Refused 2 cards applications with perfect 999 score??

izools

Mr._H wrote: »

This is the first I've ever heard of this. Is this a new guideline? I've never heard of anyone being told the "principle reason" that they were declined. The couple of times it's happened to me, I have asked why and been refused an answer.

Thing is they are well within their rights to use "Credit Scoring" as the principle reason without being more specific.

Because of the way credit scoring works it is impossible to pin down a reason for decline to one very specific reason i.e. because you took out a new bank account last month; because this mightn't be a problem if the rest of your other data shows masses of stability.

"Credit Scoring" merely means that the cumulation of all your data, both relating to your credit history and your personal circumstances, resulted in a score that to the creditor in question is insufficient for them to feel comfortable giving you a credit facility.

Because of the nature of credit scoring; i.e. totally automated, and based on constantly changing criteria, which is made up from existing customer account performance, it may very well be that even the creditor in question is unaware of what aspects of your application were unsatisfactory. Only the computer's neural-net scoring system knows.

This might sound scary but it's quite simple;

The creditor / bank monitors customer account performance - if a customer defaults, the system will look back at what data was on their application, and do the same with thousands of other customers, building a picture of what sort of applicant will perform well and what sort of applicant is likely to default. Or in fact what sort of applicant will turn a big profit, and which not-so-much.*

This is then fed back into the scoring system which decided whether you are more likely to be typical of the bad-performing customer, or good-performing customer - based on the data already collected about existing applicants and their accounts.

Hopefully this explains why there is so much mystery surrounding credit scoring and how no flat rules or explanations can be made; there are no flat rules and the criteria are constantly changing in line with existing customer's account performance.


*Creditors are within their rights to use a credit scoring model that declines applicants who fall below a pre-set "likely profitability" threshold. They can also change their pass mark up or down depending on demand / how desperate they are for more customers

KingElvis

^^^ that's an excellent post, well explained.

Mr._H_2

Thanks for that izools, that is pretty much how I understand the process to work. This "principle reason" thing as suggested by the Experian representative sounds like hokum to me (if all they can tell you is that the "principle reason" is your credit score, what use is that?).

In the past when I've been declined, I have asked why, been given no useful info in response, then just written a letter pointing out the excellent features of my credit file and requesting I be re-considered. I've only done this twice several years ago but it worked both times.