Searches - What's the problem?

a4a

SuperHan wrote: »

Not necessarily true... Your earnings to available income ratio will be considered and if you have too much available credit they will decline on that premise.

Fair enough. So its a bit of a catch22. You either owe too much and are close to your limits, or you haven't used your available credit and have too much available!!

Don't you just love the way lenders think !! :-)

a4a

Quark999 wrote: »

a4a: I agree with you entirely, and it is something that has also rubbed me the wrong way!

Interestingly, the American FICO score seems to disregard anything within the last 30 days, precisely so that you *can* go rate shopping (see the MyFICO website). I wonder whether this was the result of regulation. If the US lenders don't go bust because of all those "high risk" borrowers that search for credit multiple times within 30 days, surely the UK lenders wouldn't go bankrupt immediately either?

Therefore, I firmly believe that this impact multiple searches have on your "credit score" is not a result of higher risk, but instead vecause it is an indication that you are trying to get a good deal. Of course, lenders can't have that because it would increase competition, and therefore between themselves and the credit rating agencies they have agreed to combat that by hitting everyone that doesn't want to go for the first deal.

They then try to justify this by claiming it indicates a higher risk, at which point they can get away with murder because the system is so opaque.

I firmly believe this is something that needs to be regulated against, as it severely impacts the customer's ability to get the best deal possible - they are frightened into not searching (I am - each search knocks off a whopping 15 points of my Experian score).

Couldn't agree more, although before people jump down you neck, the experian score is not a credit score in the eyes of the lender but I do believe it throws some impact on lenders especially when soft-searches are carried out but thats another story.

The main point being though, is that credit searches should not be automatically regarded as a sign that 'someone is in trouble', and I think you may well be right in you analogy of why they are being treated this way.

If I want to suddenly change all my credit agreements to reduce my monthly outgoings and not increase my indebtedness I am barred (or at the very least hampered) from doing so, which is completely wrong.

a4a

JKSandy wrote: »

Shopping around isn't equal to making multiple applications.

True its not, but multiple applications is purchasing from different shops !

a4a

fawnsinthegarden wrote: »

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.

I totally disagree.

I have 20 credit agreements, I have a 973 excellent credit rating with experian and a 475 with equifax. I owe less than 40% of my credit limits, have no late payments, no ccj and no defaults.

I take a great interest in how the system is run and watch it very carefully. i continually look around for better deals and continually try and reduce my monthly outgoings, however I am hampered by making searches which is wrong.

Your analogy of going into a shop and buying every TV is crazy with respect. If I walk into Curry's it gives me a very clear and precise price for the item. this is not the case with lenders. The price you see is not necessarily the price you pay. You may see what appears to be a great deal, apply for it and are offered a completely different deal but surprise surprise, in the meantime the next lender will look at you with renewed caution and so on and so on, and you are then advised to 'wait a few months and apply again'. This is crazy.

With regard to me not listening, it seems that people give their opinion and if you question it, you are accused of not listening.

I am questioning it because I genuinely feel that making multiple applications should not 'always' be regarded as being desperate. As I have explained before, what if I want to change all my credit agreements at the same time to reduce my monthly outgoings without increasing my indebtedness, why should I be regarded as desperate?

a4a

Quark999 wrote: »

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...

I agree and as a result the only real way to find out is to make the application.....but be careful otherwise you will look desperate !!

a4a

MisterBaxter wrote: »

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.

'Everyone's situation is different'...I agree but the system doesn't allow for this and lenders seem reluctant to try and find out why someone is making multiple applications. Are they desperate or are they trying to get a better deal or deals?

a4a

Quark999 wrote: »

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.

I believe it is the price fixing which is the real reason. By penalising you for shopping around, lenders can extract more interest from you and collectively its a very neat way for the banking 'cartel', to rob your further. Advertise one rate and then apply another because you have shopped around!

This is why I'm really hung up about it. I can fully understand the desperate person scenario but unless the whole CRA system is bought into the modern world, lenders and CRA's will capitalise even more by providing inaccurate information so as to charge you more.

a4a

1DayAAT wrote: »

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

And you believed her ? Personally I wouldn't believe a word that came out of any lenders mouth. I have been lied to so often and when you talk to another operative they say 'oh that person shouldn't have told you that, we are very sorry'!!

a4a

fawnsinthegarden wrote: »

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.

This all very true, but it is wrong that it should be that way.

Quark999

Well, the mere fact that credit decisions can happen online and instantaneously, but a credit file takes weeks to get updated shows that something in this system is fairly ancient and out-of-whack. Surely all of this can at least be tracked in real-time - at which point lenders would also always exactly know not only what *applications* a customer has made, but also what credit facilities have been *granted*.

The fact that there IS this delay, and the fact that SEARCHES are instantaneous reinforces my belief that this works in the lender's favour, and they have NO incentive to change it unless forced to do so...