Credit checks for new bank accounts

Mattocks

Hello,

Firstly, appologies if this is in the wrong forum area but I couldn't work out which one it fitted into; and appologies if this has been posted elsewhere - I did look but couldn't find anything!

Anyway, myself and my girlfriend recently applied for a joint bank account with a well know high street bank and were rejected. We thought this was to do with addressed and the electroal register therefore reapplied a couple of months later but were still rejected. Turns out its to do with our credit rating which to be fair isn't that good.

However, I was surprised to find that (a) they were checking our credit files during the bank account application and that; (b) the check was registered on our credit files and appearded to reduce our credit scores slightly. Is this normal and why are they allowed to do this? We weren't applying for credit, we were applying for a current account (no credit card) so why the credit check?

Also, do we have a case for having the searches removed from our credit file?

Any advise will be appreceiated.

Thanks

pmduk

There is a potential for credit with a current account, they come with debit cards and often cheque books, so it is usual for most account application to be credit searched. Most, probably all, applications I have seen include your agreement to such a search, so I'm not sure you can ask for their removal. If you want to try for a basic bank account, which don't always involve credit searches see here

MichaelCR

Mattocks wrote: »

However, I was surprised to find that (a) they were checking our credit files during the bank account application and that; (b) the check was registered on our credit files and appearded to reduce our credit scores slightly. Is this normal and why are they allowed to do this? We weren't applying for credit, we were applying for a current account (no credit card) so why the credit check?

Also, do we have a case for having the searches removed from our credit file?

Thanks

(a), All banks, And pretty much all financial institutions in the world will credit check you, Dependent on what you are applying for depends how the credit check is assessed, For example, In your case, You're applying for a bank account (Although i don't know who with and what account), Im guessing you're applying for a full current account, Which comes with a Visa Debit card, and possibly a cheque book etc, Then they will do full credit checks to see whether you are suitable for the type of account, Most full Current Accounts run full credit checks, There decision is made up from the information you provided on the application, And the information they collected about you from the CRA's, If you're applying for an account with an overdraft, Then this is also full credit checked as you are applying for a small credit facility. However if you where to apply for a Barclays Cash Account, or a simular basic bank account, The credit checks they run aren't to assess your repayment history, But to make sure that you aren't bankrupt, And of course for identification purposes to make sure you are who you say you are.

(b) Firstly, There is no such thing as a universal credit score, Credit scoring is what a financial company (Bank, Credit card, Loan) provider will run on you, They work this score out by the information you submitted in your application, and also by the information they got from your credit history, This then makes a score (Companies have different scoring criteria's), Which is kept private, If this score is below the companies set score, Then you are rejected, If its above there internal score then you are approved essentially, Once again these are kept private to maximize effectiveness.

As stated above, you where credit checked for identification purposes, And to make sure the information you submitted wasn't false, And also to make sure you are not bankrupt, If you applied for a full current account, Then you where also credit checked to check your previous history with paying back creditors.

No, You have absolutely no case to appeal or get the credit footprints removed from your credit record, You'll have to wait 6-12 months, Remember the more credit checks you get in a small space of time, The more desperate you look to potential lenders, Which will often result in a decline, Also when you say you waited a few months, How long did you wait before applying again ? As most credit company's and bank accounts won't even review or consider your application if you apply within 6 months of a previous rejection.

A few quick tips,

- Get on the electoral roll, This confirms identity and address to any potential lender or bank, With out this then your chances of getting anything are very slim.

- Check your credit history through experian and equifax, Find out if you have any defaults, CCJ's, or are in arrears, if you are then this is why you where rejected, Your first port of call is to negotiate paying these off asap.

- If you have bad credit, Don't bother applying for full current accounts, As the likey hood of acceptance is slim, Instead, Go for a basic current account (I have a barclays Cash account) Which comes with a Visa Debit card (with Contactless technology), You get online banking and telephone banking, No monthly fee's, you have no limits, And you don't have to pay in a certain amount each month, You can also withdraw £300 from any ATM in the UK, Which for me, Is a great account to have along side my Natwest Advantage Blue account.

I hope this is of some help to you !

Mattocks

Ok, fair enough, thanks everyone for your responses.

chris91_2

Also I noticed when I applied for a Bank of Scotland account a money laundering id check was run on my account as a way to identify you. will find when a bank offers a mini overdraft buffer zone then this will appear on your credit profile as well, surprised me too!

Experian_company_representative

Banks will obtain your permission to carry out a credit check for a current account application if the account includes an overdraft facility. If it doesn't, eg a basic account, they'll probably just run an ID check. ID checks can use credit report data but only leave behind a soft footprint that isn't used in credit scoring.

James Jones

coolesticeking

If you both don't have great credit scores as it is, think very carefully before setting up anything in joint names as it may make things worse in the long run than better.