Why do I get different Credit Scores?

Posted by Andrew Brown in Credit Score on 3 September 2019

The first ever idea of a Credit Score was introduced in the 1950s in the United States. Almost by accident, as Bill Fair and Earl Isaac discovered that a study looking at a potential predictor of ill health could be better used to predict bankruptcy and default. They teamed up to form Fair Isaac, Inc, now FICO, to sell credit scores to lenders. FICO scores are now household names by consumers in the US, as they are used extensively, with little competition.

Brief history of credit scoring in the UK

The first ever idea of a Credit Score was introduced in the 1950s in the United States. Almost by accident, as Bill Fair and Earl Isaac discovered that a study looking at a potential predictor of ill health could be better used to predict bankruptcy and default. They teamed up to form Fair Isaac, Inc, now FICO, to sell credit scores to lenders. FICO scores are now household names by consumers in the US, as they are used extensively, with little competition.

FICO scores came to the UK in 1966 when Barclaycard launched credit cards. The choice was probably influenced by charge card providers Diners Club and American Express, both large American ‘travel and entertainment card’ companies who operated on a small scale in the UK. At the time, Credit Reference Agency information was nothing like it is today, so the scorecards used were based on the information contained in an application form. These scorecards helped drive Barclaycard to become the world’s largest credit card issuer, with over 10m cards issued in the UK.

Although some UK lenders initially used FICO scores, other suppliers of scorecards quickly emerged in the UK, including Scorex, Scoreplus, Equifax and CCN (now Experian). As more data became available from Credit Reference Agencies with the emergence of more detailed credit reports, the larger UK lenders also began to develop in-house scorecards, based on samples of the behaviours of their own customers. So, unlike the US, the UK now has many suppliers of credit scorecards, and as more and more lenders have tended to move towards developing their own, this has led to many different types of scores, all on different score ranges. There was never any need to compare scores, so as a result there is no universal Credit Score in the UK.

When Checkmyfile launched in 2000, it was the first company in the world to make credit scores available to consumers online. Until that time, credit scores were often quoted as being held in a black box. Even to this day their workings are closely guarded, as they are considered both valuable and commercially sensitive.

From a consumer viewpoint, it’s very handy and convenient to be able to summarise your entire Credit History in one round number, which is a measure of your creditworthiness. Plus, numbers are easier to compare and understand than a fully detailed Credit Report. In theory, if you have a bigger score than mine, your Credit History and Credit Rating must be better than mine. Checkmyfile opened the black box, explaining to consumers how credit scoring worked, and the rest of the world followed, initially by FICO itself, and then by the Credit Reference Agencies in the UK and US.

How Credit Scoring works

Before credit scoring, decisions to lend were made subjectively by real people. Depending on their skill level, mood, level of bias and the day of the week, the results were inefficient. In contrast, Credit Scores can differentiate much more accurately between a loan that is likely to be repaid on time and one that will fall into arrears. Scores are unbiased, work consistently and are much more reliable, as well as being less able to be corrupted and being much faster to come to a decision than a human being, even a skilled one.

Credit scorecards are created by analysing a large sample of previous accounts to see which answers given in an application form could be predictive of default. These elements are called characteristics. Characteristics that are predictable include age, time at address, time at bank, gender, area of residence, job type, whether a homeowner or renter, type of phone contract, and many more. It is no longer lawful in the UK to use gender in a scorecard. Age is by far the most predictive characteristic. Scorecards can also use characteristics from Credit Reports or from other external sources.

Using probability analysis, the odds of an applicant defaulting with each characteristic can be measured. Then, the overall odds of default can be calculated for any mix of characteristics. The odds can be transformed on to a scale that we now all know as a Credit Score range.

Lenders then work out at what point on that range it is profitable to accept customers. The lower down the range they go (chasing potential customers with lower credit scores), the higher the likelihood of default, and the higher the costs of administering the arrears and late payments, and the higher the risk of loss from write-offs. That point is known as the cut-off score. Every lender will have a different cut-off score depending on the appetite for business and the appetite for risk.

Anyone who applies with a Credit Score equal or higher than the cut-off score will normally be accepted. Anyone who scores less will definitely be turned down.

Even those with the best Credit Scores can be declined

If you get a high Credit Score from a company, the thinking can be that you must be guaranteed to be accepted for the credit you’re after. This is not necessarily the case.

Lenders can decline an application without giving you a reason - even if you have a high Credit Score. The rationale may be down to suspicions of fraud, (there are fraud databases in addition to credit databases). More commonly though, the applicant may not meet the lender’s lending criteria.

For example, some credit card issuers will not lend to under 22s, or you may be too old for a mortgage. It’s possible you may live in a jurisdiction where the lender does not operate, such as the Isle of Man or the Channel Islands, but also possibly Northern Ireland or Scotland. Your Credit Report may indicate that you are already heavily committed financially and it would not be socially responsible to increase your debt burden. Or you may be deemed not to earn enough, or be able to afford the commitment sought. All these reasons are completely independent of your credit standing as determined by your Credit Score.

Do all Credit Scores use the same data?

Credit Scores are usually based on a combination of application form data and your Credit History.

There are three different Credit Reference Agencies in the UK (Experian, Equifax and TransUnion) that collect information about your Credit History from their own customers (who are the UK lenders).

Each Credit Scorecard will be different from every other, so not only will different application form data be collected, but often there will be differences in the data provided to the lender by the Credit Reference Agency.

The bottom line is that the Credit Scores produced by different lenders are unlikely to be using exactly the same data, but Credit Scoring is so powerful that the outcome (the prediction of whether you will default or not) will likely be very similar.

Why you need to check your Credit Score

Anyone who has checked their Credit Report will know that the amount of data held by the Credit Reference Agencies is huge and spans a six-year timescale, reported monthly. Credit Report errors are rare, but they do occur and can have devastating consequences.

The only source of checking your data from all UK Credit Reference Agencies is checkmyfile.com. It also has a dispute resolution service which can guide you through the process of putting errors right.

See the bigger picture

If you check your Credit Report and Credit Score using checkmyfile.com, it’s the only place you’ll get credit information from all UK credit reporting agencies. This takes away all the hassle of having to look around comparing credit data from different sources. Plus, our carefully calculated Credit Score incorporates this data. This is what we believe makes it the most accurate and informative Credit Score available to UK consumers.

Checkmyfile.com is free for 30 days and then £14.99 a month. You can cancel at any time online, or by phone, secure message or email.

Does Gambling Affect Your Credit Score?

If you’re among the 32% of Brits that gamble on a weekly basis and are thinking of applying for some form of credit in the near future, you might be wondering whether your activity could affect your Credit Rating and your chances of being accepted.

Published on 13 Jun 2019 by Richard Catlin

Full Article

Can Social Scoring Really Affect Credit Applications?

Increased consumer awareness of the importance of a good Credit Score in recent years means that most people applying for a mortgage, loan or other form of finance know that the odds of their application being successful largely depend on the information contained within their Credit Report (among other factors) and how the lender in question interprets it.

Published on 24 Jan 2019 by Jamie Mackenzie Smith

Full Article

What Is An UltraFICO Score And Could It Work In The UK?

Would-be borrowers in the US have been given a potential new route when it comes to proving their creditworthiness to potential lenders, thanks to the recently announced UltraFICO score, which looks beyond the information traditionally used to assess credit applications.

Published on 28 Dec 2018 by Katherine Cornell

Full Article

How To See Your Credit Score For Free

When thinking about your finances and your eligibility to take out a loan, credit card or any form of borrowing, it’s tempting to boil your creditworthiness down into one single ‘make-or-break’ Credit Score. It’s not quite that simple though.

Published on 2 Oct 2018 by Jamie Mackenzie Smith

Full Article

9 Ways to Improve Your Credit Rating

Whether you’re planning on applying for credit in the very near future, or you just want to make sure that everything is as it should be, it pays to check your Credit Report. In many cases, there will even be easy steps you can take to improve your Credit Rating.

Published on 12 Sep 2018 by Beth Jennings

Full Article

10 Credit Myths Busted

Credit checks are an integral part of modern life: from buying a house or car to applying for a new job or passing a tenancy check, your Credit Report is remarkably versatile. But considering what an important role it can play, there are still a number of popular myths surrounding them.

Published on 11 Jul 2018 by Kirstie Day

Full Article

What's More Important: Your Credit Score or Report Data?

The relationship between your credit score and your credit history seems to be cyclical: a good credit history gives you a good credit score and a good credit score means you should have easy access to credit, right? Well, in a way. But you might be surprised at how much of a role a ‘score’ really plays when it comes to borrowing.

Published on 24 May 2018 by Paul Anderson-Riley

Full Article

China's Social Credit Scoring: How Does it Work?

Launched in 2012 and expected to be fully-implemented by 2020, China’s Social Credit System (SCS) could be described as at best an invasion of privacy and at worst a simple case of unabashed state-controlled oppression. Based loosely on the principles used in traditional credit scoring, this system goes several steps further to score you as a citizen and assesses how much you contribute to/hinder society.

Published on 10 May 2018 by Jamie Mackenzie Smith

Full Article

Proof That Credit Scores Make You Attractive, Apparently

In case you were looking for another good reason to check your credit file, we’ve got some good news for hopeless romantics: a recent survey by Discover and Match Media Group (owner of online dating sites including Match.com, Tinder and OkCupid) found that a good credit score is considered even more attractive to potential suitors than having a nice car.

Published on 22 Feb 2018 by Tom Blandford

Full Article

Experian Help Rent Payments Contribute to Credit Score

Tenants have often felt hard done by, receiving no recognition or reward for keeping up with their single biggest monthly outgoing: rent. For that reason, many across the UK will welcome the news that it’s now been made easier for landlords and letting agents to report rent payments to credit reference agencies, finally contributing to their credit file.

Published on 8 Feb 2018 by Katherine Cornell

Full Article


We are rated number 1 for customer service on