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The truth about credit scores in the UK

26th February 2010

It has been revealed that there is no one service that offers you a definitive credit score in the UK - a fact that not many consumers appear to be aware about.

Unlike in other countries like the US, for example, there is no definitive authority which handles credit ratings in Britain. One financial expert said that this was simply because credit scores in this country do not exist.

There are however credit scores that vary from company to company. Many people do not understand everything about how the scoring system works. Interestingly, most people do not know that whether or not you are accepted for credit by a financial company is not based on how much of a risk you would be, but by how much profit you could bring to the table in most cases.

In theory, this can mean that even people who have an unblemished record and have always been up-to-date with their payments can be rejected for credit. This is all down to the one simple reason that the candidate simply wouldn’t be worth the company’s hassle because the returns that would be seen from the customer would be small.

Credit scoring is a minefield in Britain and is nowhere near as clear-cut as other countries like the US when put into comparison - this is very surprising for a country like ours which is so economically developed. Like mentioned before, every lender has their own idea of what makes a good credit score and they use the information that they have very meticulously to find out the results that they want.

Martin Lewis created the popular website and spoke more about the unknown side to credit scoring: “In the midst of history’s worse credit crisis, few truly understand how credit scoring works, and the vast amount of data held on us.”

It has been confirmed that the information provided to consumers by websites like Experian, which provide credit reports, are not official credit scores but ratings based on the three different sources of data that they were able to obtain for the purpose helping you to determine the level of credit worthiness you have.

The key thing to remember when you are trying to work out your credit worthiness in the eyes of lenders is that there is no definitive measure. Taking this into account can help you to be aware of the little deceptions that some lenders are making.

Posted in Credit rating

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