CRA's Do they ever do credit scoring for lenders etc

never-in-doubt

bert&ernie wrote: »

I'm not going to get into a long winded discssion about this just now because I'm typing this on a phone. Instead, ill let experian explain...

http://www.experian.co.uk/www/pages/what_we_offer/products/delphi_for_new_business.html

I'm sure there will be more rambling responses that attempt to split yet more hairs, but I won't be engaging with these until I'm back behind a full keyboard on Monday. Enjoy!

Yet again, missing the point! Delphi for new business is yet another business product aimed at companies that offer SOFTWARE that will provide the scores for the company, i.e. a smaller company maybe....

The CRA CANNOT generate scores for individual users - what part of this is difficult to grasp exactly? You guys keep coming back and coming back but nothing changes - I have already stated that CRA's can offer scoring facilities to companies But they cannot provide a score for a customer.

quote:
Delphi for New Business is a suite of highly predictive generic scorecards that can be used in any consumer credit application processing environment to assess the credit risk of new customers.

Key words here: can be used in any consumer credit application processing environment

They are confirming that the software is suite based thus removes the individuality element (i.e. they are mass produced or software linked) and they can be used in any consumer application processing environment means just that! This scorecard could be taken and used to help the lender get custom that is likely to pay - it does not mean that they will provide a lender with a direct score based on me as an individual.

I read that to mean that if as a new business, instead of setting up scoring models I can pay for Delphi to provide the scorecard for me, based on Experians experience of past history across the board - they do not claim to be able to make a decision as to whether you and I can have a credit account - this is simply not allowed.

never-in-doubt

file_wizzard wrote: »

not a direct challenge, but can you make specific reference to the section of the CCA which applies to this statement?

Have a read for yourself http://www.oft.gov.uk/advice_and_resources/resource_base/legal/cca/

file_wizzard wrote: »

This direct from Experian;

We provide a service to some companies where they are simply provided with a monthly score on all of their existing customers, based upon the information held on our records. This is for the purpose of managing the accounts of their existing customers. We can only provide this information to companies where the terms and conditions of the account, as agreed by the account holder, permit the companies concerned to receive a regular check of your credit report as part of the ongoing management of that account.

In these circumstances the lender does not see any specific pieces of information and is simply provided with a scored assessment. Companies use this information to ascertain whether there is likely to have been a significant change in the financial circumstances of their customers and will then manage those individual's accounts accordingly.

Do you need me to interrogate and respond to this, or do you think maybe you ought to read it again and consider the context of the content? I'd suggest reading my last post which also covers this.

For reference:

The information provided by a credit reference agency falls into two categories - Public Information and Credit Account Information. Credit reference agencies cannot credit score an application as each lender allocates a score to each individual piece of information that differs between lenders.

Public Information:
Consists of information from the Electoral Register (provided by local authorities), which is used to help identification; county court judgments (from the Registry Trust Ltd, which is the official body that records county court judgments) and bankruptcies (from the official London and Scottish Gazettes).

Credit Account Information:
Is held by credit reference agencies on behalf of lenders. Most of the UK's major credit-granting institutions store information about the credit agreements they have with their customers, with a credit reference agency. Many of these lenders have agreed to share this information with each other. When someone applies for credit, this lets them check whether or not that person has repaid money to other lenders in the past - in other words they can check a person's credit history.

file_wizzard

never-in-doubt wrote: »

Have a read for yourself http://www.oft.gov.uk/advice_and_resources/resource_base/legal/cca/

Read and noted, however that doesn’t really answer the question

never-in-doubt wrote: »

The information provided by a credit reference agency falls into two categories - Public Information and Credit Account Information. Credit reference agencies cannot credit score an application as each lender allocates a score to each individual piece of information that differs between lenders.

Public Information:
Consists of information from the Electoral Register (provided by local authorities), which is used to help identification; county court judgments (from the Registry Trust Ltd, which is the official body that records county court judgments) and bankruptcies (from the official London and Scottish Gazettes).

Credit Account Information:
Is held by credit reference agencies on behalf of lenders. Most of the UK's major credit-granting institutions store information about the credit agreements they have with their customers, with a credit reference agency. Many of these lenders have agreed to share this information with each other. When someone applies for credit, this lets them check whether or not that person has repaid money to other lenders in the past - in other words they can check a person's credit history.

Agreed CRA’s do not score applications, however I think it is clear that they are pro-actively supplying pre-calculated scores to creditors.

never-in-doubt

file_wizzard wrote: »

Read and noted, however that doesn’t really answer the question

Agreed CRA’s do not score applications, however I think it is clear that they are pro-actively supplying pre-calculated scores to creditors.

Ahh now this I totally agree with. I am, as of today, unsure exactly how this works and am awaiting clarification from the ICO.

I am anti CRA's and if I think they are breaking any laws, I generally email the ICO to get confirmation - after all, i've got it from the horses mouth so to speak...

I asked the other day about this subject and will no doubt hear back next week. I simply asked if the CRA's were credit scoring individuals and whether they were allowed to supply bulk scores against our batch profiles.

From first communication they suggested that I check my question so I asked the firmer, more direct question:

Are the CRA's credit scoring us on behalf of companies that may or may not have provision in place to offer said scoring direct or are they simply selling pre-determined scorecards based on a high success rate of existing client profiles that the client may have provided by way of success ratio in advance.

They acknowledged my points and said they'd get back to me, but I kinda know the answer. They simply sell pre-determined scorecards to companies. The scorecards are based on exisiting client profiles suited to a particular score that has a percentage ratio of fulfilment and failure.

Kinda makes sense, my point always was that the CRA's can not score us. It'd be a major conflict of interest cos say I run ABC bank, I could offer Experian £100 per customer more than the other banks to generate 1000's of new custom - it'd be a case of highest bidder gets the best customers which is outlawed so cannot happen in theory but we all know it already does happen, in practice! :beer:

savagej

I think what they supply is a generic score based on the data on file on a monthly to basis to lenders were the customer has agreed to this in the DPA statement. It is a score very similar to the one they use on credit expert as they have no other (or are not supposed to have) information to go on. I believe all 3 CRA's do this and then depending on who is buying it it gets amalgamated into one score, so if there is a problem your bank can only say look at your files with all 3 CRA's as we only get a number we dont see what is actually on your file.

bert&ernie

never-in-doubt wrote: »

Yet again, missing the point! Delphi for new business is yet another business product aimed at companies that offer SOFTWARE that will provide the scores for the company, i.e. a smaller company maybe....

The CRA CANNOT generate scores for individual users - what part of this is difficult to grasp exactly? You guys keep coming back and coming back but nothing changes - I have already stated that CRA's can offer scoring facilities to companies But they cannot provide a score for a customer.

quote:
Delphi for New Business is a suite of highly predictive generic scorecards that can be used in any consumer credit application processing environment to assess the credit risk of new customers.

Key words here: can be used in any consumer credit application processing environment

They are confirming that the software is suite based thus removes the individuality element (i.e. they are mass produced or software linked) and they can be used in any consumer application processing environment means just that! This scorecard could be taken and used to help the lender get custom that is likely to pay - it does not mean that they will provide a lender with a direct score based on me as an individual.

I read that to mean that if as a new business, instead of setting up scoring models I can pay for Delphi to provide the scorecard for me, based on Experians experience of past history across the board - they do not claim to be able to make a decision as to whether you and I can have a credit account - this is simply not allowed.

I'm not sure that I'm the one missing the point here.

The term "new business" does not describe the type of organisation that would use this product - it describes the type of transaction that it is designed for. Delphi for new business is intended for new customers and new applications, as opposed to Customer Management Delphi which is designed for aiding decisions relating to existing customers and accounts.

The Delphi score is based on the bureau data an individual and Experians own analytics. Lenders may or may not use this directly or in their own scorecards. It is however extremely unlikely that a lender will look at the full bureau file - they will use the summarised data in the Delphi block in because this is far easier to integrate with their own decision strategy or indeed their own scorecards.

To be clear, the Delphi score is based on the individual - it is only "generic" in the sense that the analytics that generate the score are Experian's rather than the lenders.

Most lenders will choose to apply their own analytics to give themselves a competitive advantage. Their automated decision process will almost certainly rely on summarised bureau data and they may also choose to utilise the generic bureau scores.

The lenders risk department (the egg heads) will work out for themselves how predictive they think the generic scores are. They have the advantage of not relying in the applicant's honesty and they tap into the bureau's own analytics, which in turn is informed by their industry wide view of consumer behaviour

This may be where your beef is - that CRAs are able to develop highly predictive scorecards because they look after everybody's data. I cant say I am comfortable with this, but I cant see that it is illegal either.

Cash_Flow

The credit scoring system allocates points for each piece of
relevant information and adds these up to produce a score.
When your score reaches a certain level then we will generally
agree to your application. If your score does not reach this level,
we may not. Sometimes scores are calculated by a Credit

Reference Agency and we may use these in our assessment

Source:

http://money.marksandspencer.com/pdf/CreditScoring.pdf

Innocent_Guy

savagej wrote: »

I think what they supply is a generic score based on the data on file on a monthly to basis to lenders were the customer has agreed to this in the DPA statement. It is a score very similar to the one they use on credit expert as they have no other (or are not supposed to have) information to go on. I believe all 3 CRA's do this and then depending on who is buying it it gets amalgamated into one score,.

This sounds about right.

I spoke with Next directory the other day as they increased my limit by £100 then decreased by £100?!?

Anyway spoke with Authorisation who are basically the underwriters ( I think ) and they informed me that on a monthly basis they get a score from Equifax. He confirmed that they do not see the data just purely get a number.

Credit limits are worked out on the score that they receive from the CRA on a monthly basis.

He said that there system works as so ( Figures are just an example )

Their minimum score is 200

If they receive a score that is below this i.e 193 they will revoke your credit limit however if next month they get a 257 they will re-instate the limit and offer you X CL. Next month they get 500 they increase your limit by X.

Make sense?

never-in-doubt

Cash_Flow wrote: »

Sometimes scores are calculated by a Credit Reference Agency and we may use these in our assessment

Read the whole thread mate - this means nothing, what I am saying and is factual is that a lender cannot use a credit ref agency to score their whole card - of course the CRA scores parts of it, by way of scoring existing lending i.e. CAIS related data. This forms part 2 of all credit app's.

Part 1 - internal suitability/criteria
Part 2 - external data from CRA
Part 3 - adverse data from CRA
Part 4 - existing relationship points

never-in-doubt

Innocent_Guy wrote: »

This sounds about right.

Make sense?

Perfect sense mate and I totally agree - the term you are looking for is called CAIS (credit account information sharing) which is a monthly score to the lender using pre-determined criteria against other borrowings set by the CRA's as an 'acceptable revolving' level.