Rather inaccurate article about Credt Cards in The Telegraph

Trajal

This is so littered with inaccuracies and nonsense it makes me quite angry. Someone from MSE should go and shout at this deputy editor chap!

http://www.telegraph.co.uk/finance/personalfinance/borrowing/creditcards/10191773/Perfect-borrowers-rejected-by-credit-card-firms.html

In case anyone here has read this and is still confused, I've outlined my objections to several of the larger and more glaring errors below to provide proper information. Don't want anyone getting the wrong idea about this!

"The applicants’ credit files are damaged in the process. " - This is simply incorrect. Whenever you make an application it is recorded. For some providers scorecards they may prefer you not to have searches in the past. However for others they may not be too bothered and in fact several of the lower end credit cards expect it (Vanquis cards such as Aquis, Granite etc, and the sub-prime Capital One cards being two good examples).

"The applicants’ details, including credit scores obtained from referencing agencies such as Experian, Equifax and Call Credit...." - Again, this is completely wrong. The credit scores which are provided by these companies are not fed to lenders. The lenders receive the data and make their own lending decisions based on the results of that scorecard. The credit scores that the CRAs provide are what they feel is a 'rough approximation' however has absolutely nothing to do with the decision making process of the lenders. Personally I feel that they should not be able to market these credit scores to concerned people as they have little bearing on reality.

"every recent application shows on a borrower’s credit report for three to six months" - You're wrong, it's 2 years. Check your own file for free on Noddle and you will see that very clearly.

"This lowers their score temporarily" - well, it might. It probably lowers their meaningless CRA score, but that isn't relevant to a consumer. It might well lower their score temporarily to a mainstream lender but as I discussed above there are some lenders who a) don't care and b) actively expect it.

"One 50-year-old reader from Surrey, who wished to remain anonymous, was turned down by Sainsbury’s Bank for a Nectar Credit Card even though he scored 999 out of 1,000 – the maximum score ever given – on the Experian credit rating website. He had a perfect borrowing history, stable address and job. " - I think this rather clearly demonstrates how absolutely irrelevant these credit scores are. On this very forum it has been reported that people with up to 6 defaults on their files and in one case a relatively recent bankruptcy had scores in the 900 range!

The scores that the CRAs provide normally give a good indicator but they are far from flawless and certainly the lenders don't see this information, they have their own 'magic formula' scorecards based on the contents of the file only.

The article is struggling to find a point other than as being something of a plug for a few websites. Shock horror, banks are looking to make money and so are rejecting people from whom they are unlikely to make a profit. That's actually quite what we wanted from the banks isn't it? To be able to sustain their own profitability without the benefit of publicly funded assistance?

_Andy_

I can say with 95% certainty that FreedomFinance paid for the citation in that post.

Trajal

_Andy_ wrote: »

I can say with 95% certainty that FreedomFinance paid for the citation in that post.

Yes I rather suspected that myself, shocking behaviour from the telegraph of all places. Freedom Finance or Moneio Ltd as I like to call them (The other name is just a trading brand) do not have a particularly wonderful reputation and I really think the MSE crew should "Have a word"!

izools

Aaaahahaha clearly written by people who don't know much.

What needs to be investigated in a far reaching public article is why CreditExpert et al feel it appropriate to market what they call "credit scores" without making sure the consumer understands these scores actually aren't seen by the lenders and aren't an accurate representation of their creditworthiness and why.

And also - its been A YEAR since I raised the issue and James Jones still hasn't explained why I was given a score of 980 "Excellent" with six defaults and a bankruptcy order on my credit file.

Finally, I think it's great that Sainsburys Bank's underwriters were so open with the borrower mentioned in the article and helped him understand their decision, ultimately overturning it. Rare thing these days.

Jonesy_McJones

Trajal wrote: »

"every recent application shows on a borrower’s credit report for three to six months" - You're wrong, it's 2 years. Check your own file for free on Noddle and you will see that very clearly.

"This lowers their score temporarily" - well, it might. It probably lowers their meaningless CRA score, but that isn't relevant to a consumer. It might well lower their score temporarily to a mainstream lender but as I discussed above there are some lenders who a) don't care and b) actively expect it.

Totally agree with everything you've said (how can these people write such a load of gumpth AND get paid for it?!) except maybe this bit... (But I do also agree that some lenders might not care / expect it.)

Several applications over a short space of time will almost definitely impact your score (with the lender). And can be used as a reason to decline - I know this because I used to decline people for personal loans based on this - our threshold was four or more in a three month period. Definitely worth bearing in mind if you're planning a mortgage application say.


ETA - of course, this could be something only taken into account by this particular lender...