How do lenders come to instant decisions ?

Sabbathdei

How do credit card companies etc come to "instant" decisions online when you apply for a card ?
Isn't 5-10 seconds a little too quick to read someone's entire credit file, or do they see something we don't that tells them yay or nay ?

Rosco32

From what I assume once you submit an application that gives an instant decision the company will run the details you provided them with on your application through a credit scoring system. At the same time they will collect your data from one or more credit references agencies and run that through the system at the same time. The software they use for processing applications will interpret all of this data and produce a score of some type at the end. If this score is above the score they set at the point they approve applications then I guess you will see an instant yes or no if you score is lower than what they would generally deem as acceptable. Just my opinion though.

Tixy

I guess the computer 'reads' and assesses the applicants credit file data and credit application in a fraction of a second.

Sabbathdei

Tixy wrote: »

I guess the computer 'reads' and assesses the applicants credit file data and credit application in a fraction of a second.

Presumably it looks for "key" words or numbers...?
Or maybe something more mysterious happens

rb10

Sabbathdei wrote: »

Presumably it looks for "key" words or numbers...?

Your credit report isn't formed of words. There are a number of fields that lenders get from the credit reference agency, e.g.

- Number of payments 1-3 months late during the past six months [number]
- Number of revolving credit (e.g. credit card) accounts open [number]
- Current outstanding balance (excl. mortgages) [number]
- Credit score [number]
- Number of defaults on file [number]
etc...

These numbers are then just fed through the lender's own model, to come up with another number (your application score). As it's a relatively simple calculation, it only takes a few seconds to do.