Warning: Applying for a bank account and deciding not to go ahead affects your rating

Hawthornman

Unbelievable! Just discovered that applying for a bank account (First Direct special offer via MSE) and decided not to proceed (the overdraft offered wasnt as big as my current account) counts as a negative score against my credit rating with Experian.

First application FD offered me £2500 OD. Declined the offer, spoke to them about increasing it but was talked into trying it out FOC anyway. Re-applied using exactly the same details and the system offered me £1,700!

Thought I'de made a typing error so applied again within 10 minutes and the offer dropped to £1,100!

Was patronised by the telesales person as if I was supposed to know this. Experian doesnt seem to differentiate between an account rejected by the applicant and one rejected by the bank. I have been told it will take up to 6 months to clear and received no sympathy that this will now clearly affect any other applications I may make during this time.

After much fuss and refusing to hang up I was told they would delete the last two applications but can't do anything about the first.

Martin, there must be something you can do about this??????

HoneyAndLemon

You applied 3 times...you would therefore have 3 credit searches recorded on your credit report. The searches are recorded regardless of whether you go ahead with it or not. Just the same as they are recorded regardless of whether you are accepted or declined.

To be honest, you're lucky they agreed to remove 2 searches.

izools

Well yes, credit searches affect your credit rating.

Plain and simple, nothing needs to "be done" about it, it's elementary risk analysis.

When you applied first time, your credit file said you'd not applied anywhere else lately.

Second time you applied, your credit file said you had applied elsewhere, so the offer takes into account potential offers provided with the prior applicaiton and your income.

The third time you applied, your credit file said you had applied elsewhere twice, so the offer takes into account potential offers of overdrafts from two other accounts.

No, first direct won't know the other applications have been cancelled.
No, first direct won't know the other two applications were for them.

The decision and offer is done by an automated system and cannot be manually intervened unless declined or referred.

Yes, it's not great, but it's just the way it works and won't change any time soon.

Hawthornman

I don't have a problem with the number of searches being recorded but what logic is there behind it being a cumulative negative. My credit ability however hasn't changed one bit!

Gromitt

Hawthornman wrote: »

I don't have a problem with the number of searches being recorded but what logic is there behind it being a cumulative negative.

As far as the system is concerned you have made other credit applications within the last 6 months. It doesn't know they are with the same bank, it just sees the fact there are credit searches on your file and so adjusts for them. The more searches the lower the offer, until such time they reject you completely.

Hawthornman wrote: »

My credit ability however hasn't changed one bit!

According to your report, yes it has. You have applied for credit, so therefore your credit score calculated by lenders will change.

izools

Hawthornman wrote: »

I don't have a problem with the number of searches being recorded but what logic is there behind it being a cumulative negative. My credit ability however hasn't changed one bit!

I explained how. Re-read my post.

Any time a creditor sees a recent search they base their offering on what they feel you can afford on top of the borrowing the search shows you'd applied for elsewhere.

Obviously, anyone who's applied for five credit cards is less likely to afford a £5,000 limit on top of the other five than someone who'd applied for no credit cards elsewhere (for example).

That's the logic behind the effect being cumulative.

Hawthornman

Thanks izools, I had indeed read your post, but still I don't believe the point has been addressed.

The credit agency should only be totting up these matters once the credit has been granted. Had I taken up the offer from the bank, then I would of course expect my ability to get further credit elsewhere to diminish.

To merely enquire should not be used as a minus point. I don't get billed by Tesco for merely walking around their shop, only when I proceed with a transaction. This should be the same.

I'm grateful for the comments but judging by your profiles are much more up to date with intricacies that I was. My upset is not knowing in advance and my suprise is that there seems to be an acceptance in this system by the banks and the 'experts'.

noh

Hawthornman wrote: »

.......................
The credit agency should only be totting up these matters once the credit has been granted. Had I taken up the offer from the bank, then I would of course expect my ability to get further credit elsewhere to diminish.

To merely enquire should not be used as a minus point. I don't get billed by Tesco for merely walking around their shop, only when I proceed with a transaction. This should be the same.
...............................................
.

The CRA merely records the fact that a search has been made. If an account has been opened it will record the fact and the amount of overdraft offered.
The organisations offering the credit accounts are the ones who decide whether multiple searches are a "minus" point.

In your case you applied to First Direct three times. Their decision on the second and third application was more than likely based on internal information.

Multiple applications do not necessarily count as "minus" points with credit providers. In the past I have successfully applied for six credit cards in the space of 2 weeks.

izools

Hawthornman wrote: »

Thanks izools, I had indeed read your post, but still I don't believe the point has been addressed.

The credit agency should only be totting up these matters once the credit has been granted

In your opinion.

The reality of the situation is that they don't, and that's not about to change.

noh

Hawthornman wrote: »

..............................

I'm grateful for the comments but judging by your profiles are much more up to date with intricacies that I was. My upset is not knowing in advance and my suprise is that there seems to be an acceptance in this system by the banks and the 'experts'.

The first page of the online appication contains the words:-


"The application process includes identity and fraud checks via credit reference and fraud prevention agency systems. This also assists in confirming your identity via electoral register information. These agencies will record our search which may subsequently be seen by others."

notts_phil

Another incorrect posting by a new person on MSE

Me thinks the OP has a bit to learn!