the customers least suitable for their business e.g. current accounts are often used to draw in new customers to sell them other products. So apply for a current account and you may be scored on how likely it is to flog you a mortgage.
There are three prime sources of information used for scores.
- The application form. Here lenders obtain the crucial details of your salary, family size, reason for the loan and whether you're a home owner. Ensure you fill the forms in carefully; one slight slip, such as “£2,000” salary rather than “£20,000”, can immediately kibosh any application.
- Past dealings with the company. Companies use any previous dealings with you to help assess your behaviour, though complicated data protection rules can limit which separate units of a company can communicate to each other.
- Credit reference agency files. The three credit reference agencies Equifax, Experian and Callcredit compile information, allowing them to send data on any UK individual to prospective lenders. All lenders use at least one agency when assessing your file. The agency data comes from:
Electoral roll information. This is publicly available and contains address and who lives with whom details.
Court Records. County Court Judgements (CCJs) and Bankruptcies indicate if you have a history of debt problems.
Financial Data. Banks, building societies and other financial organisations compile details of all your payments and transactions. Around 350 million records a month are tracked including ‘black data' which is details of any defaults, late payments or problems and ‘white data' which incorporates how you generally operate the account.
‘Black data’ has always been shared by financial companies but until last year ‘white data’ was only provided by some. Now all share the information, where they have customer consent, meaning that each now has access to all data about you from other organisations.