Are Credit Searches Unfair

michael1983l

Ok hear me out on this one, I have a major gripe withthe way credit reference agencies make their score. Everytime you make a search on your credit file you lose points right? then once you hit 5 searches within a set time period you get refused pretty much for everything wether you have taken credit on the previous searches or not.

Doesn't this go against freedom of choice to shop around. After all nobody knows which credit companies will accept you for sure until you apply meaning that its difficult to get the best deal on the market. surely a much better way to record searches would be to only record offers taken up, this would still stop people taking out too many accounts whilst at the same time giving the consumer the ability to search out the best deal available to them.

loopy.magic

Agree with everything you're saying, just not sure what anyone can do about it.

It is completely ridiculous that someone can apply for a credit card, then not take up the offer to accept the new card. And this results in a lowering of the score next time :eek:

It would be fantastic if only offers taken up were recorded, can you imagine the greedy banks falling over themselves trying to then retain or gain our custom while we apply for dozens of credit cards and loans :rotfl:

[Deleted User]

I think the point is that too many searches in a relatively short period smacks of desperation and thus makes you an iffy risk

RobertoMoir

If you assume credit is a business based on risk then credit records that record things like applications/searches are a way of helping lenders properly assess risk.

If that data wasn't available, then lenders would have to assume a slightly higher risk from every applicant, which would surely mean we all pay more for our credit and some people who can currently get credit would simply get refused.

One thing that I wonder - as the lenders are in competition with each other, surely the fact that they all dislike patterns of a large number of searches suggests that they all have data showing that this really does tend to mean an increased risk to them. After all, a company that didn't refuse people based on this would "clean up" if there was no real risk involved, right?

michael1983l

RobertoMoir wrote: »

If you assume credit is a business based on risk then credit records that record things like applications/searches are a way of helping lenders properly assess risk.

If that data wasn't available, then lenders would have to assume a slightly higher risk from every applicant, which would surely mean we all pay more for our credit and some people who can currently get credit would simply get refused.

One thing that I wonder - as the lenders are in competition with each other, surely the fact that they all dislike patterns of a large number of searches suggests that they all have data showing that this really does tend to mean an increased risk to them. After all, a company that didn't refuse people based on this would "clean up" if there was no real risk involved, right?

Wrong, if a person wants a loan they should have the right to find out the cheapest company that will lend to them. You cannot do this under the current system. If that person then takes up 1 offer out of 20 searches then they are no more a risk than anybody else. Risk is easily assessed with how many credit accounts they currently have open and how well those accounts are run. The credit scoring system is working in the banks favour by not allowing people to shop around, it means that they don't have to compete with each other.

dmg24

michael1983l wrote: »

Wrong, if a person wants a loan they should have the right to find out the cheapest company that will lend to them. You cannot do this under the current system. If that person then takes up 1 offer out of 20 searches then they are no more a risk than anybody else. Risk is easily assessed with how many credit accounts they currently have open and how well those accounts are run. The credit scoring system is working in the banks favour by not allowing people to shop around, it means that they don't have to compete with each other.

RobertoMoir is talking about fact, you are giving your opinion. Nothing that RobertoMoir has stated is wrong.

michael1983l

dmg24 wrote: »

RobertoMoir is talking about fact, you are giving your opinion. Nothing that RobertoMoir has stated is wrong.

Theirs is no more a fact than mine. Shhhh!

inmypocketnottheirs

The point is the current system is unfair - fact.

The consumer should be free to shop around for the best deal, this can only be found after an application has been made.

The consumer is, under the current system, under pressure to accept the offer, because they are judged on having accepted the offer even if they haven't.

Therefore the system needs changing, as it is not fair.

Simples.

RobertoMoir

michael1983l wrote: »

Theirs is no more a fact than mine. Shhhh!

What I said was wrong? It's "Theirs is no more a fact than mine", whatever that means?

Ok. Show your working. I've talked about the reason the current system (which I agree is unfair to consumers, I'm a consumer too!) works the way it does.

If I'm wrong, if what I stated wasn't a 'fact' then why? Tell me why I'm wrong. Not how it's really unfair really it is (not doubting that), but show me how what I said was wrong. You've clearly got a solution all worked out that gets around the problems, so lets hear it.

At the very least you could address my final point - as the lenders are all competing to get our hard-earned, then why hasn't just one of them changed their way of business to be "fairer"? If there is no risk involved in doing so (and according to you there isn't a risk, because I'm "wrong") then where are they? Why aren't they out there making profit hand over fist?

RobertoMoir

inmypocketnottheirs wrote: »

The point is the current system is unfair - fact.

The consumer should be free to shop around for the best deal, this can only be found after an application has been made.

The consumer is, under the current system, under pressure to accept the offer, because they are judged on having accepted the offer even if they haven't.

Therefore the system needs changing, as it is not fair.

Simples.

Needs changing how? It's easy to say that the current situation is unfair (and I'd agree) but what change do you propose that won't have a bad knock-on affect on the lending market in other more "unfair" ways?

What if the current system, as unfair as it is, is the best 'real world' way of doing things? Not because it's a great system but because every other way of doing it would suck even more.

I'm afraid that things that sound "simples" are often anything but when you sit down and look at it properly.

michael1983l

RobertoMoir wrote: »

What I said was wrong? It's "Theirs is no more a fact than mine", whatever that means?

Ok. Show your working. I've talked about the reason the current system (which I agree is unfair to consumers, I'm a consumer too!) works the way it does.

If I'm wrong, if what I stated wasn't a 'fact' then why? Tell me why I'm wrong. Not how it's really unfair really it is (not doubting that), but show me how what I said was wrong. You've clearly got a solution all worked out that gets around the problems, so lets hear it.

At the very least you could address my final point - as the lenders are all competing to get our hard-earned, then why hasn't just one of them changed their way of business to be "fairer"? If there is no risk involved in doing so (and according to you there isn't a risk, because I'm "wrong") then where are they? Why aren't they out there making profit hand over fist?

What is wrong is your assumption that banks choose the current system on searches to make their decisions better wheras I am suggest it is like that because it is convenient to help keep the lending rates uncompetative. That is a benifit to all banks that are in lending which is why they have stuck with it.

A person should not be discriminated against because they want to shop around, if my credit history was good and I didn't have a lot of outstanding debt then yes in theory I should get accepted for the loan I wanted, but in reality banks can lend to different profiles that they don't advertise and sometimes don't lend at all when the pot is dry so a perfectly good person could get rejected.

If the banks only marked on your credit file when an account was accepted as a trade then it would give the consumer the power to look at a different ammount of lenders, find out which ones want their buisness and then pick the best offer available.

There is no excuses because a bank can easily make an informed decision on how many accounts you have open, what your credit usage is, what your payment history is like and how much disposable income you have. If they can't make an informed decision off that info without resorting to how many searches a person has made then it is the banks who have got the problem not the consumer.