Free banking lowers credit score??

AMILLIONDOLLARS

Went into a branch of Lloyds TSB this lunch time to pay some money in. Over the past months I have not gone overdrawn, so no bank charges or fee. Got the sales pitch that I was due a review on my account, translated to mean we want to sell you a useless account for high fees.

I politely refused the kind offer, when the cashier comes out with, you do know that it lowers your credit score when we see that you don't paying anything for your banking:cool:!!!

Question is this true, or was this a way to frightening me into paying for something I have no intention of signing up for, seems like a no win situation with the banks!

AMD

JacksterD

Paying for an account doesn't affect how you are reported to credit agencies, but if you pay for you current account it may make the bank more inclined to give you credit as you're a more profitable customer and they want to hold on to you.

jason1231972

"Free banking lowers credit score??"

Does it balls.

Sales tactic. The worst case scenario is as above, your profitability with LTSB may be considered on the low side. It really shouldn't matter though, and the info would go no further than LTSB anyway!

pmduk

It may be possible that there are facilities on a paid account that may help your rating (though I can't think of any), but as the others have said free banking in itself is of no relevance to your credit rating.

JuicyJesus

JacksterD wrote: »

Paying for an account doesn't affect how you are reported to credit agencies, but if you pay for you current account it may make the bank more inclined to give you credit as you're a more profitable customer and they want to hold on to you.

I honestly doubt that having a paid-for account feeds into credit scoring. What they're worried about when they credit score you is risk. They won't take on a higher risk just because you pay for your current account.

Honestly? Sounds like total b*llocks from Lloyds TSB. What the OP witnessed was a sales tactic. Personally I would complain as it sounds like an attempt to mis-sell (and I don't say that lightly).

innovate

Quite possible that the Lloyds internal credit scoring gives you lower marks if you don't pay them for your current account. You represent less revenue, therefore you are of less interest to them.

But it is complete poppycock to suggest your Experian etc credit record would be impacted by whether you have a chargeable current account.

JimmyTheWig

As has been said, it can only possibly affect your credit score with the bank in question, as other banks wouldn't get to know about it.

I can imagine a scenario where it might have an effect within that bank.
E.g. they bring out a credit card with 0% balance transfers for 12 months. The only reason a bank does this is to suck you in and hope the balance remains past the 12 months and charge you interest.
Now they've got to choose who they want to give it to. Do they give it to the person on MSE who doesn't incur any fees or charges on their current account? Or do they give it to the person who appears to throw money away by paying for a current account? The first is more likely to pay off the balance in 12 months, or shift the debt at the end of it, while the second is more likely to leave the debt where it is and make money for the bank.

Now I'm certainly not suggesting you should play dumb to get better offers as I'm sure what you would lose by doing the "wrong thing" would outweigh any benefits you were offered because of it. But it is possible.

YorkshireBoy

AMILLIONDOLLARS wrote: »

Got the sales pitch that I was due a review on my account, translated to mean we want to sell you a useless account for high fees.

It can also mean, and has done for me in the past, "we'd like to give you a guaranteed credit card"

Next time you're in branch ask them for your internal rating with them.

Mine's 1D...I'm told 1 is the best (probably due to £1K per month cycling through 3 Vantage accounts and decent balances in them), but the D means a pretty average APR will be offered for any products purchased. Doesn't surprise me because I have significant (stoozing) debt on both credit cards and overdraft facilities, and available credit of well over my income...both of which they can see from the monthly feed they take from the CRAs.

Rupert_Bear

AMILLIONDOLLARS wrote: »

Went into a branch of Lloyds TSB this lunch time to pay some money in. Over the past months I have not gone overdrawn, so no bank charges or fee. Got the sales pitch that I was due a review on my account, translated to mean we want to sell you a useless account for high fees.

I politely refused the kind offer, when the cashier comes out with, you do know that it lowers your credit score when we see that you don't paying anything for your banking:cool:!!!

Question is this true, or was this a way to frightening me into paying for something I have no intention of signing up for, seems like a no win situation with the banks!

AMD

Well I am with Lloydstsb and only have the Classic Account. Last time I enquired in branch my internal score was 1A.

I have an overdraft facility of £10k but very rarely use it. When I do I make sure the day the account goes overdrawn I transfer monies into that account before 3.30pm to avoid any fee and charges.

I think the cashier was just feeding you a line.

It appears I am not one of the chosen few as they never invite me in for a review.

MoneySaverLog

My internal risk band / score is a 1A and I have free banking with Lloyds TSB so I'd like to know how they can give me a better score with a Premier Account.

I more suspect they wanted to get another sale.

BugsyBrowne

MoneySaverLog wrote: »

My internal risk band / score is a 1A and I have free banking with Lloyds TSB so I'd like to know how they can give me a better score with a Premier Account.

I more suspect they wanted to get another sale.

Are you sure its 1A or does it says MUG next to it for premier account customer.