Credit Searches - Are they really considered?

cw1982

I am new to MSE as a poster, but have read threads for many years to build my knowledge of credit etc.

One thing that does intrigue me is how much importance do lenders really place on searches that are left on your credit reports? I say this as a couple of days ago I was accepted by Nationwide for both a credit card with a 4800 limit on it and a 10k personal loan (within a day of each other) whilst having around 20 odd searches within the last eight weeks or so from other credit applications.

We all know that each lender will place different importance on the amount of searches when making a decision but with Nationwide being well known for being extremely picky with whom they lend to, it begs the question are seraches really considered at all?

nomoneytoday

They are one of the many items that goes into the mix when the company decides whether to lend or not..

rebuilding_credit

Do you mind me asking what sort of ratio that is to your salary.

I need a loan of £10k but not sure its a stretch with my salary being £19500

I understand if you dont want to answer

malcolmffc

You won't get £10k - you're only taking home £1300 per month. £5k will be your max, if you're lucky.

cw1982

I earn £25k per annum. However I only pay around 7k a year into my Nationwide Debit Card account and they allowed me both the credit card and personal loan as previously mentioned. They must have given me this based on my account conduct with themselves, as they did not ask nor want to see any other proof of earnings for other accounts I hold with other banks. . . .

So in essence I got the 10k loan based only on what they could defintely see I earned - which was the 7k which goes into my Nationwide Debit Card account.

pat1976

Hi, I'm writing this as someone who created the scorecards for several highstreet banks over the last 10 or so years, but not Nationwide!

I think every application scorecard I've ever produced did have the number of searches in the last 6 or 12 months as a characteristic, however they were rarely very 'strong' characteristics, usually accounting for less than 10% of the total score.

There are usually 2 scorecards for any product - those for external customers with whom the bank has no relationship, and internal for people who also have some sort of history with the bank. You were obviously scored on internal scorecards, these tend to place greater emphasis on how you handle your other products and external data is less important, for internal scorecards searches usually accounted for less than 5% of the final score.

Personally I don't worry about searches much because I know that I am good for all of the other characteristics which tend to exist on a scorecard.

Hope that helps.

Empty_pockets

Pat,

Thats for that.

What are the 3 most inportant critera for each tpye of customer? (Internal/external)

Thanks.

elodieb9

malcolmffc wrote: »

You won't get £10k - you're only taking home £1300 per month. £5k will be your max, if you're lucky.

New user here, but how can this be correct? My partner took out a loan with barclays in 2007 for £12,000 - offered up to £23,000 if wanted... on an income of £6ph on a 40hr week contract. Zero credit history prior to this.

With their assessment, how could my partner be given this amount of loan? It was 'pre-approved' so we were in and out of barclays within minutes.

pat1976

Hi EmptyPockets,

In all honesty all scorecards differ but by product and institution but there are some commonalities.

For external scorecards 'Delphi for New Business', which is a score created by Experian was always the highest indicator. It usually accounted for a good 30% of the final score. I do wonder whether the DNB score might be the same as the score you can buy from Experian, but I don't know.

Other important ones are missed payment, defaults, debt to income ratio. Pretty much as you'd expect. Years at address and employment always had an entry too.

Pat

nomoneytoday

elodieb9 wrote: »

New user here, but how can this be correct? My partner took out a loan with barclays in 2007 for £12,000 - offered up to £23,000 if wanted... on an income of £6ph on a 40hr week contract. Zero credit history prior to this.

With their assessment, how could my partner be given this amount of loan? It was 'pre-approved' so we were in and out of barclays within minutes.

That was in 2007.
I would wager 20pence that the odds on the same scenario today would be significantly against your partner..