What Are the Factors Not Considered in Experian’s Credit Model?

credit score

Experian is not the only credit score generator in Victoria. There is no guarantee that your prospective mortgage will use it. Nevertheless, it pays to ensure that your credit score with the company is as high as possible before shopping around for house and land packages in Melbourne North, Southbank, South Yarra, or Carlton North.

It is impossible to understand how Experian’s credit scoring algorithm works. After all, it reserves the right to be secretive to protect its system from manipulation and compromise the integrity of the products and services it provides.

While nobody is privy to Experian’s exact scorecard, the company does not hide the information about the things it considers irrelevant. Below are some of the factors that can say something about you as a person but excluded in the company’s credit scoring criteria.

Bank Balances

Experian scores individuals based on pieces of credit data submitted by financial institutions, particularly banks. However, the company does not look at the bank accounts of consumers. It does not care about the inflow and outflow of cash.

But then again, your bank balances matter to mortgage lenders. They will purposely scrutinize your financial activity to determine whether you have genuine savings.

Genuine savings refer to funds kept in your bank over three months. The operative word is “genuine” because mortgage lenders want to know where the money came from. They have to make sure that such savings are a product of sound financial planning and hard work.

Not all deposits can count as genuine savings. First Home Owner Grant, the proceeds from a car sale, bonuses, tax refunds, monetary gifts from parents, and inheritances are classic examples of non–genuine savings.

Lifestyle Choices

Again, Experian could not care less if you like spending your money on luxuries. Your lifestyle, no matter how extravagant might be, is a non-factor.

However, your poor lifestyle decisions can affect your Experian credit score if you continuously rely on debt. Failing to manage your financial obligations because you like to live beyond your means will fill your credit file with negative items.

Furthermore, mortgage lenders are interested in how you live your life. The combination of lavish expenses, low levels of income, chronic loan application, and periodic late payments is a red flag of financial mismanagement.

social media

Affiliations

Experian does not discriminate against any religious, political, and social associations. Even if it uses social media data to score consumers, it would probably use your Facebook, Instagram, or LinkedIn accounts for background checks only to combat fraud.

Criminal Offences

If you have been convicted for any crime before, your past will not haunt you when you buy a house as far as Experian is concerned. As mentioned, the company uses just the information submitted to it by financial institutions. It will never dig up dirt on you for the sake of lower your credit score.

Experian fine-tunes its credit-scoring model to respond to regulatory requirements and stay competitive against its closest rivals like Equifax. You might never be aware of the exact list of criteria it considers essential to put a number on your creditworthiness, at least you know that your non-credit information will not be used against you.