Not dumb, but a good question @jpjamo and @hailstorm you’re right. Credit score is not a unique thing. There are many ways to calculate a credit score and then there are many firms who apply rules around that ‘score’ to determine if they will lend and how much. You can read more about it here: https://monzo.com/university/credit-score/
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Thank you for the link, that was an excellent read and also i didn’t realise there was a Monzo University!
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What I find really interesting is that different financial institutions share different data with CRA. I’ve had it where use of an overdraft is shared in terms of value or % used and where I’ve used it for several months but it’s been reported as not being used.
Do you know which CRAs Monzo are going to share information with?
The Tiering of the rates does mean it increases with the amount borrowed. We did test this in over survey and we chose the 50p as this is simple for the customer to know their cost of borrowing and say with certainty how much the customer could pay at end of month. Saying that we have gone for simplicity and we should review this as we scale this feature, get customer feedback and observe customer behavior (real overdraft usage data in three to six months ). Thanks
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All I meant was if I have a Monzo overdraft (which I will apply for but doubt I will need it). At the moment if I need to borrow money short term I will use my First Direct £250 free overdraft as my main buffer. Having an overdraft with Monzo as well doesn’t mean I have to use it, just gives me options until I decide whether to switch fully to Monzo as my current account.
We are currently using Callcredit, over the long run we would like to share this with more agencies. All CRAs will detail the relation type (loan /overdraft etc), the limits, balances, and status of payments ( missed payments and defaults). The CRAs will give us a standard template to submit the data.
The data shared with agencies should be very similar. However, all financial institutions may not share data with all bureaus and hence you may not observe the same information in different CRAs. Hope that helps.
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Are there any general rules about when merchants will report missed payments? In other words, it would be useful to know whether I’ll have at least X hours or days to make the rejected payment, before it’s reported.
Since Monzo is offering free of charge payment rejections as a service, I’m hoping that I wouldn’t have to worry about a Direct Debit bouncing in unforeseen circumstances. But obviously I would want to avoid that rejected DD impacting my credit history..
A DD ( direct debit ) missed is a returned item while it could a missed payment for the provider (say a telecom company) but as a lender we should only report if you are in “arrears” ( missed a payment ) on our lending/credit products for example if you had a loan and missed a payment it will get reported. This is tricky for a current account as it does not have a monthly payment ( or minimum payment ) so arrears for Overdrafts will be reported if the customer is in an unauthorized position.
So we will not report your bouncing (returned items) to Bureau however it may worth keeping mind that the provider ( telecom company ) may report this as a missed payment.
further note - The reporting is often month end position so one always has a ‘buffer’ period but it not always easy to know as it may differ between organisations.
Long and winded answer hope that helps.
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Thanks!
When it comes to merchants, are there any minimum standards that I can rely upon i.e. a merchant must always give their customer X amount of time before they report a missed payment or is it totally up to them?
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Interesting question I would also like to know the answer 
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That’s broadly the way we’re thinking, yes. We’ve got a new Monzo product along these lines that we’ll be rolling out in the next few months. Slightly larger borrowing amounts for a longer term at a cheaper price. Codenamed “Spread the Cost” 
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Opps answered that as an edit to the last reply 
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Tom your such a tease 
If it’s what I think it does, then my opinion on the 50p a day overdraft charge changes, as the way I would use it would be different
Here’s the thread with their first test: Pre-Approved Credit (Loan) 
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I’d be interested if there is actual rules laid out. I suspect it will be around 28 days after payment due though. Whenever paying something on a monthly basis you are given a payment date.
For example a mortgage may be 1st of month then if not paid by following 1st you are in arrears and this is reported.
Oh very nice I missed this one!
I find this discussion very encouraging and engaging.
On one hand, Lending products roughly tie to certain purposes Overdraft for short-term, Credit card for medium-term bulk purchases or just a payment vehicle and Loans for longer-term with structured payment.However not having transparent products and features means lending products may not serve the purpose they are intended for.
Overdrafts, as Tom mentions, is a short term lending product. If you have a direct-debit to pay and you are short of money you can dip into an overdraft to pay the same. However, if you buy a laptop and remain in overdraft for 3-4 months then it not the right product. If you are in overdraft all the time it is expensive and is not responsible lending.
In Monzo, we are want to think about Lending as part of building the financial control center for our customers.
Question: How do we do this?
If the answer is ready-made products like overdrafts and loans then so be it. However, we think we can go one step forward and design lending features that solve problems from the “first principles”. The principle being a customer should be in control of their finances and how can we make the cost of borrowing transparent. A customer should be able to look at their current ( and future ) borrowing needs and the associated costs and make decisions about the product they would want to use. It could be for price or convenience. The “Spread the Cost” will attempt to do this.
We will launch products to support this and as with all Monzo products, we need your support ( encouragement and debate ) to shape it.
Again, thank you for all the feedback
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Sounds like a really exciting time ahead. The more people can understand their line/s of credit the better.
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Sounds good to me - good explanation. Thanks.