Searches - What's the problem?

JKSandy

Shopping around isn't equal to making multiple applications.

Quark999

It is if you don't know whether you will be accepted or not - and given that acceptance criteria are never published, or rejections explained, that's pretty much always.

fawnsinthegarden

a4a wrote: »

I care about anything that affects my ability to obtain credit and, especially if the information leading to a rejection is misleading. I know for a fact I have been declined credit because of excess searches (and we are not talking dozens, just 2 or 3).

What I don't get and what my post is all about, is the fact that EVERYONE seems to have been converted to the fact that excess credit searches implies a sign of desperation. Yes, of course it could mean this, but it could also mean you are just shopping around or that after your initial application the lender has changed the terms of the offer and you want to apply elsewhere instead.

It could also mean that I want to switch mobile phone suppliers at the end of the term to better deal, the same with my Gas, Electric or Broadband provider, or apply for a 0% BT card, all to reduce my monthly outgoings and none to increase my indebtedness but it seems I would be severally penalised for this, which is wrong.

People shopping around do their research which cards would suit them the most and then would do a soft search to see if they would may be accepted for the card they want before applying. People shopping around do not apply for every card and compare them after applying like you seem to think they do. Surely you do not do this? That's like saying your looking for a new TV, you buy every TV in the store and then choose which one to keep afterwards! This is NOT how people 'shop around' I can assure you.

The ONLY reasons for several applications is desperation and needing credit urgently if you didn't need it you wouldn't keep applying and if you knew there was nothing adverse on your file you would simply appeal the first application, others may be just being trigger happy and just being desperate to have several cards with a high limit 'just because' for boasting factor (it does happen!) and unfortunately both categories are considered high risk. I guess you get the odd case where people apply for everything because they aren't aware they could read what it says on the website before applying first but I would consider those people a greater risk than the other two categories.

Surely when you go to renew suppliers or compare, you don't intend on signing up for every single supplier and then picking afterwards? Use a comparison site that does a soft search, then apply for the ONE you want. I really can't see why your making this a big issue?

I really don't mean to be blunt, it's not often an admired quality of mine, but if you do not understand credit or how to research credit should you be applying for credit? Lots of applications signals desperation, it's fact, you don't need to agree with any of us for it to be true or false. I don't think us trying to explain the same thing over and over is going to make you understand it's not opinion, it's just how it is.

I cannot understand why a few searches would affect anyone, why do you need to apply for so much credit for?If your getting rejected it's your history that's the problem, if your simply rejecting approved applications then why on Earth are you applying in the first place? I can understand applying for your first few credit cards, the odd balance transfer after a 0% interest deal runs out, maybe a car loan or mortgage but you space out applications so there's no issues.

Quark999

So can you explain to me how you work out whether you will be accepted for a credit card by just performing a "soft search"? Also, which credit card provider has a web form that lets you check your eligibility by offering a soft search?

And as a more poignant example - if your mortgage deal comes to an end, and you want to remortgage - how do you get the mortgage providers to perform "soft searches" only, but then be absolutely certain that four weeks down the road they don't suddenly ask for your grandma's savings account when you actually do apply?


I know about soft searches, but a) there seems to be no advance indication as to what search is going to be performed at the time and certainly no choice, and b) soft searches seem to be as good as a finger in the air when it comes to the lender actually honouring it at the end of the application - at which point a "hard" search gets slapped in your credit history and you're screwed again. There's plenty of stories of lenders going back on their AIP through no fault of the applicants...

MisterBaxter

I'm sure there must be some complex statistics going on behind the scenes within lenders own scoring system. They have probably seen a trend over time whereby those who made multiple applications in close succession were statistically more likely to end up defaulting on their debts and have therefore equated multiple applications to financial distress.

Everyone's circumstances are different and the statistical rules don't always turn out to be correct but they are probably correct more often than not. Lenders would rather lose a potential good customer than gain a bad customer. The computer is just following the rules it is given, it doesn't care much about you as a person.

It stands to reason that the CRA would use similar statistical analysis approach when calculating a score but they have less data to work with as they don't know your employment history or income.

Alternatively it could be that the CRAs just use a simple Random Number Generator to arrive at your score, what do they care, they make money selling scores, they don't lend it to you. Lenders want to see raw data, they maker their own decisions. If the credit report is accurate then it is what it is.

Quark999

I doubt that the CRA's credit score is used verbatim by the lenders, but I also doubt that they use these "sophisticated algorithms" either, and there are probably two or three large providers of rating tools (probably the CRAs themselves) that the lenders then tweak. Would be interesting to hear from someone with inside knowledge on that one.

I can say that the Experian score accurately reflects what I thought it would do - search knocks off 15 points, a settled account disappears, 30 points go etc.


"It is what it is" is precisely what the lenders want to achieve - credit scores are accepted as this unsolvable black art, but we all seem to be surprisingly certain that "they" know what they are doing. There is no way of challenging decisions not to lend, which in a way is understandable because it's the lenders money. But I believe it is also an excuse for price fixing and cherry picking and that will never change if everyone just accepts the current system as god given and just. In my experience dealing with companies, that is highly unlikely to be the case.

1DayAAT

I used to worry a lot more about searches that I do now. Having spoken to an operative at MBNA a while back, she said that lenders don't actually care until it goes past about 12-18 searches in a year long period - so I've stopped bothering to worry

Quark999

I have a feeling that's the case as well, and they are only using the "multiple searches affect your ability to get credit" as scare tactics - which is makes it even more despicable.

Having said that, I wouldn't really want to chance that for a mortgage application - they're having such a close look that multiple searches might just tip you over the edge with some lenders...

fawnsinthegarden

Quark999 wrote: »

I have a feeling that's the case as well, and they are only using the "multiple searches affect your ability to get credit" as scare tactics - which is makes it even more despicable.

Having said that, I wouldn't really want to chance that for a mortgage application - they're having such a close look that multiple searches might just tip you over the edge with some lenders...

Who are the 'they' using scare tactics you speak of?

If you apply for lots of credit in a short space of time it makes you look riskier to the lender, each lender will have a risk profile so some may not like several applications and some might not be bothered. No one knows the lending criteria of each lender so basically the advice is to err on the side of caution as common sense says don't make yourself look like a risk.

Mortgages are secured debt so inevitably they will weight multiple searches differently than a credit card which is an unsecured debt would do.

Quark999

Right, so in the case of a mortgage application, you apply for "pristine credit history mortgage #1" and get rejected. You are now less likely to get "so-so credit history mortgage #2".

As you say, no one knows the lending criteria (including mortgage advisors). In above example, how are you a) a bigger risk than if you had gone for "so-so credit history mortgage #2" from the start, and b) how is that in any way a system that is fair to the consumer and not skewed towards the lenders?