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Random "Amber" on MSE Credit Club Profile - any ideas?

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Satsuma
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Random "Amber" on MSE Credit Club Profile - any ideas?

#322007

Postby Satsuma » June 27th, 2020, 11:28 am

Hi all

- I have an Experian account via the MSE Credit Club. My "score" there is 999 and all the indicators are green/very good etc.
- I have had 3 different credit cards for years/decades, which I use for all my day to day spending, paying them all off in full every month.
- My income is also significantly higher than my (generous) combined credit limits; and I have no debt apart from the mortgage (low % of income)
- I'm on the electoral roll, no shared/negative credit histories with anyone else, nothing untoward on my credit search history etc etc.

Basically I am boringly textbook Foolish (if we are still using that terminology!).

Yet I have the following "Amber" in the profile summary and I am stumped as to why, because none of the reasons apply! Anyone got any ideas?
I am irrationally narked by this non-green :lol::

Amber: Debt to income ratio
This amber rating could be for one of two reasons – your debts are either quite high compared with your income, or 'too low'. If you have quite high debts compared with your annual income, this could be a red flag for lenders as they may have doubts about your ability to repay if they lend to you. Consider whether you’re able to pay off any of the debt you already have before applying for more.

If this doesn’t sound like you, then this amber status may be because you have little or no credit. Bizarrely, this can put lenders off, because if you don’t have any credit, they don’t have a reliable indicator of whether you handle it well. Without this, you may be declined – even if you’re able to easily repay. See our, How to build a credit history guide.



TIA
Sats

PS. I know the Experian rating is not a hard fact of any kind, I am more curious why their "opinion" has a random Amber for no reason!

dealtn
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Re: Random "Amber" on MSE Credit Club Profile - any ideas?

#322024

Postby dealtn » June 27th, 2020, 12:19 pm

Isn't it adequately explained in the "low debt" explanation? Doesn't that sound like your situation?

Satsuma
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Re: Random "Amber" on MSE Credit Club Profile - any ideas?

#322070

Postby Satsuma » June 27th, 2020, 2:39 pm

dealtn wrote:Isn't it adequately explained in the "low debt" explanation? Doesn't that sound like your situation?


I don't have enough debt....so that is a worry? That's nuts! (not getting at you for suggesting, but typing it out just feels ridiculous!)

dealtn
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Re: Random "Amber" on MSE Credit Club Profile - any ideas?

#322073

Postby dealtn » June 27th, 2020, 2:52 pm

Satsuma wrote:
dealtn wrote:Isn't it adequately explained in the "low debt" explanation? Doesn't that sound like your situation?


I don't have enough debt....so that is a worry? That's nuts! (not getting at you for suggesting, but typing it out just feels ridiculous!)


Its counterintuitive I agree, but the credit score is for the benefit of the lender. They use it to see how likely you are to repay any lending they make. People with low credit usage actually have a poorer record of paying of debt than those who can demonstrate they have good repayment records.

Imagine someone who has never needed debt before, but now does. They probably have a good reason why that is the case, expenditure up significantly, or income down. Examples might be furlough, so on 80%, overtime banned, a child reaching school age and parents opting to pay for private education (and probably 100s of others). Taking on debt for the first time it might be that 9/10 are fine but 1/10 find it difficult.

By contrast those that occasionally take credit, but pay off on time and repeat the process, demonstrate they are "good risks".

From a lender's perspective they have to "work out" in the first case if you are one of the 10% or 90%, in the second case you might be 99% chance of being "good".

This might not apply to you, but it is actually the case that if you have never had debt, but anticipate requiring a mortgage in the near future, you could be advised to take out, and repay, some form of credit agreements, to "fill out" your credit history, and improve your score. You are unlikely to get better offers, but the range of potential lenders might go up.

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Re: Random "Amber" on MSE Credit Club Profile - any ideas?

#322110

Postby Gersemi » June 27th, 2020, 6:05 pm

Always willing to help out a fellow fool I have signed up to the MSE credit club to see what my profile shows.

Disappointingly I am not as good as you as my 'score' is only 986. However I don't have any of those pesky ambers! The debt to income ratio does have a note that my debts are a relatively low proportion of my annual income, but is still green. Like you I pay off my cards every month and apparently the total outstanding is currently £242 (well I haven't been spending much as I can't go out anywhere!).

So it's a mystery as to why you should score amber for this - your balance can't be much lower! Is this a constant thing or has it only popped up this month?

Now off to grump about my low score.

Gersemi

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Re: Random "Amber" on MSE Credit Club Profile - any ideas?

#322157

Postby didds » June 27th, 2020, 8:21 pm

As expklained above, its a blunt stick approach by credit lenders. An analogy is medical ttypes and BMI. Got a high BMI? must be unfiit/risk of all sorts of stuff. Meanwhile if you are an eleite-ish level power athlete, and of course muscle weighs more than fat, your BMI will probably be high...

didds

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Re: Random "Amber" on MSE Credit Club Profile - any ideas?

#322177

Postby Mike4 » June 27th, 2020, 10:35 pm

I agree with the others saying this is caused by absence of a medium term record of competent debt handling. Paying off the credit cards in full every month doesn't demonstrate the ability to take a loan and pay it off over an extended period. This is is something they like to see a history of happening - although arguably paying the mortgage does exactly that!

Do you get a trickle of unsolicited loan offers in the post, email etc? A friend of mine in a similar position to you (except no mortgage), used to get the odd one here and there at a massive interest rate. They took a modest one to buy a car and paid it off in a year and BOOM, a much faster stream of loan offers at a fraction of the interest rate. Something obviously 'clicked' with the banks to make them look like a vastly better prospect than before taking and paying off that loan.

Another thing I've heard (for the benefit of other peeps who might read the thread) is that paying off a large-ish credit card balance in full after months or years of making the minimum payment gets you down-rated. The banks assume you are having difficulty servicing your current loans and as a result, consolidated into one big longer term loan. A bit unfair like a lot of credit rating stuff, but that's what happens. If one likes to keep a good credit record, paying off a long term CC balance in one single lump sum counterintuitively damages one's record. Paying down the balance with a couple of lump sums but not fully to zero, then letting the minimum payment extinguish the remaining debt is the best way.

Satsuma
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Re: Random "Amber" on MSE Credit Club Profile - any ideas?

#322355

Postby Satsuma » June 28th, 2020, 7:16 pm

dealtn wrote:Its counterintuitive I agree, but the credit score is for the benefit of the lender. They use it to see how likely you are to repay any lending they make. People with low credit usage actually have a poorer record of paying of debt than those who can demonstrate they have good repayment records.

My mortgage is a pretty hefty debt though! And my cc 'debts' are incurred every month too, so isn't that proving I can take out debt and repay it responsibly? (I'm aware I am probably flogging a dead horse, the inner black hole workings of lenders and all that...)

Gersemi wrote:Always willing to help out a fellow fool I have signed up to the MSE credit club to see what my profile shows.

Thank you for trying, and commiserations about the low score ;)

Mike4 wrote:Do you get a trickle of unsolicited loan offers in the post, email etc? A friend of mine in a similar position to you (except no mortgage), used to get the odd one here and there at a massive interest rate. They took a modest one to buy a car and paid it off in a year and BOOM, a much faster stream of loan offers at a fraction of the interest rate. Something obviously 'clicked' with the banks to make them look like a vastly better prospect than before taking and paying off that loan.

No loan offers but I do regularly get offered increased credit card limits. Fortunately now you have to actively accept rather than them just be applied. Given I haven't come anywhere near the (hefty) limits I already have, I am always a little bemused there too!

I guess I shall remain childishly insulted at my less than perfect green marks and count my lucky stars for my situation. Bloody amber though... :evil:

Thanks all
Sats

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Re: Random "Amber" on MSE Credit Club Profile - any ideas?

#322404

Postby steelman99 » June 28th, 2020, 10:44 pm

you also get amber if you use more than 30% of your credit limit on any card - used to use my Amex to pay for holidays and the next month I had an Amber on my file and was down from about 980/ 990 to about 930, a couple of months later it was back up to the higher score once I had paid the card

Interestingliy once Amex uped the credit ard limit and I wa not using 3)% of the card balance , I didint get the amber and the scores did not drop

Satsuma
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Re: Random "Amber" on MSE Credit Club Profile - any ideas?

#322552

Postby Satsuma » June 29th, 2020, 2:26 pm

steelman99 wrote:you also get amber if you use more than 30% of your credit limit on any card - used to use my Amex to pay for holidays and the next month I had an Amber on my file and was down from about 980/ 990 to about 930, a couple of months later it was back up to the higher score once I had paid the card

Interestingliy once Amex uped the credit ard limit and I wa not using 3)% of the card balance , I didint get the amber and the scores did not drop


Interesting to know, but not me at the moment (like you I have used my Amex to bill thousands of pounds of flights etc, but nothing lately, more's the pity!). My bills are almost exclusively weekly supermarket shops atm!

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Re: Random "Amber" on MSE Credit Club Profile - any ideas?

#323401

Postby k333 » July 2nd, 2020, 9:56 pm

I'm baffled by this. You should have a 999 surely. And Experian don't know what your income is -it's for credit and debt, not income.

-K

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Re: Random "Amber" on MSE Credit Club Profile - any ideas?

#323453

Postby Gersemi » July 3rd, 2020, 8:31 am

Satsuma does have a 999 score, it was me that was a lowly 986. I suspect this is because I don't have a mortgage.

Gersemi

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Re: Random "Amber" on MSE Credit Club Profile - any ideas?

#323851

Postby UncleEbenezer » July 5th, 2020, 11:09 am

dealtn wrote:Its counterintuitive I agree, but the credit score is for the benefit of the lender. They use it to see how likely you are to repay any lending they make. People with low credit usage actually have a poorer record of paying of debt than those who can demonstrate they have good repayment records.


That's all very well if you're looking to borrow. But credit scores are also used for situations where you're not borrowing anything, just paying monthly/quarterly/whatever for a service. For that, a regular flow of such payments (including creditcards paid off in full each month) should surely be ideal!

At least it seems they're (at long last) recognising that a track record of paying rent and household bills indicates someone who pays.

Satsuma
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Re: Random "Amber" on MSE Credit Club Profile - any ideas?

#324240

Postby Satsuma » July 7th, 2020, 9:09 am

A new month, so thought I'd check again. Amber still ambering!
For interest/completeness, this is the whole section. All green apart from the one noted.

8 things you need to know about your credit profile...
Below is our assessment of your credit profile and what you can do to improve it, based both on the data from your Experian Credit Report and the details you gave us at sign-up. To see information on other credit reports, see our Check other credit reports page.

Court data
There are no County Court Judgments (CCJs) or bankruptcies on your Experian Credit Report.

Missed payments
You have no missed payments – well done.

AMBER Debt to income ratio
This amber rating could be for one of two reasons – your debts are either quite high compared with your income, or 'too low'. If you have quite high debts compared with your annual income, this could be a red flag for lenders as they may have doubts about your ability to repay if they lend to you. Consider whether you’re able to pay off any of the debt you already have before applying for more.

If this doesn’t sound like you, then this amber status may be because you have little or no credit. Bizarrely, this can put lenders off, because if you don’t have any credit, they don’t have a reliable indicator of whether you handle it well. Without this, you may be declined – even if you’re able to easily repay. See our, How to build a credit history guide.

Credit utilisation
You're using quite a low proportion of the credit available to you. This is usually good, as lenders are likely to be reasonably confident you'd be able to pay them back if they lent to you.

Credit applications
Too many credit applications in a short space of time can make it look like you're desperate for cash. You've made none or very few in the past six months, which is likely to be seen as positive.

(Do note using Credit Club is not the same as applying for a product. We use a soft search - even though you will see it on your report, lenders usually don't – and where they do they can't use it - so it doesn't impact your ability to get credit.)

Account stability
You've held a lot of your credit accounts for a long time. Stable relationships are seen as good - well done. Having said that, don't be too scared of switching if there are better deals out there. That's the point of having a good credit score – it enables you to apply for better and cheaper products.

Residential status
You're a homeowner. You're seen as a good risk, as you've the security of assets behind you.

Employment status
You have an income, whether that's from a job or a pension. Lenders want you to be able to pay them back, so a secure income is important.


=======================================

This part is an annoying contradiction though:

"....your debts are either quite high compared with your income, or 'too low'....." followed in next section by "You're using quite a low proportion of the credit available to you. This is usually good, as lenders are likely to be reasonably confident you'd be able to pay them back if they lent to you."

What do they want? Debt or no debt?! Some secret Goldilocks level by the look of it!


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