Is being fully Monzo ruining my credit score?

@thomasjamesbadger FWIW if you currently rent, it might be worth checking out Creditladder or Canopy which take into account your monthly payments to boost your credit score.

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This has always been an on-going topic on Monzo with people chiming in all the time, some say it doesn’t, some say they had no problem, some day it does.

I’m not a fact checker, but as I worked for years in one of the big credit agencies let me give you my “view” which I think is closer to reality that a lot of others.

The question of, does Monzo effect your credit rating? The honest answer is, to a degree - yes it does.

Why? Because Monzo only report your activity to the smallest of the big “3” credit rating companies, all the activity you do in Monzo (which by the way, can be positive or negative) is not being recorded at Experian or Equifax.
Credit Rating agencies do NOT share data between themselves as they are in direct competition to be the most complete and accurate source to sell there credit profiling systems to credit suppliers like banks.

So, assuming you don’t have other accounts, be it credit cards, monthly contracts (phones, broadband, energy companies who give you credit etc), you will find your credit score may not be as high as it could have been, if your Monzo activity had been available and used in the calculations on your behaviour with regards to finances (assuming your Monzo usage was used positively).

The above part is a fact, no matter how much other people try to spin it. Some people have enough other accounts that do report in to Experian or Equifax, which helps give them a good score on those platforms but some people may not do and especially a younger person starting careers and looking towards their first few credit accounts will likely be impacted a lot more as they do not have much credit activity already.

The question then goes to who you are getting credit from (be it Mortgage, phone contract, car loan etc). If they use CallCredit, you are in luck. If they use either of the other bigger two, you will have more of an issue as your Monzo activity will not be there and you potentially (if you have no other current accounts) look like you have no current account or steady income. Some suppliers use multiple credit agencies to source your risk profile, but as Experian and Equifax are the biggest, the chance of CallCredit being one of them is not so high.

This is why you hear people chime in that it hasn’t affected them, as they either had other credit accounts or visible markers which helped there credit score, or the supplier they wanted credit from used CallCredit when profiling the risk factors.

This is why I’ve always found it rather awkward (and I say this as a super early adopter, Investor and full Monzo customer) that Monzo keep pushing blog stories or suggestions on building credit scores. This is one of the few areas where Monzo really has dropped the ball, and while I know it’s in the pipeline to fix - it’s always ironic them pushing how important a good credit score is across their blog and social channels while they are infact a big part of the problem. I just hope they resolve this soon.

Ultimately though… should you avoid Full Monzo because of it? It all depends on your situation. If you are getting near some big life changes and you may need access to credit and score is important, I’d suggest making sure you’re not just relying on Monzo to form your credit picture.

That’s my “view” as someone with knowledge of the industry. Take as you will :slight_smile:

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Having been full monzo for over a year, and checked a few times with experian during that time, I can answer that from experience:

No, it does not negatively impact your credit score.

Agree with everything you’ve said (I’ve said it before), apart from this part - Specifically to do with mortgages.

The income thing won’t be an issue because they’ll ask for your payslips anyway.

Plus, mortgage lenders do their own checks, and don’t rely as heavily on the credit check.

But yeah, the rest is good info :smiley:

I’ve downloaded the Money Supermarket Credit Monitor app. Very easy to use, and my Monzo account shows on it. It uses CallCredit from Transunion.

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Let’s agree to potentially disagree on that smaller minor point. I think a lot depends on very complicated calculations and it’s different from every provider.
I got my Mortgage from Natwest for example and they went through my bank statements in detail (asking why all these Paypal Transactions and if its committed spending :joy: etc). However I also know they requested a risk profile from Experian. That risk profile looks at more than just my credit history. This data, the face to face discussion on my bank statements, and many other data sources (house price, pattern of behaviour, postcode etc etc) all went together in the calculations to decide the yes or no (and amount) based on likelihood I’ll pay it back.
Every supplier is different, so let’s say millage may vary. Every little piece of positive data about you will help you!

As a bit of a first-hand-experience-story: I’ve been full monzo since July '18 and have very recently had a mortgage application with Nationwide sail through with no complications with statements, etc.

What are they doing about it? Is there a timescale?

Having read and researched a bit on this, the only answer to the original question is… it depends.

It depends what other accounts you have, what state they are in, which credit scorer they are tied to, which credit checker any new application uses… which way the wind is blowing and whether you are standing on one leg at the time you applied may also be a factor.

I don’t think Monzo is any more, or less, a problem in this respect. YMMV of course, which is literally the point. It’s all down to individually accounts and usage at the end of the day.

Can @cookywook or someone else from Monzo let us know when they plan on reporting the Joint Accounts to the CRA’s?

Also, we are nearly 5 months in to the year - Is there an update on when Monzo will report to all 3 CRA’s (I believe it was said to be “first part of 2019” from memory).

Thanks :smiley:

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This whole credit score argument is like asking who is the cheapest car insurer :oncoming_automobile: There are too many variables to consider and everyone will experience different results :chart_with_upwards_trend:

Personally I’ve seen my score increase since being exclusively with Monzo for a couple of years now after ditching all my other banks :star: Those who have seen their score decrease could be as a result of other things :man_shrugging:

Then there is the whole argument of how much of an impact these “scores” have in the decision making process for companies who do check :mag:

In conclusion. It would be nice if Monzo did report to all of them but I don’t think it is the end of the world if they don’t :slight_smile: This is evident by the fact that Monzo haven’t done anything about it so perhaps they’ve come to the same conclusion? :thinking:

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I think Monzo not reporting to all of them is more about cost than anything else (just a guess).

Also, as I’ve recently discovered, Transunion seems to be the least searched for CRA by far.

You may have benefited from other things going your way (utilities, mobile phone etc), which show stable financial relationships that are still reported to other agencies.

But if someone turns 18, opens a Monzo account and nothing else, they’ll have zero history with the “main” 2 CRA’s, and it could prove problematic for them.

I don’t personally care about the score - It’s more about showing your true financial affairs across all CRA’s (or if it’s too expensive to report to all 3, they could just report to one other one).

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Whoops I was going to start doing my weekly pestering again but forgot because I’m on holiday.
Thanks for picking up the slack!

I also agree with the above, I don’t think credit scores are necessarily accurate or useful but they are a reality of the world we live in…
If Monzo don’t want to report to other CRAs they could at least mention it on the blog post about credit scores as I asked them to months ago, the question does seem to keep coming up on the forum…

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Posted an update in this thread:

But basically we don’t have any progress to share just yet. We’ll let you know as and when we do.

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Hi All

A somewhat late contribution to this discussion, but I read the details with interest being someone who did not need to worry about Credit Scores when I first applied for a mortgage. The provision of credit, whether it be a mortgage or a credit card or any other form of credit has changed dramatically since that time. The main reason being that it is far easier for financial institutions to check on your financial goodstanding. There are both benefits and a downside to this situation. If you manage your money sensibly and pay your bills on time then it is easier to obtain credit whether it be a mortgage or credit card, but it is not always guaranteed, say if you are self-employed and applying for a mortgage and cannot prove your annual income.
The position has also changed since the financial crash and clearly the introduction of affordability tests mean that financial institutions are to a large extent responsible for ensuring that customers can afford to borrow the amount of their loan, although there are still some financial products ( and Lenders ) around which are somewhat questionable. Again, it comes down to the basic rule - only borrow what you can afford to repay and preparing a budget plan in advance will help ensure that you can meet your committments.
It has always seemed to me inherently unfair that people with poor credit scores are penalised by not being offered the best rates on a deal. A low credit score is not always indicative of a person’s ability to manage their finances. However, as with all established systems there is not always an opportunity to request a review of your personal circumstances. The other aspect which has changed is the level of fraud which occurs which costs the banking and financial services industry a very large amount each year.
In my recent experience I have found ClearScore a very useful source of information and there is plenty of Guidance on how to improve your Credit Score, plan for large purchases including houses and cars and apply for Credit Cards and Loans.
However, as always it takes a bit of time to do the research and the legwork.
I think the important thing is whenever applying for credit in whatever form, if you can show that you manage your money sensibly you will stand a better chance of being accepted or granted the loan/mortgage.
One word of caution - it is not conluded until the ink is dried. I was once offered a credit facility by one of the major banks to support the setting up of a business into which I had invested. The Bank had appproved the Business Plan and the facility was put forward to the Credit Committee for approval twice. On the first occasion further information was required, which was provided. On the second the Bank did not inform me of the outcome and did not return my calls. The matter was escalated to the Head of Business Banking Division for the Bank in London who telephoned me to say he was very sorry, that he had read the papers and the branch had been wrong to tell me that the facility would be approved. He agreed that the Bank were in breach of the Banking Code, but he was not prepared to confirm his statement in writing as he had been advised by the Legal Department not to contact me. Due to the lack of the facility the business folded. So it goes to show that despite best endeavours you have to rely on the fact that the business you are dealing with will hold good on their word, which does not always happen in the real world.

Thanks wasn’t aware of this one. Been using Clearscore for a few years. I like this new one. Shows Monzo and very similar score to ClearScore(Equifax).
Nice layout of all my accounts/cards etc.

Even better as you can drill into your payment history with Money Supermarket Credit Monitor. Can now easily see my Tesco Loan as been trying to resolve the online access with them!! :slight_smile:

I completely agree. Same with people who struggle with their energy bills being put on meters that have much more expensive tariffs.

I can kind of understand why. It’s all about the risk.

Would you give someone unlimited access to your bank account if they were known to live beyond their means and miss payments. Now substitute bank for gas and you get the idea.

You’re also paying more for them to take a chance on you and gamble their own money. This is in the hope that they’re not going to be another company on your credit report that is owed money from missed payments. By charging more you cover potential future missed payments and therefore reduce your losses.

Thanks for your reply. I also agree that it is wrong to place people on Low Incomes or StateBenfits under additional pressure by only allowing them to access Utilities on the higher tariffs.

The same applies to the delay in payment of Invoices issued by small up and coming businesses by large organisations. I was told about a case the other day where an Invoice had been issued for payment within 14 days and it took the business over three months and many telephone calls before payment was made.

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There is absolutely no reason why people on benefits or low incomes can’t be on a normal tariff for their utilities. What you’re saying is crazy :exploding_head: