The struggles in obtaining credit when you are new to the U.K.

izools

blon wrote: »

I surely appreciate your views and experience that you contribute to the thread.

Of course, your history is different than the one of people coming to the UK, because you said yourself in an earlier post that you rebuilt your credit after a bankruptcy.

It's as I always say: You can have gone bankrupt in the past (6 years ago) but be in a much better position than somebody new to the UK against whom none such things can be held against. There's no innocence presumption in the credit rating game, rather quite the opposite: "guilty" (bad credit) until proven "innocent" (creditworthy).

The fact I have previous bad credit doesn't negate the fact that UK scoring models and underwriters work on a principle of stability and proven ability to maintain the status quo.

It's a pity you're so unwilling to open your mind as you'd find yourself in a much better position creditowrthiness wise a year or two down the line if you were.

OllyM

izools wrote: »

The only banking group that still generate pre-approved offers are Lloyds Banking Group but their systems are very strange and sporadic - their pre-approved offers seem to bare no resemblance to the creditworthiness of the customers said offers are given to.

Santander certainly seem to generate pre-approved offers:



I've had this showing on my online banking for the last few months.

izools

OllyM wrote: »

Santander certainly seem to generate pre-approved offers:



I've had this showing on my online banking for the last few months.

The only way to check if it is pre-approved is to apply and then check to see if a credit search footprint has been left on any of your credit files

They may just be inviting you to apply.

Thrugelmir

blon wrote: »

There's no innocence presumption in the credit rating game, rather quite the opposite: "guilty" (bad credit) until proven "innocent" (creditworthy).

With no history there's no basis to calculate risk. Banks use depositors money to lend not their own.

blon

izools wrote: »

It's a pity you're so unwilling to open your mind as you'd find yourself in a much better position creditowrthiness wise a year or two down the line if you were.

I did not deny izools' points, just discussed and weighed them. The scoring model certainly considers many factors of which stability is certainly a sensible one. I did not mean to come across as difficult or stubborn. I hope this thread can remain a place for civilised, non-insulting exchange of arguments.

I agree that in a year or two the situation will be more relaxed for anyone maintaining a sound credit behaviour, however this seems like an awful long time to get decent offers (would be 2-3 years after coming to U.K.). Your point is valid, yet, given that I have already essentially waited for one year, I look for ways to accelerate the process and have received helpful hints in this respect from earlier posts by litheplay and dktreesea.

Thrugelmir wrote: »

With no history there's no basis to calculate risk. Banks use depositors money to lend not their own.

The first sentence is not true. Risk assessment has to be forward-looking anyway and past behaviour as an indicator of future well-behaving is just one factor. The assessment could be based on evidence of one's job contract (= future expected cash inflows) as well as current equity and debt. And as to the credit history, almost everyone has established a credit file in their home country, the issue being that currently they're not recognised across borders. However, with growing financial integration, we might see this change within the next decade at least at a EU level.

Anyway, I appreciate all your comments and look forward to reading further people's accounts.

izools

Whether you're new to the country, new to credit, new to being an adult, or new to managing your accounts correctly after a bad spell, the time taken to build a "Good" credit file is always in the 18-36 months area here.

The methods for all scenarios are the same.

It is unfortunate that the UK credit market takes the "Guilty until proven innocent" stance, as you put it (maybe a bit harsh IMO) but if we didn't, our lenders would be insolvent (again).

Our lenders (Especially RBS) learned great lessons in 2007/8 and rightly so the British banking industry is not going to expose itself to such abuse again - not until there's been a major shift in both societal views on finance and an improvement in the average cost of living to income ratio in our once great nation.

As ever, economies run on a peak and trough cycle and ours, like most others, are still very much in a trough and rightly so lending criteria reflects that.

Just simple common sense.

It must be said however that lending criteria seems to be easing up compared to where it was during / immediately after the "crash" so commonly referred to.

I don't think if you held sizable investments with various banking organizations you'd be overly impressed if they were publicized for handing out lines of credit as if they were candy, and then seeing your no-risk portfolio earn next to no interest and your low risk portfolio dwindle and start to go down the drain.

Our banking groups have a duty to protect their investors deposits; it's unreasonable to expect them to do otherwise.

izools

blon wrote: »

Risk assessment has to be forward-looking anyway and past behaviour as an indicator of future well-behaving is just one factor.

You're absolutely correct.

And credit scoring models are based on past and present experience which demonstrate that those new to the country and those who have been at their address / with their bank / with their employer for a small period of time are a high risk.

It's predictive based on past experience with customers who have a similar profile of circumstances.

Ever heard the phrase "once burned, twice shy"?

Thrugelmir

blon wrote: »

The first sentence is not true. Risk assessment has to be forward-looking anyway and past behaviour as an indicator of future well-behaving is just one factor.

Credit scoring extends outside of the boundaries of just being a financial assessment. Lenders therefore set a number of qualifying hurdles they will apply to any perspective borrower. Depending upon the product being applied for, the hurdles will become increasingly higher.

Thrugelmir

blon wrote: »

However, with growing financial integration, we might see this change within the next decade at least at a EU level.

Since 2007/08 the reverse situation has been the case. Banks on the whole have and are continuing to contract their operations. Far greater focus on core operations being in their home markets.

Days are gone when RBS had the largest banking operations in over 50 countries in the world. Likewise HSBC who are in the process of rerisking their business and likewise Lloyds who have now ceased operations in 10 countries.

k12479

blon wrote: »

Risk assessment has to be forward-looking anyway and past behaviour as an indicator of future well-behaving is just one factor. The assessment could be based on evidence of one's job contract (= future expected cash inflows) as well as current equity and debt.

But...looking forward someone who has been in the country for only a few years is more likely to return home at some point, possibly leaving unpaid debts, than someone who has been in the country for longer and is more settled.